Wednesday 4 September 2013
[Philip Davies in the Chair]
Criminal Legal Aid Reforms
Motion made, and Question proposed, That the sitting be now adjourned.—(Jeremy Wright.)
I am sure it will be a pleasure to serve under your chairmanship, Mr Davies. I have not done so previously, but I am very hopeful.
I am delighted, and relieved, to have secured this debate on an important issue, because without it and the recent Backbench Business Committee debate, the Government had no plans whatever to give Members of Parliament the opportunity to challenge profound, fundamental changes to our justice system.
I am pleased that the Backbench Business Committee granted time to discuss the issue, and it was telling that we had contributions from 31 Members, the vast majority of whom were opposed to the proposals. Furthermore, more than 100 Members of Parliament have put their names to the early-day motion urging the Government to think again about their plans, while the e-petition sponsored by Rachel Bentley has attracted more than 103,000 signatories.
It is a shame that the Lord Chancellor and Secretary of State for Justice was unable to attend the Backbench Business Committee debate as he had more pressing matters—campaigning in a marginal Tory constituency—but I am pleased that the Minister is here to respond for the Government. It would have been fitting, however, for MPs to have had the opportunity to challenge the Lord Chancellor on the latest attack on our justice system, although I suspect that he is not keen to be challenged in whatever guise.
At this point, it is right to pay tribute to Michael Turner, QC, the former chairman of the Criminal Bar Association, for his achievements in uniting the two professions—I suspect that the Government were hoping for a divide between the two, which has not happened. I was surprised, and suggest that it was a shame, that the Lord Chancellor refused to meet Michael Turner—who, as chairman of the Criminal Bar Association, represented thousands of criminal barristers—apparently on the basis of his having been rude about the Lord Chancellor. To be clear, Michael Turner has never been rude about the Lord Chancellor. He has, however, dared to criticise publicly the plans and proposals of the Government in their consultation. The Lord Chancellor does not seem to like being criticised.
Furthermore, the Joint Committee on Human Rights report seems likely to be ignored by the Government, and the Lord Chancellor will plough on with his barmy proposals without even considering it.
I congratulate the hon. Gentleman on securing the debate, which is of considerable importance. I agree that the proposals contain many things that are hugely damaging. On the JCHR’s ongoing investigation, does he agree—I am sure he will—that the least the Lord Chancellor should do is to delay any decision on the proposals until the investigation into whether they are fully legal has been completed?
Absolutely. That should be the least that the Lord Chancellor is prepared to do, because the further proposed cuts to legal aid come hot on the heels of the last hacking that legal aid received from the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Within a few months of taking power, the Government introduced that Bill to Parliament to slash legal aid and remove many areas of civil legal aid from scope, which has already denied many of the most vulnerable access to justice. We saw the effects in our surgeries when the changes kicked in, in the spring. I have seen a huge increase in the number of people at my surgery who cannot get a lawyer, but who are desperate for legal advice on housing, benefits and other complex legal issues.
I completely agree with my hon. Friend about the impact on access to justice, with many of our constituents turning to MPs for advice on complex areas of law, although most of us are not in any position to give such advice. Will he mention the big worry about the insidious impact of the new proposals on victims of crime?
My hon. Friend makes my point for me. He is right: Members of Parliament are not competent to give legal advice. One option that had been open to us was to signpost people to citizens advice bureaux and other pro bono clinics, but due to budget cuts—local authorities and charities being slashed—they have closed or are buckling under the pressure of reduced resources and vastly increased referrals. Local authorities are desperately struggling to provide advice services as they try to absorb cuts of more than 30%, while charities and authorities up and down the country are being forced by the Government to withdraw vital funding for local projects simply to ensure that they can sustain basic, statutory obligations.
During the first attack on civil legal aid, my party’s Front Benchers and I were accused of scaremongering. Since implementation, however, 600,000 people have been denied access to advice on many aspects of civil law. There has been a 30% fall in the number of providers of civil legal aid and a 12% fall in providers of criminal legal aid, yet the most recent consultation paper, “Transforming Legal Aid: Delivering a more credible and efficient system”, which was published on 9 April, goes beyond anything that anyone could have imagined. The proposals can only damage the legal aid system yet further.
The proposals aim to save £220 million from legal aid spending by 2018-19, but the Government have not said from which year’s spend that money is meant to be found. Many of my colleagues in the profession believe that the proposals will cost the taxpayer more money in the long run—a valid point to make. A common misconception promoted by the Government is that legal aid is the principal cost, but as the right hon. Member for Haltemprice and Howden (Mr Davis) rightly pointed out in his contribution to the Backbench Business Committee debate, the cost of our legal aid system is just three quarters that of similar systems in many other European countries. The President of the Supreme Court—no less—supports that notion. He said that the bill for legal aid increased substantially between 1965 and 2000, which I accept, but it has since been cut and projections show that it will continue to decrease over the coming years.
I am persuaded that in some areas there may be further savings to be made, but I do not believe that the proposals are the way to achieve such savings. At the Justice Committee session at which the chairman of the Bar Council, Maura McGowan, QC, Michael Turner, QC, and others gave evidence, Michael Turner suggested savings of a surprising £2 billion. The Government should be prepared to sit down with the professionals, the practitioners and the people who are expert in the area to discuss where those savings might be made.
I congratulate my hon. Friend on securing the debate. Is it not the case that some of the motivation for the proposals has nothing to do with savings? The Lord Chancellor himself has acknowledged that, for example, restricting access to legal aid for prisoners is a simple matter of ideology.
My hon. Friend makes a valid point and I will develop it in a moment. She is right to raise the issue, and many people argue that the changes are a false economy because costs will increase. Matrix Chambers and Bindmans LLP have pointed out that the Government’s proposed savings are nonsense. They believe that costs—I suspect that they have done proper research—will increase by £24 million if the proposals go through. I agree with Bill Waddington, chairman of the Criminal Law Solicitors Association—
My hon. Friend makes an interesting point. I am a member of the Public Accounts Committee, which looked at the matter. Does he agree that the inefficiencies of the Courts Service may increase as more people try to represent themselves? I was recently a witness in court and saw for myself at first hand how inefficient that is. Perhaps the Minister should concentrate on some of those inefficiencies.
My hon. Friend makes a point that, again, I was about to develop. It is accurate to say that costs will increase and people will self-represent.
I was about to say that I agree with the chairman of the CLSA who said that the Government are wrong to say that the issue is simply about savings when their figures show that costs have been coming down for years and projections show that they will continue to fall. Ministry of Justice figures show that public expenditure on legal aid between 2004 and 2009 has fallen by 25%. Figures also show that, between 2004 and 2010, the cost of criminal legal aid fell by £165 million. Those are Government figures, and they are expected to fall by a further £264 million by the end of 2014. My respectful submission is that it is about not saving money, but ideology.
Desperate people who have no choice but to represent themselves—this is my hon. Friend’s point—will clog up the courts and cost more money. Court time is expensive and not only will extended court time cost more money, but self-representation will provide fertile ground for miscarriages of justice and I hope that the Minister will acknowledge that.
My hon. Friend is making his case very well. A long time ago, I ran a solicitors firm on a high street in north Shropshire. Does he agree that it is extraordinary that a Conservative-Liberal Democrat Government are making proposals that will specifically hit small firms on our high streets which are some of the most important providers of advice and services to local communities?
My hon. Friend has stolen one of my best points. He is right of course.
I want to concentrate for a moment on the courts and staffing levels. I was not practising in the criminal courts during the recess, but I was there briefly. It is clear that since 2010, the courts have been stretched. There is no doubt that the proposals will put more pressure on the clerks in trying to advise clients who may be faced with no option but to self-represent.
Last year, the National Audit Office found that the cost of our legal aid system was average compared with other countries, and costs continue to fall. I accept that, according to the Government, 48% of criminal legal aid costs account for 1% of cases. Those are the cases that we should look at to make savings. The Government should concentrate their attention on high-cost cases. In times of austerity, we should look at all Departments for efficiencies, and the Ministry of Justice should shoulder its responsibilities and accept the burden for that.
It is right to make those who can afford it pay legal fees. It is also right to freeze the assets of convicted criminals to fund their legal costs. I am sure that my Front-Bench colleagues would be happy to work with the Government on that. However, it is not right that the legal aid system is sold off to the lowest bidder at the expense of quality. It is not right that huge global corporations that also run prisons, probation services and tagging—they do not do that well—are likely to bid for criminal defence contracts. That suggestion is appalling.
It is clear that there is a conflict when organisations involved in criminal defence also run the prisons. It is not right that companies such as G4S, which have great financial power, outbid smaller local firms at the expense of quality and local expertise. Local expertise is valuable. The legal aid scheme has evolved and changed over many years since its inception in 1949, but it remains a system in which the Government fund private expert practitioners to provide a pivotal public service.
My hon. Friend raises an interesting point. A solicitor in my constituency says that 50% of the clients he deals with are innocent, and are neither cautioned nor charged. Does my hon. Friend agree that the proposals are also an attack on the innocent and, as is sometimes painted by the Government, that they do not affect just people with criminal records?
Absolutely. That is correct. Before coming to the House, I was at the Bar with local chambers in Hull, but before that I was a criminal solicitor. I attended police stations and the vast majority of clients I represented had no further action taken against them or were dealt with by an alternative to court, but most often no further action.
Of course, but the point is to dispel the bonkers notion that old lags cost the money. The reality is that people are entitled to a defence, and I will address that later.
I want to deal briefly with the suggestion that the previous Labour Government were profligate with the system. I have spent years defending my party because many practitioners say that the previous Government cut the system to the bone, but we were careful with legal aid spend. I also want to dispel the myth that only self-interested, fat-cat lawyers are concerned about the changes. I have been lobbied by charities, constituents, colleges and trade unions that do not benefit in any way from legal aid, but want a system that continues to be fit for purpose and protects the most vulnerable at the time when they need access to justice.
I thank the hon. Gentleman for bringing this important matter to the House for consideration. On his reference to those who are less well off, Citizens Advice in my constituency has told me—I am sure that many other hon. Members here have received similar information from their citizens advice bureaux—that the least well off will suffer more and those with little or no money will be unable to take a case to court to protect or defend themselves. Does the hon. Gentleman believe that the critical issue is that the less well off will suffer more?
My hon. Friend is rightly making a point about justice and has drawn attention to the danger of miscarriages of justice if we go back to a system that we thought we had left behind. Does he agree that there is another side for the victims of crime because if the wrong person is convicted they suffer a double injustice?
In my experience, for what it is worth, my advice to a client was based on the evidence. If that was overwhelming or strong, and if, in my opinion, the defendant needed to plead guilty, they were advised accordingly. I think solicitors and barristers will always act in the best interests of the client.
May I address the caricature that the Government have peddled, which is that all lawyers earn salaries like that of the Prime Minister’s very wealthy brother? It is not true. The vast majority of legal aid lawyers, up and down the country, earn a modest wage; often, they will take home less than a nurse or a teacher. I wonder what information the Government have on that issue, because I think that the Bar Council could provide them with information about average salaries at the Bar, and that the Law Society could assist as well.
A very important point, and perhaps an unintended consequence, is that the proposals will prevent many young people from black and minority ethnic backgrounds, less advantaged backgrounds, and poorer backgrounds from coming into the professions. This is not a plea for the so-called fat cat lawyers, but, as John Cooper, QC, put it:
“This is recognition, before it’s too late, that if the proposals go through we will be complicit in excluding many young people from less advantaged backgrounds from becoming part of what can only be described as the National Health Service of the Law”.
I also want to deal with the misconception that all people seeking legal aid are old lags. I have dealt with that briefly, but the Government seem to suggest that such people do not deserve representation. Of course, there are repeat offenders who are found guilty, or who plead guilty to a further offence, but just because someone has previously been convicted of burglary does not mean—cannot mean, surely—that they are automatically guilty of the further alleged offence. They might not be.
Fundamental to our legal system must be the presumption of innocence. Denying people’s liberty is one of the strongest powers of the state. It is vital, therefore, that that can be done only when a court of law is presented with evidence, for and against, by highly skilled and trained lawyers.
Fundamental to our system is the issue of choice, which the hon. Gentleman may come on to. He is a former member of the Select Committee on Justice, which I now sit on. The right for someone to choose who represents them goes very much to the heart of our system.
I wonder whether the hon. Gentleman would agree that the price-competitive tendering proposals, as originally drafted, would appear to deny that, but as he knows from the Justice Committee’s hearings and the Backbench business debate, the Government have moved on that issue. I wonder what his feeling is on where that movement on choice, which very much holds the PCT proposals together in their original form, leaves us. He should acknowledge that the Government have already moved a little on the issue.
I will address that point later in my remarks.
I am concerned about what seems to be an outdated concept, in the Government’s vision, of a Tesco-style justice system, but I still believe that the defendant is innocent until proven guilty. Surely we should be looking to protect that system. I add that these stereotypical clients are not the only people who seek criminal legal aid. Thompsons Solicitors, in its response to the consultation, made it clear that many who seek legal aid are people such as teachers, nurses and police officers, who are wrongly accused of assault or similar, and who need to clear their names and save their livelihoods.
I congratulate the hon. Gentleman on securing the debate. He has not mentioned a category of people who suffer a form of injustice greater than anything he has spoken about. Those people cannot defend themselves, either because they have died as a result of a state action—I am thinking of Baha Mousa, in particular, who was beaten to death by British soldiers—or because they are incarcerated by either British or foreign states. Such people, without legal aid, have no recourse whatever. There is no self-representation, because they cannot do that, and no cheap representation, as they cannot do that either.
The right hon. Gentleman makes an extremely valid point, which I, again, want to address briefly in my remarks. I disagree with many aspects of the proposals—the right hon. Gentleman is correct—but as my hon. Friend the Member for Stretford and Urmston (Kate Green) said, denying prisoners access to legal representation simply goes against everything that a civil society should represent.
Defending prisoners is not a vote winner, but we live in a civilised society, and I believe that prisoners must have the right to legal representation. The reforms will essentially mean that justice stops at the prison gates and that prisoners are denied legal representation, if the Government plans go ahead. As colleagues have said, denying prisoners access to justice in the way that the consultation proposes seeks to save £4 million. In times of austerity, it would be flippant to say that that is peanuts, but actually, when I think about it, those efficiency savings come at what cost? For goodness’ sake—it seems incredible to me.
It is likely that the proposals will save nothing in the round, because they will lead to more inefficiencies inside prisons, as people will be kept in higher-security conditions, when they need not be, for longer, and as there will be greater difficulty in managing discipline and behaviour in prison as a result.
Absolutely. My hon. Friend makes a valid point.
I think that this next point was the one made by the right hon. Member for Haltemprice and Howden (Mr David Davis). I am also concerned that the proposals to introduce a residency test will see victims of human trafficking denied access to legal representation and will prevent many cases from being brought against the Government when they are accused of wrongdoing abroad. The new proposals will mean that families such as that of Jean Charles de Menezes would not have been able to fight the case for their dead son, who was wrongly shot by armed police.
I also disagree with the proposals to reform judicial review. They will mean that an individual will no longer be able to hold public bodies to account. Shelter, for example, provides specialist social welfare law advice—on housing issues, in particular—to about 15,000 people each year, under various legal aid contracts. However, it is clear that the proposals will prevent it from doing that.
The Government proposals limit funding for judicial review to only those cases where permission to proceed is granted by a judge. That must severely limit Shelter’s ability to help people. None of us in this place can imagine the prospect of losing our homes. It seems incredible that the Government, in their plans, seek to attack the most vulnerable people at the time when they need assistance the most.
Clearly, the Lord Chancellor has thought about the proposals since the Backbench business debate. Following absolutely overwhelming criticism from many Opposition Members and Government Members, I was very pleased to see the Secretary of State U-turn on the accused having the right to choose their lawyer. However, we do not know what the impact of that will be, because as far as I understand it, the Lord Chancellor is still keen to press ahead with what he thinks is a workable system of PCT. I suspect that it is not workable; I do not think it ever has been.
The client choice issue was designed to assist with PCT, in the sense that it would be attractive for large corporations to bid for contracts on the basis that they are getting a vast client base, but I am not sure what the impact of that will be and how the proposals will change things as a result. I hope, however, that the Lord Chancellor continues to listen, and that he will concede that PCT, in any form, is not suitable for allocating legal aid contracts. Legal aid contracts should not simply go to bidders who are willing to do the work for the lowest price.
As I have said, I am concerned about many aspects of the proposals, but I want to focus, in the time remaining to me, on chapter 4 of the consultation document, which is about PCT in relation to criminal legal aid.
A constituent of mine recently wrote to me in praise of a small local firm of solicitors that had supported her and her family through a long, traumatic and very serious case. She felt that the attention to detail and dedication shown by that small local firm would not be replicated in the new system, in which speed and economics would be of the essence. Does my hon. Friend agree?
Absolutely. That is an excellent point. It is just the reality of business. Small firms of solicitors have established themselves over a long period. The hon. Member for Warrington South (David Mowat) thinks that my remarks are amusing. They may be amusing to him, but I can tell him that the reality of the proposals will not be funny to people in my constituency who are looking to access justice.
I am listening very carefully to the hon. Gentleman’s remarks, and he is making a strong case for access to justice with which no one, in any part of the House, would disagree. What I would be interested to understand, though, is whether his position is that legal aid as it is currently is pretty much right and cannot be reformed or that reforms are possible but the Government are pursuing the wrong ones. If it is the latter, why has the Bar Council not come forward with more substantive proposals than it has apparently done so far?
I am not the Bar Council; I do not represent the Bar Council. It is not for me to say why it has not come forward with proposals, but my opinion is this. Why should the Bar Council, the Criminal Law Solicitors Association, the Criminal Bar Association or any other organisation that represents the professionals come up and do the Government’s job? I suggest that the hon. Gentleman goes away and reads the evidence of the Justice Committee and looks at the proposals put forward by the experts—the practitioners, the people who do this work every day. Michael Turner, QC, came up with a suggestion for making £2 billion of savings if the Lord Chancellor was only prepared to allow him enough time to sit down and discuss the proposals with him.
I thank the hon. Gentleman for giving way again. I thought I heard him earlier give that figure of £2 billion, which of course is a very significant amount. I believe that it is 10 times the amount that the Lord Chancellor is seeking. If Michael Turner has identified £2 billion of savings, would it be possible for the hon. Gentleman to identify for other hon. Members the main areas in which those savings would be made?
The former chairman of the Criminal Bar Association put forward various suggestions in the Justice Committee evidence session. I happen to think that some of them are feasible. He talked about saving money in courts. In my experience, an awful lot of money is wasted in the courts system. Then there is the Crown Prosecution Service. I do not mean to criticise colleagues in the profession, but very often defence lawyers are blamed for delays and loss of court time when in fact it is the CPS, whose staff are rushed off their feet, overworked—in my area, the service is terribly understaffed—that causes the delay. There are all sorts of things that the Government could look at, but the reality is that the Lord Chancellor is simply not prepared to sit down and discuss them. I am hoping that the new chairman of the Criminal Bar Association, Nigel Lithman, QC, has the ability to persuade the Lord Chancellor to sit round a table and discuss the proposals.
First, let me help the hon. Gentleman with a reminder of some of the things that were proposed. There was a proposal for a levy on the commercial courts in London that would raise large amounts of money. There were proposals that the banks should pay for the fraud cases that make up a large part of what we are discussing.
I also want to ask the hon. Gentleman a question. The Law Society has come up with a proposal that maintains choice but still puts in place a bidding system— a rather more thoughtful bidding system, if I may so—a rolling three-year bidding system, which would keep in place some of the smaller specialised companies and so on. Does he think that that is a good route to go down?
Absolutely. The right hon. Gentleman is absolutely right. The Law Society’s proposal, I think, is a much better alternative. To answer the point made by the hon. Member for Warrington South, of course I accept that efficiency savings have to be made across the board in Departments—I made that point earlier—but it seems to me that the Lord Chancellor has just gone off without really being prepared to consult. I think that we are talking about a period of two months. It seems to me—the Minister shakes his head, but this is the justice system. There are a lot of professionals involved. I think that the Government received 16,000 responses. Surely there was a requirement to have some form of proper consultation—I do not think that it was proper, frankly—so these things could have been discussed more properly.
I think—this point was also made by my hon. Friend the Member for Wrexham (Ian Lucas)—that what is proposed defies everything that the Conservatives allegedly stand for. It is contrary to all that they say they are doing to promote growth on the high street. The idea of savagely attacking small businesses seems barmy to me. Do the Tories not believe that small private firms are the backbone of our economy? It beggars belief that this policy will without doubt break the backbone of the legal profession and, in my submission, severely undermine local economies such as my own in Hull. Let me be very clear.
For the record, I am still a practising solicitor, although my firm does not do criminal law. I want to take up the point about rural areas. Already in places such as Cumbria there are gaps in terms of the legal profession giving advice. Does the hon. Gentleman agree with me that the potential is that the reforms will exacerbate that problem, particularly in rural areas?
The hon. Gentleman is absolutely right. I have not read the 16,000 responses to the Government consultation, but I know from my discussions with colleagues in the profession that a vast majority of those responses make the point about advice deserts. Let me refer to my area of Humberside. Bridlington, which is in the area, will, in my submission, become an advice desert. It is covered currently by all the firms of solicitors in the area, but there is one firm of solicitors that is based in that town.
Does the hon. Gentleman agree that whatever changes to legal aid are brought in, they will, in Wales, have to accommodate the legal requirements of the Welsh Language Act 1993? It is a great concern of many people that the capacity will not be there to do that.
The hon. Gentleman makes a very valid point. Clearly, this is not my area of expertise, but the point has been raised by the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd), the leader of Plaid Cymru in the House, who is very worried. He is a practising barrister and is concerned that that obligation will go as a result of the proposals. That cannot be justice.
I am conscious of the time, so I will now make a little progress. The Government proposals for PCT will irrevocably damage the criminal justice system. PCT will inevitably lead to the market being dominated by the big multinationals—the usual suspects—G4S, Serco, Capita; and I fear that many new entrants to the market who have no experience whatever of delivering criminal justice will dominate the market. The small businesses, the expert businesses, that have established their practices over a number of years and have a great relationship with local authorities will just close their doors. It will become economically unviable for them to continue to exist.
The proposals are designed to cut a further 17.5% on top of the 2011 reduction of 10%. Firms that win the contracts will assert that they can provide the service at the cheapest possible rate. Stack it high and sell it cheap will see our criminal justice system reduced to the lowest common denominator. I have no doubt that it will be taken over by less qualified people providing a less qualified service. We will see the cornerstone of a civilised society reduced to a factory mentality where quantity will trump quality each and every time. The only consideration in our justice system will be the cheapest provider.
The plans also perversely propose the same fee being paid whether the case is resolved by way of a guilty plea or contested at trial. To me, that suggestion beggars belief. There is undoubtedly a concern that that will lead to undue pressure being put on a defendant to plead guilty to speed up the process, thus saving time and money for big legal aid providers. There will be a clear financial incentive for the defendant to plead guilty as quickly as possible, even when a trial would be in the client’s best interests. It is unlikely to happen, because, in my honest view, solicitors always act in the best interests of their clients and always advise based on evidence alone and the strength of the evidence presented in the case, but do the Government not accept that advice might be misconstrued? A particular client might plead guilty to an offence when the evidence is strong and overwhelming, but there might be a later discussion, perhaps in the pub, along the lines, “You pled guilty, mate, because your brief was paid the same money whether they did their best for you in a trial or forced you, with your arm up your back, to plead guilty.” Surely that will be the result.
Order. I do not wish to interrupt the flow of the hon. Gentleman and I have no idea how much longer he intends to go on for, but other people wish to contribute, not least some of his hon. Friends. I urge him, in the spirit of co-operation with his colleagues, to consider bringing his remarks to an end.
I am grateful, Mr Davies. I will bring my remarks to a close. I apologise. I think I took too many interventions.
Well-established, local, high-quality providers that have strong links with local police authorities, courts and councils will be replaced by large corporations. That is not a good idea. It is not helpful to the justice system. The reality is that people will suffer as a consequence of the proposals. I hope the Government listen. I hope that the Lord Chancellor—according to rumour, this will be the announcement tomorrow—has changed his mind and decided once and for all to bury the idea of price-competitive tendering.
Order. It appears that five hon. Members wish to catch my eye. I intend to go to the Front Benchers no later than 10.40 am, which leaves just less than half an hour for other contributions. I do not intend to set a formal time limit, but I hope that people will do the maths—it leaves just under six minutes each—and bear it in mind when considering other speakers.
I declare an interest as a member of the Bar, albeit that I do not do any criminal or legal aid work at all. Whether that makes me a fat cat, I leave to others, and my tailor, to conclude.
I congratulate the hon. Member for Kingston upon Hull East (Karl Turner) on his marathon performance this morning; he ranged over the full width of the criticisms to be made of the policy. The debate is somewhat reminiscent of the discussions we had in the first Parliament of the Tony Blair Government about the Access to Justice Act 1999, when I was in the position of the hon. Member for Hammersmith (Mr Slaughter), arguing against slashes to legal aid and actions that would deny access to justice, rather than improve it—so much changes and so much does not change. It is a pity that we have got to where we are today because there appears to be intransigence on both sides of the argument. Both sides have good points to make.
The economic constraints that the Government face are obvious and need to be dealt with—that is undeniable, and I think the hon. Member for Kingston upon Hull East is prepared to accept that. Unfortunately, the Whitehall system of government means that everyone works in a silo and nobody pays any attention to the consequences of a cut in one Department on the expenditure of another. We saw that with the closure of magistrates courts.
Does the hon. and learned Gentleman not concede that estimates from his esteemed colleagues show that there will be an increase in costs? For example, a doubling in the cost of legal aid for prisoners’ cases and an increase of £1.3 million to £4.5 million for judicial reviews are additional costs that will result from the proposals.
I rather thought that was the point I was making. If we cut one Department or one aspect of expenditure, it has a knock-on effect on another, which is why I referred to the closure of magistrates courts. It saved one Department, through the Courts Service, a certain amount of money, but impacted on the police forces that had to transport defendants from, for example, Market Harborough to Leicester, some 15 or more miles away. Such discussions are perennial. That is not to say that we should not have them, but nobody should be surprised when the Government and the Opposition stand against each other in this way.
The consultation is to be responded to at some stage in the future, whether it is tomorrow, as the hon. Member for Kingston upon Hull East suspects, or some other date, we do not know—the Minister may be able to give us a sneak preview of what is going through the mind of his Secretary of State—but I hope that it has not yet been printed, because there are plenty of things about which the Lord Chancellor needs to think before he responds. I, unlike the chairman of the Criminal Bar Association, have had the joy of meeting the Lord Chancellor: once in his office in Parliament and once in his office in the Ministry of Justice. I have always found him an entirely reasonable person to talk to. It will be interesting to see quite how much of what I invited him to consider ends up in the response to the consultation document; no doubt, in due course, we shall see.
A number of points need to be borne in mind. The first is the important constitutional point the hon. Member for Kingston upon Hull East addressed and my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) mentioned, by implication this morning and on an earlier occasion in the Backbench business debate. Access to justice and representation, particularly in cases against the Government or the authorities, are hugely important. If we deny them, we undermine an aspect of the civilised nature of this country. I am not sure that that is what the Lord Chancellor has in mind, but we are necessarily fearful that it could happen.
Reducing expenditure on prisoners’ cases as a blanket policy is of course worrying, but if we are preventing public money from being spent on people complaining about whether they have one blanket or two or whether they get this or that pornographic magazine, I do not think I will lose much sleep. There will clearly be cases involving prisoners, the downtrodden, asylum seekers and so forth for which legal aid will be essential to see that justice is done and the Government are not oppressive.
Does the hon. and learned Gentlemen agree that the cases prisoners bring are not necessarily trivial? They may be to do with a prisoner’s mental health, mothers wanting to be with their babies in mother and baby units or children and young people in custody who desperately need legal representation if, for example, they do not have access to proper programmes in their sentencing plan.
I thank the hon. Lady for that intervention. Her point is not controversial. The argument against it, and perhaps against my points, is often made the basis that there are far too many people taking judicial review proceedings about trivial and silly cases on pornography or whatever it might be. Those cases need to be got rid of, but the cases she mentions need to be dealt with properly.
Constituents drew to my attention a problem that the changes, if they go through as advertised, will cause for not only the future representation of defendants, but the administration of our justice system. At the moment, thousands of criminal barristers, and this may be true of criminal solicitors as well, are doing the most complicated cases, particularly child abuse and sex crime cases, which can in my view be prosecuted and defended only by professionals who have experience of such cases. They are not paid huge sums of money. They are the senior juniors: 35 to 40-year-old juniors at the Bar, who are the potential QCs—silks—and Crown Court judges. If we push those people away from the profession, we will not be able to develop the judges and senior members of the profession of the future. Perhaps that consequence has not occurred to the Lord Chancellor, but I know that it will have occurred to my hon. Friend the Minister, because he is a former criminal barrister of huge thoughtfulness and experience.
If we push those people away, we are in danger of utterly changing how we deliver the criminal justice system. I have had any number of constituency members of the legal profession coming to me, and they do not live in vast houses or drive Bentleys. They live in small houses on little executive estates, drive second, third and fourth-hand cars, and send their children to state schools. They are not rich; they do a difficult job for little money. They do it because they have a vocation and because they think it is right that innocent and guilty criminal defendants alike are represented.
I will stop there because I have overrun my time by far too long. I urge the Minister to take the points that I have gently put to him with the seriousness that the constitution requires.
I will try to be brief, Mr Davies, because of that stricture.
Does the Minister accept that price-competitive tendering must always lead to the reduction or complete withdrawal of client choice? As long as we begin from the principle that we are not only entitled to a fair trial, but must be seen to have a fair trial, the latter is incompatible with the prosecuting body limiting the defendant’s choice, or even choosing the person employed to defend them. If the Department plans to put contracts that guarantee an equal share of work out to tender—as stated in the document it has produced—by necessity, choice is being limited. The central concern about choice therefore remains. As I said in the legal aid debate called by the hon. Member for Brent Central (Sarah Teather), the establishment of choice goes back to the Magna Carta. It is fundamental to our system, and I have yet to hear why the Lord Chancellor thinks it can be discarded in this way.
Even if the Government are not interested in the perception or the subjectivity of receiving a fair trial, tendering, and the guarantee of work without quality control, can lead only to an objectively less fair system. The system proposal means that firms will be forced to compete on price rather than on quality, and I do not want lawyers doing that. The lower firms bid, the fewer resources they can commit to each case. That is why, when we went down that road with those who would provide food for our children in schools, we ended up with turkey twizzlers. It is why, when the NHS decided to contract out the cleaning services in our hospitals, we ended up with MRSA. So I say to the Minister, let us remain committed to quality in the system—a point well made by my hon. Friend the Member for Kingston upon Hull East (Karl Turner) and the hon. and learned Member for Harborough (Sir Edward Garnier)—and not discard it for a cheap and, by definition, substandard service.
The savings we need can be found in other places. The significant bulk of the £220 million, as the Minister knows, comes from high-cost cases, half of which deal with banking fraud. Why does the banking sector not have an insurance scheme for fraud against its banks? That would halve the sum that the Minister is looking for. Again, it would be nice if the Lord Chancellor could say whether he was considering taking banking fraud out of criminal cases so that we could find the savings in a way that was much more friendly to our justice system.
Do we want the situation that we see in the United States of America, with substandard lawyers and huge miscarriages of justice? There are an estimated 10,000 cases of innocent people convicted of a felony there. Do we want that system? We need to think very carefully about price-competitive tendering.
I want to end briefly with the proposals that still stand on judicial review. This matter affects us all. If the state comes to take my kids away, I will seek judicial review. If the state wants to bulldoze my home to make way for High Speed 2, I will seek judicial review. If the state is unwilling to provide a care home for my mother, I will seek judicial review. Seeking to restrict judicial review is a travesty. It is a fundamental area that has largely been protected by law, and the inroads into it should be of great concern to every individual in this country. We really need to consider the matter again, given that the savings are so minuscule.
The caricature of fat-cat lawyers has been a disgrace—most lawyers are high street lawyers in places as different as Cornwall and Tottenham, and are on less than nurses and teachers. The clamour outside this building is not being made by just the legal profession. It is not about the lawyers, but about the many people who will see miscarriages of justice if the measure goes through.
I congratulate the hon. Member for Kingston upon Hull East (Karl Turner) on securing the debate. Many Members will remember that my hon. Friend the Member for Brent Central (Sarah Teather) led a well-attended debate on legal aid reform in June, which focused on civil legal aid and was helpful in moving the debate forward. Those of us with an even better memory might remember that two years ago I held a debate in this place on legal aid reform, before the previous legislation was passed.
We will not have time to touch on some things, such as the residency test, which I still consider pernicious, but I wish to talk through a whole range of issues. We accept, as I think everyone must, the principle of making savings. It has been accepted, I think, across the board. The Labour party’s manifesto at the last election stated:
“To help protect frontline services, we will find greater savings in legal aid”.
The question is how to do that.
As co-chair of the Liberal Democrat committee on home affairs, justice and equalities I wrote formally, with my colleagues, to the Lord Chancellor, and we received a detailed response to our suggestions. Sadly, I will not have time to go through all the suggestions or every aspect of the response, but I was pleased that he said:
“It is important to note that I have yet to make any final policy decisions.”
He is absolutely right not to have done so, and I am sure that he will listen carefully to the concerns we are all expressing. He also referred to a short period of further consultation, which I think we would all welcome.
The Lord Chancellor also talked about working closely with the Law Society. I was at the Law Society yesterday and had the opportunity to talk to it about some of the new proposals. I hope we will be able to come up with something that it will find not necessarily ideal but an acceptable way forward. As has already been said, the society’s suggestions for savings are definitely worth looking at; it has an improved model.
Our biggest concern as a committee was the lack of choice. When a scheme including that was tried in Scotland in 1998, under a different Government, there was substantial dissatisfaction with the representatives. It was clear that getting rid of choice did not work then, and I am pleased that the Lord Chancellor has taken the right decision to abandon that approach.
We must also look at quality. We saw the problems with the bulk contract awarded to Applied Language Solutions—now Capita—for interpreting services. It did not provide the quality that was needed, and we must avoid anything like the same problems again. The Lord Chancellor said that quality was
“critical to any future model of procurement”,
and that must be absolutely explicit. We do not want cut-price justice; we must ensure good quality, and that includes the smaller firms that many colleagues have spoken about. An idea that I have suggested is to encourage firms to work together in consortia rather than to have large bidders. There will be a firm operating in one town that can work happily as part of the same contract with one in a town somewhere else, in Cornwall, Cambridgeshire or wherever it might be. It does not make any sense that such firms should have to bid against each other. I hope that the Lord Chancellor has considered that and will respond in detail, with some helpful ways forward.
Judicial review is an important remedy. It is essential to have ways in which the state can be held to account at local government and national level. The proposals will not save a huge amount of money. I look forward to detailed suggestions about how to deal with cases of suggested misuse of the system without affecting the vast majority of cases that are important and which form a clear safeguard.
A particular concern has been put to me by several lawyers doing judicial review cases: because of the requirements for payment only when permission has been given, in a really strong case—for example, when a local authority that is failing to provide the care it should, gives up and settles at the point that there is a claim for judicial review, because it knows that it will lose—there may be no opportunity for the lawyer ever to be paid. I did not know until recently that a local authority will quite often settle, subject to not having to pay the fees. If the Government and the local authority will not pay the fees, the people with the strongest cases will never get paid. That is clearly not right and must be addressed in some way, because I am sure that it is not what the Government want to happen.
It is important to have a system of legal aid for prisoners. There may well be some trivial cases, but there are some incredibly serious ones. By all means, let them go through a complaints system that has to be used first, but if that is unsatisfactory, there must be a proper legal route and support for prisoners. The change will not save much money, so it should not be done purely for ideological reasons.
We can do much in relation to savings, as has been touched on. The use of restrained funds, with appropriate judicial control and capping, would be a fantastic way forward. It seems odd to pay for legal aid for people who have money, but not allow them to spend it. That would be one way to save a substantial amount of money. That can be used in some cases—the Home Office has access—so let us make sure that it is available here.
I support the idea of dealing with high cost fraud cases by having a form of compulsory directors insurance or some other scheme—I do not mind about the exact details—so that we are not paying in cases where there is another substantial source of money. That would enable great savings.
Lastly, there could be more efficiency savings in how courts operate. The system too often does not work: the late arrival of prisoners due to transport failures has caused delays for a third of defence solicitors; half of solicitors have been delayed because the prosecution did not follow disclosure rules; and there are unnecessary adjournments and listing failures. The court system does not operate as efficiently as possible, which costs us money in legal aid. We could provide better justice for less money.
I look forward to the Minister’s response and the Lord Chancellor’s final decisions. Yes, we can save money, but it must not be at the cost of justice.
I want to speak briefly about the impact of the proposals on prisoners. I raised that in the debate we were able to have before the summer, when the Minister did not have time to respond to all the questions asked. I will quickly highlight two or three points.
The representation of prisoners inside prisons on such matters as resettlement, categorisation and access to health care treatments and programmes is classed as a form of criminal legal aid, but in practice the skill set required and the nature of the lawyers carrying out that work makes it much more akin to civil public law. That deeply concerns me, because where there will still be an entitlement to access legal aid in prisons—that will be severely curtailed, in any event—it is likely that the national or international firms receiving many of the contracts will simply lack those skills. I ask the Minister to comment on how that expertise will be protected under the contracts.
I am particularly concerned about children and young offenders. Thankfully, the number of young people in custody is falling. I pay great tribute to the Youth Justice Board and the criminal justice system for that achievement. Young people, in particular, need good quality representation with a specialist advocate who is used to working with children and can recognise that they often arrive in prison in particularly difficult and chaotic personal circumstances. The advocate needs to have the time to build a relationship with the child or young person, and I am very concerned that we could lose that for young offenders. I wanted to ask the Minister about that in the debate earlier in the summer. I am keen to hear from him that special arrangements will be put in place to protect the interests of children and young offenders, and I really hope that he can say something reassuring.
As time is so limited, I will make my final point, which is a similar one about older prisoners and those who are disabled or very unwell. They form an increasing part of the prison population, as the Minister will know. I have a constituency case of a prisoner who is very unwell, has disabilities and, as a result, is unable to participate in the programmes that are part of his sentence plan. That means that he cannot be moved, on successful completion of his programme, to a lower-security prison. That is mad for the Prison Service, and it is bad and unfair for him. I again invite the Minister to say what special arrangements could be put in place for such particularly vulnerable and disadvantaged disabled and older prisoners.
It is a pleasure to serve under your chairmanship, as ever, Mr Davies. Having cut down my speech, I seem to have more minutes that I thought.
The debate over legal aid cuts is about more than just lawyers’ fees; it is about access to justice and to our legal system, without which equality before the law cannot function. Any cuts to legal aid must be targeted and thoroughly thought through, otherwise they will be fraught with risks to our legal system.
I understand that savings need to be found across the criminal justice system, and that legal aid should be reserved for those who need it most—those whose inability to pay legal fees threatens their access to justice. I feel strongly that steps should be taken to address the problems of very high cost cases, although I recognise that there are very few of them. I support efforts to root out inefficiency in the court system, as well as in prosecutions and the wider criminal justice system. I cannot, however, support cuts that might lead to an increased number of miscarriages of justice, which I fear the model will promote; it will also promote quantity over quality.
I question the first plank of the Government’s plan, which is to replace the current model and reduce the number of providers from 1,400 local providers to 400 larger ones. The Secretary of State has claimed that that will be a more efficient model of criminal legal aid procurement, but I do not follow that logic. For example, if someone has a solicitor from Berwick at the other end of my region, that will add at least an hour and a half to the time for them to get legal advice. The ideology that bigger means more efficient and that local means wasteful is part of a trend with this Government, but it is misguided.
Small and medium-sized legal aid firms will be obliterated by the changes; yet it is those very local firms that have the strong links with local courts, the police and the Crown Prosecution Service that larger companies simply do not have. Indeed, they often have relationships with repeat offenders, and sometimes a bit of common sense can be used in a situation, rather than letting it escalate into a massive legal case. With no pilot, no monitoring and no quality control, the lowest cost provider will win out, regardless of quality. Tendering time scales are so tight that many existing providers will not have sufficient time to restructure themselves into larger consortia.
On top of the previous 10% cuts to legal aid lawyers, the further proposals would cap bids at 17.5% below the current fee. The same fee will be paid regardless of the nature of the plea, as was mentioned by my hon. Friend the Member for Kingston upon Hull East (Karl Turner). The cuts will price firms out of the legal aid market, and may even increase pressure on people to plead guilty, so heightening the chances of miscarriages of justice. The reforms, particularly price-competitive tendering, threaten universal access to justice, and I therefore urge the Government to reconsider and amend the proposals.
It is a pleasure to be here under your chairmanship, Mr Davies. I thank my hon. Friend the Member for Kingston upon Hull East (Karl Turner) for his outstanding speech—a tour de force—demolishing the Government proposals. I also thank all hon. Members who have made very fine speeches on a range of issues—and, indeed, all 20 Members who have turned up, not one of whom have I heard give unqualified support to the Government proposals; there has been much for the Minister to think about and reply to. In its way, it is almost as impressive as the 31 Members who attended the Backbench Business Committee debate. There has also been a debate in the other place.
As my hon. Friend said, it remains a scandal that the Government have not provided any of their own time to debate these issues. We had a year going through the Legal Aid, Sentencing and Punishment of Offenders Bill—now an Act—but these measures are equally controversial and should have been the subject of primary legislation or, if not, certainly given ample Government time. We will no doubt return to the issues in other debates, but such debates all seem to be up to Back-Benchers and the Opposition to supply. I remind the Minister that the Government’s own lawyer said about the consultation document:
“We consider that the proposals in the consultation paper will undermine the accountability of public bodies to the detriment of society as a whole and the vulnerable in particular.”
More than 100,000 people have so far signed the petition opposing the proposals.
In the few moments that I have this morning, I want to look at where we are. A two-month consultation process earlier this year yielded 15,000 responses. We had the climbdown on choice, which was welcome as far as it went. The Joint Committee on Human Rights then intervened, asking the Government to pause, partly because some of the proposals might be unlawful. That was rejected out of hand by the Lord Chancellor, who said that he had to get on and make the cuts.
The areas of particular concern that the Joint Committee identified for review were the proposals on judicial review, residency and prisoner rights that, on the Government’s own estimation, make savings of no more than £6 million. The Government still cannot say—the Minister may want to correct me—what the savings will be from introducing the residency test. Some have pointed out the appalling consequences of such a test for the relatives abroad of those who have died in custody, the Gurkhas or other groups for whom justice should be done. The Government say that those proposals will save £6 million.
I hope the Minister has read the excellent paper by Dr Nick Armstrong at Matrix Chambers. It has been endorsed by the probation service, which says that, cumulatively, the proposals will cost about £30 million. The Lord Chancellor is simply wrong to say that it is on the grounds of cost that we must proceed in a hurry to make those fundamental constitutional changes.
We are told by the usual channels—a leak to the Law Society Gazette—that tomorrow there will be an oral statement and the publication of the Government’s response. I am not sure whether the Minister is in a position to confirm that today. He might as well, because we do not know whether the Lord Chancellor will even turn up to the statement tomorrow; someone might be rude to him on the way there or he might have to go and do a bit of canvassing in a marginal seat.
Let us hear what the Minister can tell us this morning. Will he answer my questions? First, given that choice is back in, what is the savings target now? Is it still £220 million or has it changed? What effect will the second consultation, which we are told will take place shortly, have on the timetable for implementation of the changes? What will the new tendering regime look like? Is the decline in the number of firms by 75%—1,600 to 400—still on the table?
Will anything be done on the issue of specialism? A lot has been said about that in relation to, say, black and minority ethnic firms and small rural firms, but these measures go across the board. One submission that has already been mentioned was from Thompsons Solicitors, which represents a lot of public sector workers such as paramedics, nurses and care workers, who are often accused of serious offences that have implications for not just their liberty but their continued career and employment. They need specialist representation, and it is very unlikely that they will obtain that under the proposals.
On average, what will be the costs of a bid? We are told in the consultation paper that they need to be digitally prepared and done in a certain way. The process will be extremely expensive for small firms, which may not be able to make the investment with any certainty that they will be successful at the end of the day. Will the Government’s proposals still discriminate against small, rural or specialist firms?
The Government have said nothing so far on the issue of the perverse incentives. It is nonsense to suggest that the same fee should be payable for an early plea, a cracked trial or a short trial of up to three days. Given his background, the Minister should know that and that it must be addressed at some stage. Retaining choice is a step forward, but it is not the magic bullet that will sort out all the problems.
The Government have been asked to pause. They are bringing forward a second consultation, but they have not addressed the main reason for the pause. They have not addressed the issue of legality that the Joint Committee has raised, and the timetable thus far has shown the confusion and inadequacy of the proposals.
The other matter I want to raise with the Minister is the cumulative effect that this avalanche of proposals is having on the criminal justice system as a whole. We saw in the research from the shadow Home Secretary this morning that the number of domestic violence cases being handed by the police to the Crown Prosecution Service has fallen by 13%—primarily due, it appears, to a lack of police numbers and time.
Reference has been made to the crisis in the CPS. Again, a leading defence firm that responded to the consultation estimated that in 85% of cases, disclosure is not supplied timeously by the CPS. The consequence is more applications in court and more wasted costs orders against the CPS.
The court amalgamations—we are told that there may be more closures coming forward—are also causing great problems of management for magistrates, court staff and the CPS. The continuing interpreters fiasco is not only a problem in itself but an indication of where we might be in relation to the proposals. Having a system in which the lowest common denominator drives down prices to the lowest possible level means that we just cannot get the people to do the work. There will be solicitors who either cannot or will not work for those rates, because the costs are just too low.
We have not seen the full impact of the cuts enshrined in the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which were introduced in April. We have not seen the effect of other savings such as the defence costs orders, which were introduced at the end of last year. They effectively mean that if a person is paying privately for their defence and is acquitted, they may now recover only 25% of their actual costs.
There seems to be an issue of justice there; people should be put back into the position where they should have been had they not been falsely accused of offences. None the less, there will be a saving there. Will the Minister say what that will be? Equally, what additional costs will we increasingly see to litigants in person, and what are the additional costs that will come about because of some of the so-called cuts that Dr Armstrong has identified in his papers?
The Government are hardwiring inefficiency and injustice into the criminal justice system. There are inefficiencies in the system and they should be taken out. Several hon. Members have alluded to possible ways of making savings in a way that would improve the efficiency of the courts and the administration of justice. The Government’s proposals offer the worst of both worlds. They are increasing inefficiency, making things more uncertain and putting delay into the system. At the same time, they are unlikely to achieve many of the savings that the Government have outlined.
On the way to the Chamber, I was reading an article by Stephen Sedley, one of our most eminent judges, in the London Review of Books. He says:
“The decision in 2012 to put a political enforcer, Chris Grayling, in charge of the legal system carried a calculated message: the rule of law was from now on, like everything else, going to be negotiable.”
He adds that
“departmental housekeeping is being used not to rebalance but to unbalance a central element of the constitution.”
We have to make cuts in legal aid and elsewhere in the public finances. However, putting in jeopardy the justice system of which this country is so proud and on which so many people rely is not the way to do it.
It is a great pleasure to serve under your chairmanship, Mr Davies. I begin by registering my interest. I, like the hon. Member for Kingston upon Hull East (Karl Turner), practised in the criminal courts for some time, and I, like him, was very much a thin cat. I recognise and agree with the comments that he has made about the quality of advocates who practise in our criminal courts. I also agree, of course, with my hon. and learned Friend the Member for Harborough (Sir Edward Garnier) on that.
I congratulate the hon. Member for Kingston upon Hull East on securing the debate and thank all Members who have spoken or intervened in it. The hon. Gentleman knows that this is a debate and a discussion that has been ongoing for a considerable time and that the Government have listened to a variety of different contributions. He knows that, for example, Ministry of Justice officials have travelled across England and Wales and met approximately 2,500 practitioners, members of the judiciary and members of the public.
We have heard and considered views expressed by the hon. Members who participated in a previous Westminster Hall debate on these proposals, secured by my hon. Friend the Member for Ceredigion (Mr Williams), and of course the views expressed in the Backbench Business Committee debate, which has also been referred to today and which I had the pleasure of responding to. There have also been meetings of the Justice Committee; a moment or so ago, we heard from my hon. Friend the Member for Winchester (Steve Brine) about those. In addition, there have been meetings of the all-party group on legal aid.
Furthermore, Ministers have met a variety of different stakeholders. We have received just under 16,000 responses to the consultation, which have all been considered in order to inform the development of the policy. We have also had a variety of letters from the public and from parliamentarians, a multiplicity of parliamentary questions and debates in the other place, which Lord McNally has responded to. Of course, there is also what has transpired in the media. So there has been a good deal of engagement and that process will continue. I certainly welcome the contributions that have been made to it today.
Let me be clear on one or two points in general. I think that the first point is recognised; I welcome the fact that the hon. Member for Hammersmith (Mr Slaughter) referred to it late on in his remarks. It is that we have to make savings in the legal aid budget. There is simply no getting away from that; in fact, I think that it is also well understood within the legal profession. So that point is not in dispute; it is a question of how we make those savings.
In that process, it is important that we listen to all the people I have mentioned, and to those in the legal profession. The hon. Member for Kingston upon Hull East asked us to sit down with those in the legal profession and listen to what they have to say to us. Well, we have done that and I think that he will see the fruits of that when we respond to the consultation, which we will do as soon as possible.
Let me try to deal with some of the other points that the hon. Gentleman made. As he will understand, I will not be able to respond to everything he said in the time that I have—indeed, I will not be able to respond to everything that other Members have said in the debate. However, I will do my best to pick out some of the things that he referred to.
The hon. Gentleman and others referred to inefficiencies in the legal system and in the courts process that need attention. They are all absolutely right about that. The hon. Member for Hackney South and Shoreditch (Meg Hillier), my hon. Friend the Member for Cambridge (Dr Huppert) and the hon. Member for Sunderland Central (Julie Elliott) all referred to such inefficiencies, as did the hon. Gentleman. Of course, it is an area that we must look at, but it will not exclude the need to find savings within the legal aid budget.
The right hon. Member for Tottenham (Mr Lammy) and others said that we should look at the very high-cost cases, and they are absolutely right. We are looking at the issue; our proposals include a 30% reduction in the fees paid for cases of that nature. Again, however, dealing with those cases on their own will not do the necessary job of delivering savings.
Many Members who have spoken in this debate have been concerned about quality, and of course they are right to be. No part of the proposals that we are making suggest that quality is not important in the provision of legal aid services, and any system that we institute will require those providing those services to maintain standards of quality. In addition, those standards must be properly monitored.
It is important when we talk about eligibility for legal aid that we are clear about what these proposals actually are. It is not sensible to refight all the battles over the Legal Aid, Sentencing and Punishment of Offenders Act 2012; we certainly do not have the time to do so and you, Mr Davies, would not let me. However, in relation to the particular proposals about criminal legal aid, the argument over eligibility is limited to whether it is right to set an eligibility threshold at a disposable income of £37,500 a year. The only people who will not have access to legal aid for criminal cases will be those who have a disposable income of that level or above. That is a generous level, and I think that the majority of our constituents would consider it right that people with substantial wealth should pay up front for their legal fees, which of course will be refunded to them if they are, in the end, acquitted.
Does that not counter a tradition in British law that someone is innocent until they are proven guilty? The fact that the Minister is suggesting that somebody who is yet to be found guilty will not have access to the law is an absolute affront to the criminal justice system in this country.
I am afraid that I do not agree with the hon. Lady, because we are not talking about changing that presumption of innocence. What we are saying is that people with the means to pay—sometimes, very substantial means to pay—should not have access to taxpayer-funded subsidy for their legal fees if they are, in the end, found guilty. If they are found innocent in the end, the amount that they have paid for their legal fees will be considered for refund. That is important, but it is not about a presumption of innocence, which remains intact, as—of course—it should.
I will say something about prison law, because that is an issue that many people have raised. The hon. Member for Stretford and Urmston (Kate Green) asked some sensible and detailed questions about it. If she will forgive me, I must say that in the five minutes I have left to me I will not have the opportunity to respond to those questions, but I will write to her about the specific points that she has made.
However, my hon. and learned Friend the Member for Harborough is entirely right that the nature of the case that is being considered and that may be litigated is crucial. It is not the case that every instance of grievance raised by a prisoner should be litigated through the courts. Also, the changes that we are proposing say that it is important that when a prisoner’s liberty or the length of their sentence are considered, they should still have access to legal aid. However, there are a whole range of other complaints that can be more properly and more effectively dealt with through other methods, rather than involving the courts and costly lawyers.
I will also say something about the residence test, because the right hon. Member for Tottenham and others expressed concern about it. Again, I think that in principle it is right that those who have a strong connection with the United Kingdom should have access to taxpayer-funded legal aid, and that those who do not have a strong connection to the United Kingdom should not have access to it. There are exceptions to that principle, which we have made clear. For example, these changes will not apply to refugees or asylum seekers. In general, however, applying that principle is the right thing to do, and I think that it will have the support of the public.
Judicial review has also been referred to. We absolutely support the principle of judicial review. Those who have spoken up in favour of it were right to do so; it is a crucial tenet of our system that the public should be able to hold Government to account through the judicial review system. However, it is equally important that that system should not be abused, and we simply have to face up to the fact that there has been a huge increase in the number of cases pursued through the judicial review process that are not found to have merit.
It is important that the crucial pre-court phase does not cover the initial preparatory work on a judicial review case. In that phase, lawyers should think carefully about whether a case has merit, and they should have something at stake when they do so. That is the basis for the proposals that we are making.
My hon. Friend makes an interesting point in relation to settlement. Again, if he will forgive me for now, I will write to him about it, because it is not something that I can go into in the two minutes I have left. Nevertheless, he is right to make the point, and we will certainly explore it—
I hope that the hon. Gentleman will forgive me, but I would rather not give way to him; I want to deal with the point about price-competitive tendering that he referred to. Obviously, it is a crucial question. Should we deal with legal aid reform in that way? I am sure he is aware that as recently as last year, the hon. Member for Hammersmith was still saying that there was no reason not to do price-competitive tendering in legal aid, and that he said that he had seen nothing in the past two years to say why we should not press ahead with it. The hon. Gentleman may want to speak to the hon. Member for Hammersmith about whether price-competitive tendering is a deeply flawed concept that could never work.
However, the hon. Member for Kingston upon Hull East will also know that we are considering a range of submissions—we will also consider his submission—and that the Government will respond to the consultation that we have held. In addition, he knows that there will be a further period of consultation on some of the proposals. I hope that he will be a little more patient and see what those responses entail, because we will want to consider carefully a number of things and to decide what our response to them should be. He will forgive me if I cannot give him a sneak preview today, but he will not have to be patient for very much longer to see how we intend to respond.
There are crucial points to be considered—they have been raised again in this debate today—about the nature of rural areas and the advice to be provided to people there. As I say, hon. Friends and hon. Members have made those points, and they have been listened to and understood. Similarly, the point was made about Welsh language requirements. Any contracts that are issued will include a requirement that Welsh language services be provided. That is the law and that is as it should be.
Again, I stress that this process is an opportunity for people to contribute their views about what we have set out. With our legal aid reforms, the intention is to do two things: first, to address the real financial challenge that we face; and secondly, to reinforce public confidence in what is a very important system of providing taxpayer-funded subsidy to those who need it in our courts. Our proposals have those twin objectives. We will listen to the submissions that have been made to us, but in the end those objectives are what we seek to achieve.
International Development (Scotland’s Role)
It is a pleasure to serve under your chairmanship, Mr Davies. I am delighted to have been able to secure this important and topical debate, given the continuing humanitarian crisis in places such as Syria, Palestine, Burma and elsewhere, and what that means in the context of the upcoming referendum in Scotland. I am also delighted to have so many hon. Members from Scotland here, and I hope that they will take the opportunity to intervene during the debate.
It is vital that, during these difficult economic times, we recognise the fantastic work that the UK has done and continues to do in promoting and supporting international development. We are all rightly proud of that work. Let us not forget that the Department for International Development does exactly what its title suggests. Yes, one of its roles is to respond quickly to crises—to feed, to clothe and to provide emergency health supplies—but, crucially, it is designed to help and support developing countries to lift themselves out of poverty, grow their economies and create prosperity and opportunity for their own citizens. That is why DFID is a force for good in the world.
I have more than my fair share of criticism of the Government, be it on the economy or on welfare, but we must all recognise and pay tribute to the efforts of successive Secretaries of State to protect DFID’s budget. It is the perfect example of how we can maximise our impact by pooling and sharing our resources. It demonstrates the positive and powerful voice for change of the people of the United Kingdom—be they from Scotland, England, Wales or Northern Ireland—and the powerful voice that they have through their seat at the top table.
Who can doubt the UK’s positive influence on international development? Not only do we play our part, but we lead the way shaping global priorities, fighting poverty and creating opportunity. That is one example, among many, of how our collective voice is stronger—stronger in the UN, stronger in the EU, stronger in the G8 and stronger in the G20. Let us not forget that it was a Scot who, in 2005 as Chancellor of the Exchequer, got the G7 group of leading economies to agree to cancel up to 100% of the debt that was owed to them by developing countries. As a result, the debts of 18 of the world’s poorest countries to the World Bank and the International Monetary Fund were wiped out as part of a $55 billion package.
I congratulate my hon. Friend on securing this important debate, and it is indeed a pleasure to serve under your chairmanship, Mr Davies. Does my hon. Friend agree that Scotland, if it were separate from the UK, would lose out on the UK’s experience and influence in the world to deliver such projects?
I am coming to that point in a second. Everywhere I have travelled to while serving on the Select Committee on International Development—whether it was Palestine, Rwanda or the Democratic Republic of the Congo—I have seen Scots who work for DFID leading teams and leading the difference that the UK makes to some of the hardest-hit places around the world.
The same Scot who was Chancellor of the Exchequer in 2005 later, as Prime Minister, put tax transparency on the agenda for the G20 in 2009. Many hon. Members will have received correspondence from constituents asking them to support the Enough Food for Everyone IF campaign, which calls on leaders of the G8 countries to take concerted action against global hunger. I highlight that campaign because it recognises the instincts of internationalism shared by people from all parts of the UK, who want to make a difference based not on nationality but on need.
As part of the UK, we play a leading role on the board of the International Monetary Fund and the World Bank. The UK has far greater combined influence when we speak with one voice than we could ever hope to achieve by speaking in isolation. It is not merely our position of influence that is a force for good. The combined budget of DFID this year is £10.7 billion—more if other departmental spend is included—which is used to deliver real change, lift people out of poverty and intervene to save lives.
Scotland is not simply part of the delivery but at the heart of it. DFID’s historic Scottish headquarters in East Kilbride, in the constituency of my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann), has had a 30-year presence and employs more than 500 people to fight global poverty. The East Kilbride headquarters has developed from a transactional and corporate support function into a core part of the Department with responsibility for bilateral and multilateral projects. I take this opportunity to pay tribute to the staff in East Kilbride, many of whom I have had the pleasure of meeting when I have visited, for the tremendous work they do.
As we have found in debates about defence, or about civil service jobs in Her Majesty’s Revenue and Customs, there would be no simple transfer of Scottish-based jobs or services to a Scottish Government if the country voted for independence. Such jobs serve the whole DFID operation, which would have to be disentangled. It is inconceivable that a continuing UK DFID would locate a third of its jobs in what would become another country. The inescapable fact is that those jobs are at risk. For the Scottish National party to suggest anything else would be merely an assertion not backed up by reality.
The hon. Gentleman wants to spread scare stories yet again about what would happen in an independent Scotland. He may have noticed that the Scottish Government have operated a policy of no compulsory redundancies in the parts of the public sector for which they are responsible. That policy has sadly not been replicated in the rest of the UK. Would the Labour party support a policy of no compulsory redundancies for Scottish public sector workers?
In case you do not follow day-to-day Scottish politics, Mr Davies, you just heard the same old line that we get continually from the SNP about scaremongering. For members of the SNP, the definition of scaremongering is asking a question to which they do not have the answer. They do not know what will happen to the DFID jobs that I have mentioned, which is why the hon. Lady did not want to raise that point. Are we likely to have large bases of civil service jobs in France, Spain or Portugal, for example? Is the First Minister likely to locate a third of the jobs in the new Scottish tax service, which he launched yesterday, in Norway? No, he is not. He will base them in his own country, and the same principle applies to jobs in DFID.
The contradiction in the hon. Gentleman’s argument is that he has highlighted the positive role played by Scots all over the world, especially in international development, but suggested that in Scotland we would suddenly forget all that if we opted to join the international community as an independent country. Of course we would not. We would hope to work with DFID and with other countries to ensure that good development work continued.
I agree with that point, and I will address it in a moment. The hon. Lady fails to understand that I am talking about 500 staff in Scotland who control a budget of £10.7 billion, which services the entire UK DFID programme, not Scotland’s share of it. It is not possible to escape from that dichotomy as the hon. Lady is, sadly, trying to do.
One reason why I am so proud of my Scottish heritage is the overwhelming sense of compassion that Scots have for those who are less fortunate than ourselves and the incredible passion we have for making the world a better place for everyone. According to a recent study by New Philanthropy Capital, people in Scotland give more to charity than those in any other part of the UK. That is not simply a Scottish value; it is a Labour value. By contrast, the SNP likes to paint a picture of independence in which, free from the shackles of the UK, Scotland can pursue its natural preference for progressive politics. Scotland does not need to look to an independent future to achieve a progressive contribution to international development. We can be proud of our progressive record to date as part of the UK.
Before we all get too self-congratulatory, does the hon. Gentleman share my disappointment that the previous Labour Government failed to meet their 0.7% target? They have been shamed by the Tories, who met that target. All the missing aid over those years would have gone a long way to help people in developing countries by improving health, education and water and things that really make a difference.
I seem to have pre-empted the hon. Lady’s intervention, because I was just about to say that Labour MPs from Scotland helped to secure majority Labour Governments in the UK that were committed to pushing international development high up the political agenda. Labour appointed the first Minister for overseas development. Labour established DFID with a Secretary of State in the Cabinet. Labour doubled and then trebled international aid. Labour secured debt relief. Labour set in place the 0.7% target that has been hit in 2013. We should be proud of that record, instead of trying to talk it down.
Scots can be immensely proud of their contribution to that record; millions more children are in school, mothers are giving birth safely and AIDS sufferers have access to life-saving medicines because of the decisions made by successive Labour Governments that Scots helped to elect. In Budget after Budget, and at international summit after international summit, a Labour Government fought on the side of the poor and the marginalised, transforming their lives for better and establishing Britain as a leading force for social justice in the world.
The UK has joined the select group of only five countries on the OECD’s development assistance committee that have reached the target of providing 0.7% of their national income in aid. It is worth noting that many countries the SNP holds out as examples of the benefits that accrue from independence are well below that target.
I care about reducing poverty and inequality not only in Scotland, but in other parts of the UK and across the world. Poverty has no respect for borders; I have yet to see an inequality that stops at a line on a map. That is why I recognise, as do others on the Labour Benches and, I am sure, right across the House, that pooling and sharing our resources across the UK is the best way of making a difference in the UK and across the world.
For me and the majority of Scots, our beliefs and compassion extend not just to people living within the borders of Scotland, but to people right across the globe. Members will be aware that a Scottish engineer, William Burton, developed one of the first drinking water systems in Japan. We all know the story of David Livingstone and about the close links that remain with Malawi. Those are just two examples, but fine ones, of how Scots have a long and proud history of making a difference in the world.
Scottish organisations are still making a difference today. DFID works with a number of leading Scottish charities to deliver its aid and humanitarian support programmes. It recently announced that Mercy Corps, which is headquartered in Scotland, and which is one of the top organisations specialising in disaster response, has been selected for a new UK rapid-response network. Another Scottish charity, the Global Alliance for Livestock Veterinary Medicines, recently received funding of more than £31.2 million from DFID and the Bill & Melinda Gates Foundation. Those are just two examples of the many Scottish organisations that work in partnership with DFID and deliver change around the world.
As a former member of the International Development Committee, I have witnessed at first hand some of the fantastic work DFID has done, and is doing, in places such as the Democratic Republic of the Congo, Burundi and Rwanda. In 1998, DFID gave Rwanda £20 million to help improve the Rwandan revenue authority; on average, Rwanda now collects that amount once every four weeks. Currently, DFID is providing £348 million in response to the humanitarian crisis in Syria—a fact we should all welcome.
The hon. Member for Banff and Buchan (Dr Whiteford) mentioned the Scottish Government’s commitment, and it is commendable that they have committed £9 million of their budget to international assistance. However, as part of the UK, Scotland, based on its population share—if that is the calculation we choose to use—contributes about £900 million. We have influence over, and control of, a budget of more than £10 billion, alongside a seat at the top table at the IMF and World Bank. There can be few more bizarre arguments in favour of independence than the one that says, “Let’s turn our backs on this. Let’s walk away from a budget of billions and a Department that is a force for good across the globe, with the second largest aid budget in the world.”
I have no doubt an independent Scotland would want to ensure that it maintained Scotland’s proud record of providing international development support; of course it would—the people of Scotland would insist on it. However, it is not clear how that would happen, because on this issue, as on other issues, the SNP does not have a plan. All DFID’s good work is at risk. The contribution Scots make to meeting our global obligations would be cast aside at the altar of independence.
In a recent article for The Herald newspaper, the hon. Member for Moray (Angus Robertson) said:
“Independence offers us the opportunity to make Scotland’s place in the world one that meets the aspirations of our people.”
Well, I believe the aspirations of Scots go well beyond the nationalists’ blinkered, narrow approach. Are we really saying that we could have the same impact and the same budget and that we would require the same number of jobs with a fraction of the budget? Are we really saying that we would have the same influence across the world if we were standing in isolation, instead of sitting at the top table when discussions are had and decisions are made? Only the nationalists could believe so.
What would happen to the DFID jobs in East Kilbride in a separate Scotland? What would happen to Scottish charities such as Mercy Corps or GALVmed, which work with DFID to deliver its aid and humanitarian support programmes? Would staff working in East Kilbride have to relocate, or would they be made redundant? How much would it cost the Scottish Government to set up their own dedicated Department for International Development, or how much would Scottish charities in receipt of DFID funding lose? Crucially, how much would an independent Scotland spend on overseas development? Surely, after having thought about independence for so many years—for all its existence—the SNP would have answers to such basic questions. The sad reality is that, before, the answer to every problem was independence; now that the issue is independence, however, the nationalists simply have no answers.
Given that the Scottish Government’s international development fund is so small, by what amount, if any, would it be increased? What would be the implications for people in extreme poverty and for developing countries? Which DFID programmes would continue to receive funding in a separate Scotland? Which would have their funding reduced or cut altogether? Those questions cannot just be ignored—they must be answered.
Those are just some of the questions the International Development Committee hopes to find answers to in its inquiry about the implications for development following possible Scottish independence. I welcome that inquiry, and I urge all colleagues across the House—from all political parties and all parts of the UK—to engage with the debate.
Those are important questions for the Scots working for DFID in East Kilbride. They are important questions for the Scottish charities working with DFID or in receipt of DFID funding. Most of all, however, they are important questions for those of us who abhor poverty and the wasting of life chances, wherever they occur, and who recognise that our responsibility is not just to those in need in our own towns and villages, but to everyone in our global village.
I am grateful to the hon. Member for Glasgow Central (Anas Sarwar) for securing this debate. I very much appreciate his kind and appreciative comments about DFID and, more importantly, the staff who work so hard.
As we talk today, the International Development Committee is, as the hon. Gentleman said, holding an inquiry into the implications for development in the event of Scotland becoming an independent country. The Committee has yet to present its analysis and report, so, out of respect for the processes of the House, I will not anticipate the outcome of the inquiry.
I welcome the chance, however, to set out the Government’s plans for the UK’s international development programme and to consider the role Scotland plays in it. Let me be clear at the outset: the UK Government want Scotland to remain an integral part of the UK, because that is what is best for all of us. Scotland benefits from being part of the UK, and the UK benefits from having Scotland in the UK. The UK Government are hopeful that, when people in Scotland come to make their choice, they will choose to remain part of the UK.
On the evidence and analysis available so far, I am very clear that the UK, with Scotland in it, can continue to have a significant international development impact, providing excellent value for money to taxpayers at home and making a significant difference to the poorest and most vulnerable people across the world. Scottish taxpayers, like all UK taxpayers, can be proud of the contribution they make to the UK’s official development assistance—otherwise known as ODA—and I see no case for changing that.
The UK is one of the world’s leaders in the fight against poverty. On provisional data, the UK provided £8.6 billion of ODA in 2012. That places us second only to the USA, just ahead of Germany and then France. This year we will do even better, as the first G8 country to achieve the global 0.7% target. That is a tremendous achievement, which brings with it great responsibility for DFID.
The size and reach of DFID’s programme enable UK aid to have a huge impact. We are proud of the results we have delivered towards the millennium development goals. To give just a few examples, since 2010, UK aid has supported 5.9 million children—half of them girls—to go to primary school; given 19.6 million people access to clean water and sanitation; prevented 12.9 million children and pregnant women from going hungry; and enabled more than 30 million men and women to work their way out of poverty through access to financial services. I am sure we can agree that those figures are very impressive indeed.
DFID delivers major results through its significant funding of multilateral organisations, which helps draw in other donors who add their contributions to those effective multilateral organisations. In 2012, for example, the multilaterals supported by DFID gave food assistance to more than 97 million people and immunised 46 million children against preventable diseases. The UK, together, has a significant impact on the lives of the poor as a responsible 0.7% donor. We can always do better, but the Government believe that we are stronger and more influential when we work together.
I will now analyse why size and reputation help the UK make a bigger impact. First, DFID’s size and global reputation create opportunities to shape international efforts in ways that are consistent with UK values. The Prime Minister’s pivotal role in shaping the framework that follows the MDGs and the co-chairing of the Global Partnership for Effective Development Co-operation by the Secretary of State for International Development are examples that ultimately aim to give global development more impact per £1 spent. That is about being clear on what we are trying to achieve, measuring and reporting on it and working with the right partners. The UK as a whole, together, is leading the way on that.
Alongside that, we have real influence within the multilateral system. The World Bank’s International Development Association, a major provider of interest-free loans to the world’s poorest countries, is an effective example. UK aid typically accounts for between 10% and 14% of donor contributions, giving us a powerful voice in fund governance structures. IDA was assessed in the groundbreaking DFID multilateral aid review as very good value for money. It is poverty focused, provides quality technical expertise and has a huge global reach. Because of DFID’s size and reputation—something that would be reduced if we were fragmented—the World Bank works closely with us to keep improving the impact on matters that reflect UK values, such as addressing the needs of girls and women and delivering better in fragile states.
I will come back to the Minister’s question in a moment.
Is the Minister really saying that an independent English DFID would lose its status in the world? That seems a preposterous assertion from a Conservative Minister.
The SNP has pledged that there will be no compulsory redundancies in public sector jobs for which it is currently responsible. Obviously, if Scotland were to take on new responsibilities, it would need to resource those functions. Scottish people of all parties are committed to meeting their obligation to provide 0.7% of gross national income in ODA, but if we were to have an international development budget of some £900 million, we would surely need a civil service to administer that.
I will leave it to the Select Committee to analyse that in greater detail, but I point out, more generally, that the hon. Member for Banff and Buchan (Dr Whiteford) has been unable to give a clear answer, despite the illusion and impression that she is trying to convey. I ask her once again: does she, or does she not, guarantee the jobs of those in Abercrombie house should there be independence for Scotland?
The Scottish Government have made it very clear that they will need civil servants to do such jobs post-independence. Look at our record to date: we have secured people’s jobs through the toughest recession and the UK Government’s shameless austerity measures. Why would that change?
That answer shows that the hon. Lady’s so-called public sector jobs guarantee amounts to nothing and is a political deceit.
The UK’s global reach matters. We have a strong, professional DFID presence in 28 focus countries, and we have widely respected multi-million pound programmes, many of which are worth between £50 million and £250 million a year. Partner Governments seek advice from DFID, which translates into better development.
None of that would be possible without our staff. DFID’s size and ambition allows us to attract and retain the best talent. Front-line staff have technical and specialist skills, such as in economics, health, governance, social development and accountancy. Our staff are able to build fulfilling careers in an organisation with a wide scope.
So what should Scotland’s role be in the UK’s international development effort? Scotland already makes a significant contribution to UK international development, and the contribution Scottish taxpayers make to the UK’s total international development budget is important. DFID has a sizeable headquarters in Abercrombie house in East Kilbride. More than 600 staff in Scotland form an intrinsic part of the team that delivers the UK’s entire international development impact. Responsibilities at Abercrombie house range from professional oversight of DFID’s finance, procurement, human resources and IT functions to the development of policy and research agendas. Staff working equally from East Kilbride and London contribute to the coalition Government’s international development priorities, such as the Prime Minister’s push to end global hunger and malnutrition. The Department delivers excellent value for money for all UK taxpayers and provides significant high quality job opportunities in Scotland.
The Scottish Government have their own small £9 million programme, which is funded from the devolved budget and contributes to the UK’s official development assistance. Working relations between DFID and the Scottish Government are strong and there is regular contact and co-operation.
The real question is whether it would make development sense for an independent Scotland to start afresh and to develop the capacity to manage its own programme, aiming for 0.7%, or even more, of its own gross national income. It is not for us to speculate on how an independent Scottish development agency would or could operate; it is for those advocating independence to make the case that independence would have a greater overall impact on international development.
I am just finishing.
We believe that the UK can have the greatest impact in the world if everyone works together as part of a UK that includes a vibrant Scotland. I am very pleased, and I warmly welcome the fact, that the hon. Member for Glasgow Central has so eloquently put that view.
Manufacturing and SMEs
[Dr William McCrea in the Chair]
It is a pleasure to serve under your chairmanship, Dr McCrea. I hope this will be a worthwhile and interesting debate.
Today we could discuss Government support for small and medium-sized enterprises across all sectors: services, construction and, of course, manufacturing. Indeed, all sectors and industries will have many similar issues and problems—lending, taxation and employment law, to name but a few. There are certain issues, however, on which there are significant differences between the sectors. Indeed, even within sectors there may be different needs, requirements and problems that warrant different solutions. The reality is that it would be easy to have a debate on each sector, and probably many debates within each sector.
Today, however, I will concentrate on the manufacturing sector, the matters that apply to that sector and what the Government can do to support manufacturing, to enable the sector to grow and to ensure that it makes a larger contribution both to local economies across the country and to the national economy. I will address the help that the Government can give to all manufacturing businesses, including larger businesses that seek to develop new products or deal with EU regulation.
I obviously welcome Government support, which is very important, but companies can often help each other. Will the hon. Gentleman say a little about the supply chain, which is so vital to many small and medium-sized enterprises, particularly in Cumbria?
I completely agree. Companies can help each other, particularly within the supply chain, but today’s debate is primarily about the Government’s role in helping to support businesses, both large and small.
The Government can help smaller enterprises that are seeking to expand and start-ups that need very basic advice on how to get going, and they must recognise that businesses of all sizes have their own individual roles to play. The Government have stated that they want to rebalance the economy—a laudable aim that is clearly supported across the House. Arguably, the Government want to go further and see growth in the country within an economy that is far more structurally balanced between the various sectors and which has a larger manufacturing sector, in particular.
Not only the economy but the country needs to be rebalanced. The country needs to move away from an over-reliance on a dominant financial services sector that is so overwhelmingly run from and centred on London. London has been, and is, a huge success, but there is a danger that it adversely affects the rest of the country. London dominates politics, the media, finance and business. It is almost overpowering, which can cause policy makers to forget or overlook the many other important contributors to our future prosperity.
I congratulate the hon. Gentleman on securing this enormously important debate, which is of concern to us all. Does he agree that, as part of the culture shift that he rightly says is necessary, more needs to be done in schools and colleges and through the curriculum to encourage able young people—sometimes those of a more practical, rather than academic, bent—to have high self-esteem, to set their targets high and to realise that there are good jobs out there for people who make things?
I do not disagree. The improvement in the view of apprenticeships is helping enormously, because people now view apprenticeships as a serious career choice, rather than people always going off to university.
We need to move to a more balanced economy so that we become a balanced country in which manufacturing has a central role. In my own county of Cumbria and constituency of Carlisle, we still have a very strong manufacturing base. There is defence, power, engineering and food, and in Carlisle itself 20% of the local economy is still based on manufacturing.
In my constituency, we have large players such as Pirelli, Nestlé and McVitie’s, and there are also smaller players that are significant locally such as Carr’s Milling Industries, Clark Door and Mallinson Fabrications. For both local and national reasons, I am delighted that the role of manufacturing is back on the Government’s agenda. A huge amount of credit must be given to the Government and to Parliament for achieving that change.
We all acknowledge that there has been a steep decline in manufacturing over many years, which has created a number of problems. Obviously, there is the balance of payments issue, because we are simply not paying our way in the world. The decline has also created a skills problem. Many skills have gone overseas, with some potentially lost for ever. We have an ageing work force in some sectors, with the food and drink sector being an obvious example of where many thousands of people need to be recruited over the next few years just to stand still.
The decline in manufacturing has created a problem for the long-term success of our economy. Thankfully, there is growing recognition that we, as a nation, need to produce goods, as well as to provide services. Growth in our economy can only be helped by the expansion of industrial production—the rise of the makers once more. Such a revival would immediately help to correct our trade imbalance, and more tax would be paid, so the Government could start to balance their books.
Yes, I agree. Ultimately, we want to see all sectors of the economy grow, and they are all interlinked. Clearly, if manufacturing improves, the services side will also benefit. The reverse does not always work in quite the same way; there is a greater benefit for services when manufacturing succeeds.
As for my personal involvement, I have to confess that in my previous life I had little knowledge of or involvement with manufacturing. My constituency has a significant number of employers in the manufacturing sector that make a major contribution to the local, national and international economies. I recognise the importance of those employers, and I want to support them wherever possible. That is why I became heavily involved with the all-party group on food and drink manufacturing, which is well supported across the House and which I now chair, and with the associated all-party group on manufacturing—I am delighted to see leading members of that group here this afternoon. There is much overlap between those all-party groups and others, and it is useful to have such differentiation because it demonstrates that although there are many similarities between manufacturers, there are also many important differences.
I also congratulate the hon. Gentleman on securing this debate. He will already have realised that there is much cross-party agreement on the importance of manufacturing. I have seen that importance in the past fortnight, when I visited Burgon & Ball in my constituency. The company has been in business for 280 years, and with the help of the Royal Bank of Scotland and the growth fund I hope it will be here for another 280 years.
Will the hon. Gentleman confirm that part of the difficulty for rebalancing and manufacturing is the continuing culture of our banking system? To be fair, the Department for Business, Innovation and Skills endeavours to do something about the banking system, which focuses on short-term returns from manufacturing and business, rather than on long-term investment. We have turned the original intention of the banking system on its head. That intention, which is still reflected in the German model, is that banks are there to serve manufacturing and service industry development, rather than the other way around.
The right hon. Gentleman makes a valid point. I assumed that many people would raise the question of lending, so I have specifically avoided it, but it is good that he has raised the issue.
My simple conclusion is that, if our economy is to rebalance and grow, and if our nation is to prosper, manufacturing must be central to that change.
I thank my hon. Friend for securing this debate. Manufacturing is critical to the economy, and he is making a powerful case.
Interestingly, the statistics show that not only is manufacturing vital to our economy but average weekly earnings in manufacturing are £557, which is second behind only finance and business services. Does my hon. Friend agree that that is good not only for the economy but for those who are fortunate enough to work in that important sector?
My hon. Friend makes a valid point. People sometimes forget that in manufacturing there are many highly paid jobs—it is not a low-wage sector, as many think.
There are already signs that our economy is beginning to recover and that manufacturing is playing its part. In the food and drinks industry, exports are up to more than £12 billion; the manufacture of cars is now at its highest level since the 1970s; we are still a world player in pharmaceuticals; we are a leading nation in aviation; and this Monday there was the announcement of a significant rise in manufacturing activity—all welcome signs. It is easy, however, for parliamentarians and Ministers to get caught up in the larger, more glamorous companies with the sexier products such as cars and planes, rather than with the more mundane products, such as storage doors or food, even though those are equally important and often produced by SMEs.
In reality, SMEs are central to the future success of manufacturing, whether as part of a supply chain or as a stand-alone entity with a local or national market share, whether innovating and expanding alone or as part of the next national or international conglomerate. The purpose of today’s debate is to examine what Government can do to support, encourage and enhance the SME manufacturing sector. Government support, assistance and encouragement are critical to the success of our manufacturing sector. The debate is about a few specific issues whereby a role for Government can help businesses of varying sizes to prosper.
Other Members will have their own ideas, as will Government, lending being the obvious one—it has already been referred to, but I am avoiding lending today, because I am sure that others will touch on it. It is important that we all share ideas, to ensure maximum benefit for the manufacturing sector and the industry. It is a given that Government should create an environment in which all businesses can succeed: a tax regime that is friendly, rewarding and supportive; regulation that is sensible and proportionate and ensures a level playing field for businesses to work and compete on; and the confidence that it is important for Government to give to business, so that they are supportive and consistent, without any big surprises for industry.
I want to touch on four specific key areas; first is the definition of an SME. According to European Union law, the main factors determining company size are the number of employees, the turnover and the size of the balance sheet. Those factors can then be divided: micro-businesses have fewer than 10 employees, turnover of less than €2 million or a balance sheet of €2 million; small businesses have fewer than 50 employees, turnover of €10 million or a €10 million balance sheet; and medium-sized businesses have fewer than 250 employees, turnover of €50 million or a €50 million balance sheet.
There are, however, varying definitions in the UK, with one under the Companies Act 1985 and a different one under the business bank scheme. For the purposes of research and development schemes, Her Majesty’s Revenue and Customs defines SMEs in a different way again. In fact, depending on which definition is used, an SME can have anywhere between 10 and 500 employees or a turnover of between £1.7 million and £86 million.
The real issue is that the actual definition of an SME is not helpful. It would be far better to break the definition down into different sizes and types of businesses with their own reference. A clearer idea of exactly what type of businesses we are discussing is necessary, rather than lumping them all together.
More definitions would be beneficial and help to target support to the right businesses in the right circumstances. For the manufacturing sector, that would demonstrate and recognise the importance of companies and raise their profile, and identify a sector as important in its own right. Any definition needs to acknowledge that larger manufacturing companies often have little in common with smaller ones and they should therefore not necessarily be linked together.
Size and numbers matter: they have an impact on how businesses structure themselves, how they function and what type and level of support they seek. I certainly find it hard to equate a manufacturing company with a turnover of several million pounds and, for example, 200 employees, with a two-man engineering business with a turnover that does not even exceed the VAT threshold. A better group of definitions, certainly in the manufacturing sector, would help to simplify a business’s ability to access the correct support, help and guidance that it may be seeking. That might also help Government to steer a business of a particular size or industry towards the appropriate support.
My second issue is simply what support there is, and whether it reflects the actual needs of manufacturing. What can Government actually do? What is the real support and help that Government can give to the manufacturing sector? Clearly, small businesses have their own particular issues; large businesses that want to expand are likely to have different requirements and problems; and there are individuals who want to start their own small manufacturing businesses.
A significant number of issues therefore need to be addressed for businesses of different sizes and complexity within the manufacturing sector: strategic advice and business plans will vary depending on the size of the business; procurement, too, is different for small and large businesses; there is involvement with UKTI—UK Trade & Investment—for exporters; skills and qualifications depend on the needs of the different sizes of businesses; there is the issue of funding, grants, loans and, as mentioned, banking facilities; there is involvement with trade federations, because larger organisations invariably hold greater sway and influence, or relations with the chamber of commerce; there is legal, accountancy and intellectual property rights advice; there is dealing with relevant regulation, because cars, for example, are very different from the food industry; and, equally important but sometimes forgotten, there is succession planning.
I appreciate that the Government are helping where they can—the manufacturing advisory service is an example—but there needs to be accessibility and relevance to the manufacturer. A common complaint is that the Government do not understand the user, and that their support is inaccessible or inappropriate. I appreciate that the amount of such support will vary considerably.
Larger manufacturers will contact Ministers or officials and have an ongoing dialogue. They are more likely to work through the trade organisations, and many will have the resource to research matters or to take paid advice. To be honest, a small manufacturing business in Carlisle with five employees is unlikely to contact central Government, while a 200-employee company with a £30 million turnover may well do so. Often, however, the smaller businesses have the greater needs, but they find it more difficult to access such help from Government.
I acknowledge that the Department for Business, Innovation and Skills is having some success. The best example is the R and D credit uptake, which has been welcome and demonstrates a successful policy and implementation. My concern, however, is that much of the effort is not as effective as it could be for many businesses. AXA Business Insurance carried out a study in the UK suggesting that many are unaware of the initiatives designed to help them. Darrell Sansom, the managing director of AXA Business Insurance, said:
“The numbers of small businesses in the UK continue to climb rapidly, but it seems that many could be missing opportunities to help their business along the way through a lack of awareness of the support that may be available to them.”
That leads me on to my next two points. Talking about government can be slightly misleading. What do we actually mean? Which aspect of government is the most appropriate? Today, I am clearly ignoring the EU, but we still have central Government as well as local government. There are clear issues with central Government: where to go, who to talk to and what Government should be doing. What advice and level of support should they be giving? That applies equally to local government, which really does matter. In many respects, the local council matters more for small manufacturers and businesses than central Government.
Does the hon. Gentleman agree that local government—local councils in particular—should be proactive with SMEs, rather than reactive? Instead of small businesses coming to the council and saying, “We have a problem or an issue”, councils should be going out and looking for ways in which to support local businesses.
I completely agree. The hon. Gentleman and I, as fellow Cumbrians, agree that our local council does not do enough to support businesses locally or to take a proactive stance in Cumbria.
Is local government up to the job? What support or direction is it getting from central Government to ensure that it gives support to businesses, especially manufacturing ones? Councils can have a direct link to businesses through their everyday activities—planning, highways, environmental issues, health and safety, and, often, property ownership and rentals. What about other advice and help that local government could give, such as with business plans, legal and accountancy advice, finance, business structure, regulations and changes within an industry, and consumer and employment law? I have already commented on many other matters as well.
My experience of local government is that it is not nearly active enough in support of business. I agree with the point made by the hon. Member for Workington (Sir Tony Cunningham).
I agree with my hon. Friend. It is sensible for businesses fortunate enough to have a local university to engage with it. It will be interesting to hear the Government’s view of local enterprise partnerships taking on the role of helping small businesses in particular in their localities.
My final point is about the interface between the Government, civil servants and the businesses and the individuals within them. I have spoken to many businesses and the common comment is that the Government can be detached from the business environment. That is particularly true of local government, which does not always have a real grasp of the needs of businesses or the complexity of what they are trying to do. That is where there is a huge gap between the thinking behind strategy plans and the reality of businesses engaging and benefiting from support.
On procurement, are smaller businesses, whether manufacturing or otherwise, getting a real opportunity to win Government contracts at both national and local levels? I am aware of the Government’s 25% target and understand that it has reached around 16%, but there is still some way to go. Inaccessibility or inappropriateness of many policy instruments may affect a business’s ability to engage with the Government. Departments and think-tanks often have good ideas, but what about reality? Schemes may suit different sectors and different-sized businesses, but one size does not fit all.
On complexity, the Government must bear in mind fraud and audit trails, but the complexity of application forms for funding often puts people off from even applying. Those who are more engaged with the Government are often the ones who are always applying for funding, assistance or support, but many businesses do not engage with the Government or are not even aware of what they can offer. Real feedback should include those who have not applied for funding and support, but companies that have not applied should also be contacted to find out why not and what are the obstacles and barriers to that.
I am setting out some of the issues facing SMEs rather than offering solutions. I appreciate that the Government are trying to support the manufacturing sector, but there is room for improvement and it is incumbent on MPs on both sides to give their views and to encourage the Government to be open-minded, willing to take on board suggestions and, when appropriate, to make changes.
Other hon. Members will have additional points and issues to make that are relevant to this debate and I look forward to hearing them. I have touched on four. How worth while is it to have a definition of an SME that covers nearly 99% of all businesses in the UK across all sectors? Clearly, greater refinement and relevance is needed across all sectors, and I shall be interested in hearing the Minister’s comments on that. What support have the Government given to the manufacturing sector, taking account of the varying size and complexity of businesses and the accessibility of that support?
Importantly, is there a strategy for dividing the roles of central Government and local government, and does one know what the other is doing? Is there a clear division between the two? Where should businesses go—to central Government or local government? For small businesses particularly, it may be a big thing to talk to their local councillor, let alone MPs and central Government. When they want to access legal or accountancy advice, should that be at local, regional or even national level? My hon. Friend the Member for Gosport (Caroline Dinenage) referred to the role of local enterprise partnerships and universities. Do the Government want LEPs to take a role in helping small businesses particularly?
My final point is about the interface between users and the Government, and the requirement for feedback and for the Government to realise what the reality is for users on the ground. It is vital that Government initiatives fulfil their goals. Advice, support and assistance for small businesses particularly could help to transform the manufacturing sector. SMEs, however they are defined, are the great growth area for employment. They are the backbone of local economies, and they can be the engine for growth in our economy.
I look forward to hearing other contributions and what the Minister has to say about his views and intentions in supporting the world of manufacturing SMEs.
It is a pleasure, Dr McCrea, to serve under your chairmanship. I congratulate the hon. Member for Carlisle (John Stevenson) on securing this debate and the cogent and well-reasoned way in which he spoke. There was very little to disagree with. I will keep my comments brief as quite a number of hon. Members want to speak. It is a reflection of the importance of the matter across parties that so many hon. Members want to contribute.
In the past couple of weeks, there has been euphoria about manufacturing. There has been a revival, but we must put that in context because the current level is below what it was in 2010, when it was described as a disaster. There are welcome signs of a significant upturn that might be sustained, but the situation is still not good.
In so far as it is possible to discern what has provoked the sudden surge in confidence and production, it is led partly by an increase in confidence in the housing market, which is rising largely because of the funding for lending scheme, and an improvement in exports. Both are welcome, particularly the increase in domestic construction in the housing industry. However, exports are particularly difficult at the moment with the problems in the eurozone, although there are welcome signs of revival. There is a danger in basing a rise in domestic consumption and confidence on a housing boom that may be temporary and is fragile. Many of the criticisms levelled at the previous Government were that consumption was based on that.
I will not reiterate our debates at that time, but although there is a welcome revival, the long-term sustainability of a manufacturing industry must be based on two things, or three if exports are included. First, a sustained and rising standard of living domestically will underpin demand for manufacturing products in this country. Secondly, an appropriate level of investment in the manufacturing industry in the private sector will ensure that we remain competitive, that value is added to improve exports and our domestic consumption, and that cheap foreign imports are resisted.
The hon. Member for Carlisle rightly outlined investment issues. The funding for lending scheme is generating confidence in the housing market, but the indications are that, like the enterprise finance guarantee scheme and other well-intentioned Government schemes designed to boost bank lending to small business, that is not yet happening. When I talk to banks about that, their reaction is that they want to lend and they have the money but companies will not come forward. When I talk to companies, they say that they do not have the confidence to invest because of the current economic situation.
The recent improvement in confidence may stimulate further demand from small manufacturing businesses, and may make the banks look differently at the risk parameters on which they base their loans and improve bank lending.
I will not detain the Chamber long. Surely one of the difficulties with the enterprise finance guarantee scheme—which, in theory, is an extremely good idea—is that many major banks are asking of small businesses, and particularly of the owners, far more than they can give in personal guarantees, given that the banks can recover not only from the individual owner, but the 75% from the guarantee scheme, if they believe that the business is no longer viable. I think that the term is the “going west route”, whereby the banks end up owning the business. That is bound to put the fear of God into entrepreneurs, no matter how brave and confident they are.
My right hon. Friend raises a valuable point. I talked about the risk profile. A huge body of evidence demonstrates that banks are excessive in the security they demand in order to lend to businesses, and that is one of the main barriers to businesses wanting to apply for loans. If there is a criticism of the Government, it is that while the Government have provided cheaper money for banks to lend to businesses, I do not think that has addressed the obstacles that are far more significant in terms of getting the money out where it is needed, into investment in small businesses.
I apologise for interrupting the hon. Gentleman’s brilliant speech. Does he agree that it is also up to the local community to look at ways in which they can help businesses grow and invest? In my area, the local newspaper, The News, made a regional growth fund bid, which they used as a “bridging the gap” fund for small start-up businesses and those that wanted to grow, as a way of helping them to get access to the finance that they needed. Will the hon. Gentleman join me in welcoming that sort of initiative?
I certainly join the hon. Lady in welcoming that. In fact, one of the unintended, beneficial by-products of the problem has been the resourceful and inventive ways that communities and businesses have got together to overcome it. Peer-to-peer lending is an example of that. In my area, we have the Black Country Reinvestment Society, with which my fellow west midlands MPs will be very familiar. However, the scale of the entrepreneurial alternative lending sources still does not match what is needed for our manufacturing base as a whole.
I turn to a specific issue that applies not only to my constituency, but to the whole of the west midlands and the black country—other west midlands MPs may refer to this, too. First, I pay tribute to the Tata brothers for their investment in Jaguar Land Rover, which, I think it is fair to say, has transformed manufacturing prospects in the west midlands in a way that we have not known for 30 years. It is an indication of the value of our relationships with the Indian subcontinent and that growing market and growing access of capital, and of the historic association between the Indian diaspora in this country, and of course, the native India.
I entirely agree with the hon. Gentleman. It is also testament to the wonderful co-operation between Wolverhampton city council and Staffordshire county council, which, together, put £40 million forward to build a motorway junction on the M54, without which that project might not have been able to go ahead.
I pay tribute to both of them. All the players in the i54 development on the borders of Staffordshire and Wolverhampton deserve credit for the united way in which they have seized the opportunity. For the benefit of non-west midlands MPs here, it is a huge expansion in the engine production capacity of JLR that will result in 1,400 jobs. It has really transformed the supply prospects of foundries in the area. In that context, I would also mention the £45 million that the Tata brothers have invested at Warwick business school’s centre for research and innovation. Collectively, they have transformed the prospects for manufacturing in the west midlands.
My constituency still has the highest number of foundries—I think—of any constituency in the country, but there are plenty in the surrounding areas as well. The prospect offered to them of being part of the supply chain to Jaguar Land Rover is very significant. In the regional growth fund applications, there have been a number of successful bids from JLR and companies locally. However—I mention this to the Minister, because it highlights some of the problems that we have with the support that the Government give industry—I understand from the Cast Metals Federation that the engine blocks for the new Jaguar Land Rover development at the i54 will have to be made in Germany, because there is not, would you believe it, the capacity for foundries to produce them locally.
I also understand that Jaguar Land Rover is happy to look at repatriating some of its supply chains, where it has to source from abroad at the moment, but obviously, that will depend on the capacity of local SMEs to deliver. Despite all the Government sources of support, the regional growth fund and the grants that it has given, a crucial gap still remains in the potential economic benefits that will accrue to the west midlands because of the failure to secure this vital market. Aluminium engine blocks for that development will be crucial.
The Society of Motor Manufacturers and Traders has identified something like £3 billion-worth of potential extra business in the supply chain—if the Government and the industry can get together to maximise that potential. Although I do not condemn any of the attempts that have been made to provide finance for business and for SMEs so far—but certainly with the regional growth fund, there are all sorts of issues relating to length of time and so on—I ask the Minister to look at working with the Automotive Council to develop some sort of package that would enable the existing gaps in provision to be filled. The potential benefits, both for regional policy and for our overall national economic situation, are absolutely enormous.
I have spoken for longer than I intended, partly because I have taken interventions, so I will cease my remarks with that plea to the Minister.
Six Members from Government parties desire to speak before we have the wind-ups, and there are 32 minutes before those commence. I therefore ask for Members to be considerate to their colleagues in order to allow them to speak, if possible.
It is a pleasure to serve under your stewardship, Dr McCrea. I join others in congratulating my hon. Friend the Member for Carlisle (John Stevenson) on securing this important debate and on introducing it in such an insightful and thorough way.
I should probably start by declaring an interest. I have been the owner of a small marketing business since I was 19 years old, which is sadly many more years ago than I would care to admit. I would like to echo my hon. Friend’s comments in welcoming the current resurgence in UK manufacturing. It is great news that after a debt-fuelled boom and bust, our economy is finally starting to rebalance, with manufacturing and exports playing an important role in our recovery.
The latest data show that we have seen the biggest jump in output and new orders for almost two decades. That is great news for Britain, but there is no room for complacency. Speaking as a business owner, I would say that the key things the Government need to facilitate to allow other small businesses to flourish are: a skilled work force, the availability of finance, a solid infrastructure, ease of access to both domestic and international markets, and the reduction in red tape and bureaucracy.
While I support the many steps the Government are taking to boost access to finance, and there has definitely been a marked improvement, many businesses, sadly, still find it difficult to obtain credit. A concern all too often voiced by local business owners in my constituency is that, despite their best efforts to weather the economic storm, and no matter how thriving their order book, the failure to secure meaningful credit and the regular hits to their cash flow that result from late payment leave them on the brink of collapse.
I am still concerned about the regulatory burden on small and medium-sized businesses. The country’s 5 million SMEs provide 60% of jobs and generate more than 50% of GDP, and we must do everything we can to ensure that their chances of growth are not strangled by bureaucracy. I therefore welcome the work the Government have done on cutting red tape; indeed, through the red tape challenge, they have committed to scrapping, improving or simplifying at least 3,000 regulations. The one in, one out rule has saved businesses about £1 billion in regulatory costs, and I am glad it has been stepped up so that it is now one in, two out, although I will resist any pressure to enforce that in my shoe cabinet.
My particular bugbear, and one area where we still need to see progress, is the procurement of Government and other public sector contracts. That is one thing I know about, because, as I say, I have owned a business for more than 20 years. The paperwork involved in trying to get considered for a Government contract can still be overwhelming. The tendering process for private sector contracts is still significantly less complex than for public sector contracts.
Although I warmly welcome the scrapping of many of the pre-qualification questionnaire requirements, as do businesses in Gosport, there is still room for such processes to become even more efficient. John Allan, the chairman of the Federation of Small Businesses, quotes research showing that only about a fifth of SMEs have bid for public sector contracts in the past year, in large part because it simply is not worth the effort and because of the intrusive amount of company information that needs to be supplied. A contract my business recently looked at bidding for required financial details of not only my company, but every company I was thinking of subcontracting to, which is hugely bureaucratic for a small business. There is still more to do on this issue.
Our SMEs are the drivers of prosperity in this country, and we should give them every opportunity to overcome obstacles and to expand. I welcome the Cabinet Office announcement in August that there will be a shake-up in Whitehall procurement and that the Government want to loosen the grip of an oligopoly of large suppliers and let in more SMEs. However, we must do more to cut bureaucracy in the application process. As we move from rescue to recovery, our economic success depends on a vibrant, innovative private sector.
That innovative private sector must have the Government’s backing when it develops new and exciting products. The Government rightly take great pride in our country’s innovation, and they invest heavily in R and D; indeed, globally, we are second only to the US in terms of our scientific knowledge base, but we slip down the chart when it comes to turning that innovation into economic prosperity and jobs. The Government’s enthusiasm for helping to develop new ideas is, sadly, not matched by an enthusiasm for buying the results. Unless we become earlier adopters of innovation, British R and D tax credits will continue to deliver German and American manufacturing jobs and profits, as those countries invest in making the things that originate in Britain.
SMEs are often cited as the lifeblood of our economy. We must match those words with action and eradicate the lethargic culture of bureaucracy, which sometimes clogs the procurement process and holds back British business. We must celebrate all that the Government and business, working together, have done in that regard, and we must ensure that SMEs continue to flourish.
I will do my best to finish within five minutes or so, Dr McCrea.
Bradford is promoting itself as a producer city, but the truth is that it never ceased to be one. It sits alongside many other northern cities, including places such as Carlisle, and I congratulate the hon. Member for Carlisle (John Stevenson) on calling the debate; indeed, I thank him for doing so, because we cannot have enough debates on this subject, which is crucial not only to local communities, but the national economy.
As I said, Bradford never really stopped being a producer city. It suffered dreadfully in the 1980s recession, which almost decimated the city. Bradford did not always focus on textiles; it was, of course, the wool capital of the world, and it was a fabulously wealthy place. However, its manufacturing and engineering were devastated in the 1980s.
None the less, Bradford is still a producer city. Although we still lost 15,000, or 40%, of our manufacturing jobs during the 60-odd consecutive quarters of growth from 1998 to 2008—the golden years, in many ways—Bradford still exists, and it is a cruel rumour that Bradford is no longer a producer city. Some 1,200 manufacturing SMEs still provide employment for 15,000 people in the Bradford district.
With others, I recently set up the all-party group on textile manufacturing, because it is important to tell people that manufacturing, and particularly textile manufacturing in places such as Bradford, still exist, and spinning, weaving and scouring continue on a massive scale. There are no longer 2,000 people coming out of Salt’s mill or Lister’s mill, but many small businesses, particularly in the manufacturing and engineering industries, continue to thrive.
I wanted to speak in the debate because of two contrasting stories picked up in this week’s Yorkshire Post. The first concerns manufacturing. There is a really good story to tell across the whole Yorkshire region. The purchasing managers index for the latest quarter is 57.2, which is a staggeringly good figure. The previous figure—55—was thought to be really good. Fifty is what separates growth from decline; at 50-plus, however, we are talking about exceptional performance, so this is a really good story.
The paper carried out a survey, which tells us that employment has increased for the fourth month running, while output has risen at the fastest pace since July 1994. In addition, the paper included a Barclays survey showing not only that there is growth in output and employment, but that businesses have a real intention to invest for the future, with 54% planning to increase investment over the next 12 months. Some 63% plan to invest in new machinery, 62% plan to invest in new product development and 42% plan to invest in furniture, fixtures and fittings, and buildings. That is all really good news.
What, though, are the contrasting stories? On the same day, the Yorkshire Post included an article headed, “Optimism dims in the small business sector”. According to the article, a survey of 500 UK firms showed that most small businesses
“were still having problems accessing finance despite the introduction of lending schemes.”
A further article in the same paper, on the same day, was headed, “Funding plan still failing to help SMEs”. It says that although the Bank of England lent £1.6 billion through its funding for lending scheme in the last quarter, which is really good news, the bad news is that lending to SMEs continued to fall, shrinking by a net £583 million. The article continues:
“The scheme was revamped in April in a bid to boost the flow of credit to small businesses. But bank loans to SMEs shrunk 2 per cent during the quarter on a year earlier.”
Those are the two contrasting stories. We are all really excited about one, which is about the renaissance in manufacturing. That renaissance is taking place not just in certain sectors or certain parts of the country, but across the piece. It is showing itself strongly in domestic output, customer numbers and exports; that is the good news story. The worrying factor is that that is not getting through to our small manufacturing and engineering businesses, and they are still struggling. Despite Government schemes to provide finance for those businesses, they are waiting, their energy is pent up and they are ready to explode, but they are being held back by a lack of finance. The money is there, but it is clearly going to the bigger companies, which can always access finance from other sources. The companies that critically need the finance to enable them to carry out the investment intentions I mentioned are simply being denied it. Whatever the reasons for that, we need to crack this nut if these companies are to achieve their full potential and we are to carry out the rebalancing of the economy we are all so desperate to achieve.
It is a pleasure to serve under your chairmanship, Dr McCrea, and I congratulate my hon. Friend the Member for Carlisle (John Stevenson) on securing this welcome debate.
Government support for business has always been crucial. My first job was as a production foreman at Ford Motor Company in Bridgend, a plant brought to the UK under Prime Minister Jim Callaghan in the late 1970s. I am glad to say that that factory has expanded since then; it is one of the largest engine factories in Europe, if not in the world, and is still exporting around the world.
In Staffordshire and Stoke-on-Trent there has been strong Government support for manufacturing business—for instance, through the regional growth fund to Alstom in my constituency, which has become a world leader for research in high-voltage direct current manufacturing. The hon. Member for West Bromwich West (Mr Bailey) earlier mentioned Jaguar Land Rover on the i54 site on the edge of Wolverhampton and South Staffordshire. South Staffordshire council has played a major role in that, and that was a great example of co-operation between government and the private sector.
However, that is all about the largest companies, which have access to the Government. We really want to talk more about smaller projects and companies. We have already heard talk about procurement, and how Government procurement from SMEs has increased substantially under the present Government. There is still a long way to the 25% target, but I welcome that progress.
My hon. Friend the Member for Gosport (Caroline Dinenage) talked about oligopoly in procurement. It is not just in manufacturing companies; among service companies it seems that the Government will procure only from a very small number. For instance, there are the big four consultancy firms. In my constituency, health administration is being carried out by Ernst and Young. I should prefer some specialist medium-sized consultancies to do that work if, unfortunately, it should become necessary for a Government to procure it.
We have heard about training and apprenticeships, and the 21.5% increase in engineering and manufacturing technology apprenticeships starts in the past year. However, there is still reluctance from smaller firms, as they do not necessarily have the facilities or expertise to allow those apprentices to start. I welcome the idea of training networks, which could operate under the employer ownership pilots that BIS has started in the past year. I look forward to more of that, with small businesses taking advantage of the facilities and expertise of larger manufacturing businesses in their area.
We have also heard about the supply chain in the debate. Yes, that is an area where small businesses can do things for each other, but there is an increasing realisation of the benefit of having suppliers on the doorstep. The previous Government supported programmes in relation to the automotive sector supply chain, and the present Government are considering the aerospace sector in that regard. I should like to know from the Minister whether there are plans to consider other sectors—and to bring major sectors’ supply chains back into the UK.
I want to spend a little time discussing exports. There has been an increase in the services offered by UK Export Finance. Indeed, just this week BIS announced a direct lending scheme of £1.5 billion under UKEF, in which foreign buyers can get access to support to buy UK products. It is the first time that that has happened, and I encourage all hon. Members to point it out to exporting companies in their constituencies.
UKEF is still very much focused on large businesses, although I was glad to see from its last report that it was used to enable British companies to export, for example, cheese to Greece, a hospital to Ghana and tractors to Israel. However, those were the exceptions rather than the rule. UKEF tends to be dominated by Airbus, Rolls-Royce and BAE Systems. That is welcome—we need those exports—but in the past year the total was only something like £4.3 billion, compared with €29.1 billion under the Hermes scheme in Germany. Under that scheme, Kenya had €156 million of credit, South Africa had €461 million and India had €1 billion. Those are all developing countries, to which our businesses need to export.
I shall cut my remarks short, because colleagues want to come into the debate, but I reiterate what has been said so many times about the importance of the availability of long-term, patient capital and equity finance. It is ironic that Britain has a major institution that deals with that, which has nearly £3 billion of investments throughout the world, in some of the most difficult situations in developing economies—it is called the Commonwealth Development Corporation—but that we do not have a similar development corporation for some of the more challenged areas in our country.
I thank my hon. Friend the Member for Carlisle (John Stevenson) for securing this important debate and giving us another opportunity to discuss this topic, as we have done over many years.
One of my concerns, given the welcome news about the upturn in growth in the UK economy, is that politicians—and we are politicians in this Chamber—may move away from a focus on manufacturing and the good results that it could produce for the rebalancing of the economy. We could move back to property booms and financial services, which I think all those present would agree would be a very bad thing. We have a window of opportunity to establish policies to get manufacturing growing strongly once more.
The key is small and medium-sized businesses. The Government need to take steps now to prevent manufacturing from being neglected as growth returns to the economy. They need to ensure that incentives are set up for lenders to support our manufacturers, rather than pouring investment into quick returns in sectors such as property or financial services.
One of the simplest and easiest ways to get support to those manufacturers is through changes to capital allowances. The Chancellor rightly increased the annual investment allowance, which will enable them to upgrade plant and equipment in the next two years. However, if we are to attract more significant manufacturing activity, and enable small and medium-sized businesses to integrate into supply chains, we need to make the capital allowance structure more competitive, and encourage larger manufacturers to base themselves in the UK, which will in turn help the small and medium-sized businesses.
According to the Oxford university centre for business taxation, the present value of capital allowances as a percentage of cost for capital investment is just 46.5% in the UK. That is lower than in Japan, Germany, the United States, Turkey, France, South Korea and virtually all our major competitors. It makes investing in the UK far more expensive for manufacturing businesses than it is elsewhere, and we should not be surprised that, despite a strong skills base and depreciation in sterling, manufacturers are still not flocking as quickly as they might.
Like the rest of the economy, manufacturing is an ecosystem that requires diversity. To increase the number of small and medium-sized manufacturers, we need to increase the number of larger manufacturers in the country, to create resilient supply chains that can weather global economic storms. That, I think, is the key to what has happened in Germany and the United States. We should not ignore small and medium-sized manufacturers while we go about it, but we will need to continue a generous regime of investment allowances for the businesses in question, so that they can compete and provide a base on which large manufacturers can build supply chains.
Another area where we can help businesses is through the availability of skills and apprentices. There has been a fantastic, massive surge in apprenticeship applications in the past 12 months, but manufacturing and engineering are still not the main destination. Business administration, child care and customer service are still the three most popular areas. Perhaps that has something to do with the image of manufacturing in society, which those present for the debate are trying to help to promote.
A way to combat the current situation might be through the creation of apprentice training agencies, similar to those deployed in Australia. Apprenticeships are advertised by the agencies, which then hire them out to small and medium-sized manufacturers. The agencies take on the burden of administration, payroll support and supervision costs, and merely charge the manufacturers something similar to normal agency costs. That will hopefully boost the supply of labour to SMEs and potentially attract young people to work with the companies in the long term.
We need to put policies in place in the next few years so that we have an economy that does not just return to business as usual but is robust, creates sustainable jobs for the future and has manufacturing as one of its key pillars.
It is a pleasure to speak under your chairmanship, Dr McCrea. I add my congratulations to my hon. Friend the Member for Carlisle (John Stevenson).
I am deeply proud of Weaver Vale’s huge range of manufacturing enterprises. I personally spent more than 20 years working in manufacturing, starting off at BAE Systems making RAF Nimrods. I am delighted that EEF has announced that the domestic market is at its strongest in almost three years and export sales are at a two-year high. That marks a significant growth in confidence and provides some reassurance that the industry is on the right track. However, although that shows a short-term improvement, it is set against the long-term trend that has seen manufacturing’s share of the economy fall from 23% in 1997 to about 10% currently. That sits alongside the Government’s ambitious target to double UK exports to £1 trillion by 2020—manufacturing currently makes up about half the market. I would be interested to hear my hon. Friend the Minister’s opinion on that and whether he thinks that this country could once again have 20-odd per cent. of its GDP based on manufacturing.
How do SMEs fit into that pattern of ambition and decline? In 2012, SMEs—defined as companies with fewer than 250 employees—made up 99% of all manufacturing businesses, with a turnover of £167,455 million, less than a third of the whole industry’s turnover. However, not all SMEs are created equal. Clearly, the needs and capacity of a 249-employee company are very different from those of a nine-employee company. In 2012, there were 203,000 manufacturing business with nought to nine employees, which made up 88% of manufacturing businesses and 96% of all businesses in the UK.
What can we proactively do to support SMEs? There are two clear lines of support which could and should be better developed. Research and development is key to the UK’s manufacturing future. Manufacturing is responsible for three quarters of business R and D. That is a staggering amount and a credit to our world-leading universities and work ethic. The flexibility, adaptability and innovation of SMEs make them perfect leaders of R and D. To ensure our place in the world market, we need to be able to provide financial, research and trade support to SMEs at this crucial time.
First, we should consider finance. Simply put, without strong, reliable and consistent funding, we cannot expect SMEs to grow and thrive. There are some strong incentives to help SMEs involved in R and D. From April 2012, the tax relief for SMEs is 225%. For every £100 of qualifying costs, corporation tax is not paid on an additional £125 income that would be liable for corporation tax. It is worth noting that HMRC has extended its definition of an SME to companies of under 500 employees.
I have spoken previously in the House about the German political infrastructures set up to nurture industry and especially the Mittelstand—small and medium-sized companies. Foremost among those tools stands KfW, the state-backed bank that ensures that the Mittelstand can access funding, even when the commercial banks are unwilling to lend.
Certainly Government schemes such as the advanced manufacturing supply chain initiative and the high-value manufacturing Catapult, which is designed to bridge the gap between early-stage innovation and manufacturing, are helpful, but they do not address the industry’s concerns about simple access to finance. The right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) ably pointed that out earlier.
Secondly, with 71% of manufacturers planning innovation to export to new markets and 73% planning to bring new products to the market, they require not only funding but research collaboration. I welcome the work of the Technology Strategy Board’s Catapult network on high-value manufacturing, which brings together SMEs and industrial investors to work together on the centre’s core research and on their own challenges and the knowledge transfer partnership. That form of business/research collaboration speeds up innovation. It is a credit to the Government that 62%—up from 44% in 2010—of manufacturing companies are now engaged in work with research institutions. I have seen that in action at the excellent Daresbury science and innovation campus in my constituency.
Once development has been completed, UKTI must take the innovations and provide a clear and supported route to market. I welcome the £70 million increase for UKTI and I believe that it is the role of those in this House to push the manufacturing agenda to the forefront of campaigns such as the GREAT campaign to demonstrate our unique and innovative industry to key and emerging markets.
It is clear that we need a blueprint for the long-term future of the manufacturing industry and especially SMEs that goes beyond general commitments to industry as a whole. That is why we are all waiting with bated breath for the report of the Future of Manufacturing project, which will set out the long-term future of the manufacturing sector to 2050. It is due in the next few months. I sincerely hope that much of what has been discussed today will feed in to that report in order to help to ensure that the powerhouse that is SMEs in the manufacturing industry is properly supported.
It is a joy to join the debate rightly won by my hon. Friend the Member for Carlisle (John Stevenson). The discussion of manufacturing has gone on for some years and will go on, because it is so important to all of us. It is especially important in constituencies such as mine, Gloucester, where making things has been what the city is all about. We are in fact arguably the bellwether for what happens to British manufacturing, because the narrative, as many hon. Members have noted, is a story of decline and recovery, and now the challenge is how to take it to the next chapter of success. My constituency, as a bellwether, is one to which my hon. Friend the Minister will want to pay attention. We make things, whether for the aerospace sector, the oil and gas sectors, nuclear power, consumption, health, dentistry or container ports; and when we export tea to China and valves to offshore Australian pipelines, the Minister will want to sit up and take notice and, indeed, come to visit the great city of Gloucester as soon as possible to see what can be done in modern manufacturing.
The story of decline we will gloss over, except to note that by 2010 new apprentices were virtually extinct in Gloucester. The specialist Gloucester training group was down to 20 engineering apprentices in one year. Small engineering companies were almost dying on their feet. Science was disappearing from school exams, and 6,000 jobs in business had been lost during the 13 years of the previous Administration.
Today, the story is rather different. We have created 2,000 new jobs in business—not all of them in manufacturing, but many—and last year alone 1,240 new apprentices started in our city. Nationally, of course, manufacturing is now going through its fastest growth, in terms of order books, for more than two decades. The output index is the highest since 1994, and non-EU exports have risen by 10% according to the latest figures. The rebalancing is full steam ahead, but we must not run ahead of ourselves. There is still much more reinvestment to be done to see a sustainable increase in manufacturing. We need confidence to spread more widely across the country and in manufacturing businesses, and of course we need banks to provide support and schools to give more time for manufacturers to tell their story and inspire youngsters.
I believe that the Government have played a useful role. I am thinking of what they have done on corporation tax, on capital allowances, which my hon. Friend the Member for Warwick and Leamington (Chris White) mentioned, on R and D and on apprenticeships, and about the renewed focus on engineering and sciences. All those things, linked to steps taken by my right hon. Friend the Secretary of State for Education on careers advice, have helped. They have been a stimulus to our manufacturers, who now have greater confidence than they used to and can see that this is a Government, finally, who are backing manufacturing and urging them to help with the rebalancing of the economy, which was so badly needed, away from finance, public service and property.
There is still, though, as I mentioned, much more to be done. As individual MPs, we can do our little bit. We can, for example, take on our own apprentice. I am delighted to pay tribute to my apprentice, Laura Pearsall, who has now completed her two-year apprenticeship with me, got her NVQ level 3 in business administration and won a good job in business. Clearly, that is not manufacturing, but manufacturers can also take on apprentices in non-manufacturing subjects, such as business admin. I am delighted that, for example, EDF Energy, whose operational headquarters for its nuclear power stations is in my constituency, now has apprentices working in finance, human resources and a variety of other sectors that are not directly running nuclear power stations.
We can also help by working with the media and our further education colleges. I congratulate Gloucestershire Media and Gloucestershire college, which were the first to launch the 100 apprentices in 100 days challenge, which so many regional newspapers have taken up. They went on to get places for 100 apprentices from companies that had never had them before. They have given huge support to the rebalancing of our economy and supported manufacturers by giving them a platform of encouragement. We can also help to create or support apprenticeship fairs and jobs fairs to highlight the opportunities in manufacturing. I have helped support three apprenticeship fairs and created seven job fairs in the past three years, and there will be much more to do over the next two years.
We can create job sections on our websites, highlighting opportunities for youngsters in manufacturing and other sectors. We can encourage all our employers to take more young people into manufacturing through apprenticeships. We can create export clubs and organise events with UKTI. We can invite Ministers to proselytise and give further encouragement. The Minister’s predecessor did that successfully at Kingsholm, and I invite the current Minister, who is full of enthusiasm, to come and encourage our businesses, many of which are micro-business and manufacturing subcontractors, such as the 500 members of the Gloucester branch of the Federation of Small Businesses. I am delighted to say that its chairman, Mark Owen, is leading from the front by taking on his first apprentice. We can also visit manufacturers ourselves, and help them to expand by assisting with council problems of additional space, parking and other local issues. There is much that we can do.
I finish by congratulating my hon. Friend the Member for Carlisle on securing the debate. I welcome the measures the Government are taking. I salute the success of our manufacturers and urge them to use their capital balances to invest more in new plant and equipment. I urge large manufacturers to look at their supply chains, our schools to engage with manufacturers, and our Ministers to help manufacturers that went abroad to return to Britain with help from the regional growth fund and local councils through waiving business rates for a period, so that we may see the brands “Made in England” and “Made in Gloucester” thrive and expand.
Before I call the next speaker, may I thank all Members for the discipline shown, led by the excellent example of the hon. Member for Gosport (Caroline Dinenage), in allowing everyone who desired to do so to get in to the debate? I now have the pleasure of calling Iain Wright.
Good afternoon. It is a pleasure to serve under your chairmanship, Dr McCrea. I join others in congratulating the hon. Member for Carlisle (John Stevenson) on securing this important debate. I am pleased that there have been so many contributors to a well-informed and consensual debate.
It is clear that manufacturing matters to this country and to the House. Indeed, manufacturing is essential to any advanced economy that wishes to maintain or enhance its living standards. An effective manufacturing policy, based on innovation, is the means by which productivity and wage rates will grow. It is equally clear from listening to hon. Members’ contributions that in every corner of the country we have dynamic, enterprising manufacturers—Mallinson Fabrications in Carlisle or Burgon and Ball in Hillsborough, among others—keen to expand, export into new markets, invent new products or processes and employ more people. An effective and proactive industrial policy will ensure that Government can work with industry for the long-term and tap into that huge potential.
We warmly welcome recent increased output in manufacturing and order books, and the Opposition will encourage any sign of recovery. There is a long way to go however: manufacturing output remains 10% below pre-crisis levels and is still performing below the wider economy, which is 3% off its peak. Despite the positive news, manufacturing is still expected to contract by 0.5% this year. Despite the good news, we are not seeing the much-vaunted march of the makers that the Chancellor promised. Will the Minister comment on that and on today’s news that the World Economic Forum’s global competitiveness report shows that we have slipped down the competitiveness rankings from fourth to seventh and down the infrastructure rankings from fourth to 28th? It is a long-term concern for the productivity and innovation of our manufacturing base, so will he comment?
Every Member who spoke mentioned access to finance. It remains the most significant barrier to manufacturing businesses’ growth. Every initiative the Government have attempted to put in place, from Project Merlin to funding for lending and from the national loan guarantee scheme to the enterprise finance guarantee, has failed in its objective. Net lending to businesses has contracted in 21 of the past 24 months. Commenting on the funding for lending figures, Dr Adam Marshall, director of policy at the British Chambers of Commerce, said that
“the credit environment is not where it could or should be, and many dynamic, new businesses are still struggling to find the funds they need to fulfil their growth potential….A fully functioning Business Bank is essential to plug this gap, but it must be delivered with greater urgency and scale than is currently being proposed by the government.”
Will the Minister comment? Businesses are not confident that the Government’s business bank will help them. A recent survey by Bibby Financial Services showed that only 6% of small and medium-sized businesses believed that the business bank would benefit their firm. David Petrie, head of corporate finance at the Institute of Chartered Accountants in England and Wales, of which I am a proud member, stated:
“The proposals put forward don’t appear to address the needs that businesses have and the finance gaps that exist. It is shaping up to be a missed opportunity to make a real difference, especially to micro and smaller businesses.”
Will the Minister outline how he will ensure that the British business bank works for manufacturers to ensure that long-term capital is put in place to allow manufacturing firms to innovate and grow?
I think that every hon. Member also mentioned procurement, which can be an effective lever for Government to enhance skills, attract apprentices, improve and incentivise innovation and ensure that we have a resilient manufacturing base. What are the Government doing to ensure that smaller and medium-sized businesses, particularly in the manufacturing sector, benefit from Government contracts?
My hon. Friend is making an excellent speech. Will he also ask the Minister whether he saw the report in The Daily Telegraph that quoted research by Opinion Leader? It said:
“Despite efforts to cut red tape and promote competition, only 6pc of small and medium-sized enterprises…believe it has become easier to win public sector contracts”
in the past two years,
“and 26pc say it has become more difficult”.
Should the Government not explain why they think that is?
My right hon. Friend makes an excellent point. The article goes on to say that the Government have a target of awarding 25% of public contracts to small and medium-sized businesses, but the figure for 2012-13 is only 10.5%. We are a long way from the target. Is the Minister confident that he will hit the target and ensure that small and medium-sized businesses in the manufacturing supply chain have a chance of winning Government work?
Business investment is the means by which we can enhance and strengthen manufacturing growth, as the hon. Gentleman for Warwick and Leamington (Chris White) mentioned in his thoughtful, well-informed speech. Since 2010, Britain has experienced the biggest fall in investment as a share of national income of any G8 country, other than Italy. We have seen a 0.8 % drop in the level of capital investment. Our competitors, such as Canada, France, Japan, Russia and the United States, are improving their business rates. Most other nations do better than us; according to The Economist, we are ranked 159 out of 173 countries for investment as a share of GDP. We are on a par with Mali.
The situation is not improving. According to last week’s figures from the Office for National Statistics, general investment for quarter 2 of 2013 fell by 4.8% from a year ago and investment in machinery and equipment, which is probably most related to manufacturing, fell across the same period by 3.4%. To improve our competitiveness, our business investment performance must improve. Will the Minister acknowledge that the levels of business investment are unsatisfactory? They are getting worse on his Government’s watch and are inconsistent with the House’s and the country’s aspirations to being an innovative and competitive high-value manufacturing nation. What will he do to ensure an environment of better business investment?
Supply chain resilience is key. Over the past 30 years, with de-industrialisation, we have seen the hollowing out of the UK manufacturing supply chain, and that is hindering the potential of manufacturing and growth. In an excellent speech this afternoon, the Chair of the Business, Innovation and Skills Committee, my hon. Friend the Member for West Bromwich West (Mr Bailey), made that point in relation to aluminium foundings—I think I have that right. He pointed out that the Society of Motor Manufacturers and Traders stated that the lack of an adequate supply base is forcing some vehicle manufacturers, such as Jaguar Land Rover, but also Nissan and others, to limit their activities in the UK to final assembly operations, relying on foreign R and D and component development and manufacture. The Automotive Council concluded that at least 80% of components in vehicle assembly could be sourced from UK suppliers, but at present only about 36% are. There is enormous scope and potential for manufacturing here, and I hope that we can work together in the House to support it.
In that vein, I applaud what the Government were trying to do with the advanced manufacturing supply chain initiative: trying to improve the global competitiveness of UK advanced manufacturing supply chains, by supporting innovative projects where the UK is well placed to take a global lead. It is an important initiative, and I want to see it succeed for the good of the British manufacturing base. Will the Minister let the House know how much of each funding round—I think we are up to the fourth round—has been not just allocated but provided to the relevant firm, how much of each round has been spent, and how many jobs have been created or safeguarded?
In the short time I have available, I want to finish on skills. Several hon. Members have mentioned that manufacturing firms are finding it difficult to recruit appropriate skills, and a recent CBI/Pearson survey found that two fifths of employers who required employees with skills in STEM—science, technology, engineering and maths—found it difficult to recruit. The hon. Member for Carlisle placed the issue in the context of demographic changes—more and more workers will be retiring shortly. How are the Government dealing with that urgent issue? Does the Minister believe that recent changes, such as the downgrading of the engineering diploma and the dismantling of impartial information, advice and guidance, provide a co-ordinated, cross-Government approach to business and industrial needs? He straddles the Departments for Business, Innovation and Skills and for Education, so what is he doing to ensure that we have a co-ordinated approach to providing the skills that manufacturing needs?
It has been clear, in what has been an excellent debate, that manufacturing matters to this country as a means of improving our competitiveness and raising living standards. We all want manufacturing to succeed and a Government who support it, and I hope that the Minister can address the concerns raised.
As everyone has said, this has been a stimulating debate, and I will take away from it several specific points. I will address the points as well as I can in the time available, but I start by saying that I do so in the context of someone who began their career in a small business, albeit a software business rather than a manufacturing one. I understand the difficulty of engaging with the Government—they are a large organisation—and the importance of putting in place an improved environment in which small businesses can succeed in a way that is appropriate to their size and to the amount of time that the people running them have. My hon. Friend the Member for Warwick and Leamington (Chris White) asked whether the return of growth would mean that the Government would stop pushing on measures for growth, and all I will say is that he certainly will not get that from me, or my Department.
The context for the debate is, as my hon. Friend the Member for Weaver Vale (Graham Evans) set out, the sharp decline over many years of manufacturing in the UK, from about 23% to barely more than 10% of the economy, but it is on the rise again. Having the debate this week is good timing because we have the welcome news that data show the sharpest rise in manufacturing orders since 1994.
The current level of manufacturing output is of course below the level it was at before what the Governor of the Bank of England has called the great recession, of 2008-09, and there is a huge amount to do to recover that ground and go forward, but I think we can all agree that there is a new spirit and vision for the growth of high-tech, high-end manufacturing. Other countries, not least the United States, where energy costs have fallen sharply, partly due to new sources of unconventional gas, are bringing manufacturing back onshore, especially at the high-value end. That is a positive context for the debate.
The hon. Member for West Bromwich West (Mr Bailey) talked about the i54 development and the Jaguar Land Rover project, which I happened to drive past last week—there is a massive amount of building and earthwork going on. The Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon), met Jaguar Land Rover only yesterday to discuss ensuring that we can keep the project moving forward. The links between the different local authorities have been an impressive part of its development.
In the context of the new growth we are seeing in manufacturing, I would be delighted to visit Gloucester and proselytise about manufacturing. I very much look forward to my visit.
My hon. Friend the Member for Carlisle (John Stevenson), who has rightly been congratulated on securing the debate, talked about the definitions involved in the Government approach’s to small businesses. It is important to ensure that we have as simple as is reasonable an approach across Government, and that each intervention is targeted at the right size and sector of business. Broadly defined, SMEs can run from a single-person business up to one employing 250 people. Those are hugely different types of business and we need to ensure that we segment properly.
The links between central and local government are important. Local enterprise partnerships play an increasingly vital role in bringing together local businesses and local authorities and providing a link to central Government, and we should push that forward further.
I want broadly to set out how we view the Government’s role, and to respond to some of the questions asked by the hon. Member for Hartlepool (Mr Wright). It is true that Britain fell down the league of competitiveness, not least on infrastructure, but now, finally, we have a national infrastructure plan, on which we are beginning to deliver. The earthwork along the M54 is not alone; across the country there is infrastructure development, not least for Crossrail, which is the largest construction project in the whole of Europe. It is vital that we turn the situation around and that is what we are doing.
The hon. Member for Hartlepool also mentioned finance. It is true that the funding for lending scheme, as the hon. Member for West Bromwich West said, has been helpful, and in April we announced that we were extending it to SME lending. I note that lending to small businesses rose by £262 million in July, which is positive news. On skills, the increase in engineering apprenticeships, which my hon. Friend the Member for Stafford (Jeremy Lefroy) mentioned, is vital and is something into which I personally have put huge effort. We have apprenticeship training agencies in the UK, but there is the potential for more because they can ensure that we draw together the needs of different companies to guarantee that training is co-ordinated and bureaucracy taken away from small businesses. We are also considering more radical changes to how we fund apprenticeships, to make them easier for small businesses to access, one option being to introduce funding through the tax system.
My hon. Friend the Member for Gosport (Caroline Dinenage) brought her own experience to the debate. The question of simplifying procurement bureaucracy is absolutely vital, and the hon. Member for Hartlepool made a point about procurement almost with the zeal of a convert. The target of awarding 25% of public contracts to SMEs is important and the fact that, according to his figures, only 10% of them go to SMEs at the moment just shows what work there is to do. I am glad that the Labour party is coming to the table on that.
It is certainly taking time to turn the situation around, but there is no doubt that there is the enthusiasm to do so. Some Departments have already hit the 25% target, including the Ministry of Justice, so there is progress, and there appears to be cross-party support for it.
I will finish by saying that everyone who participated in the debate mentioned the scope and potential for the future of manufacturing in general and in small businesses, and we in the Government passionately support that. There is plenty more to do on tax and deregulation, the expansion of the R and D tax credit, the all-important funding and finance for growth and all the other issues we have talked about, but momentum is starting to build and we will not let up.
School Starting Age
I am extremely pleased to have secured this debate. It follows from early-day motion 213, which I tabled in June, on the school starting age for summer-born pupils. The timing is particularly apt, given that most four-year-olds start their primary school education this week. A child born on 31 August 2009 will most likely be in the same year group as a child born on 1 September 2008. Indeed, I received information this morning that some three-year-olds—those born between 29 August and 1 September—have started school in an area where school re-started on 29 August.
The early-day motion notes
“the robust and consistent evidence from around the world on birth date effects, which in England shows that summer-born children can suffer long-term disadvantages as a result of England’s inflexible school starting age”.
To expand on such birth date effects, I will briefly refer to the Institute for Fiscal Studies report published in May. The study found that, relative to children born in September, those born in August are 6.4 percentage points less likely to achieve five GCSEs or equivalents at A* to C, and about 2 percentage points less likely to go to university at 18 or 19. It is staggering just how long term the effects appear to be.
Following the Rose review, the previous Government required local authorities to provide a full-time school place for all four-year-olds in the September following their fourth birthday. One could argue that that change tackled one problem faced by summer-borns—that they receive less time in formal education than their peers, which for some has a long-term effect on their school performance.
I argue that any such benefits are cancelled by the impacts on individual children who are simply not ready in their emotional, social and cognitive development to start formal school. A good nursery or pre-school can obviously help with school-readiness in some respects, but certain aspects of an individual child’s development can progress only when that child is ready. By definition, many summer-borns will not be as ready as their older counterparts. Furthermore, an unhappy experience may lead to behavioural problems and a lack of confidence and self-esteem as a child tries to cope within the school setting, and may therefore have further impacts on long-term achievements.
The statutory school starting age remains five. In principle, parents have a choice about which term their child starts school within that time span, but practice may be a little different. For many families, a child starting full-time school reduces the burden of child care costs. It is difficult to imagine that that would not impact on some families’ choices.
Where a parent chooses to defer their child’s entry to school, the child remains entitled to a funded early education place of 15 hours a week for 38 weeks, which prompts the question of the cost of any extra child care needed by working parents. There are also pressures on parents to do what is best for their child. A parent has to be confident and have full information if they are to decide to keep their child in nursery while others start school. Will the school and the local authority make sure that a school place is available part-way through the school year in an over-subscribed school so that parents can exercise their choice about which term their child starts school?
Over the years, I have received representations from across the country about parents who have struggled to be allowed to exercise that choice. I have asked questions and supplied details of cases, but I am not clear what the Department does to support parents experiencing problems in simply trying to have a place held open, so I would be grateful for clarification.
More recently, I have been contacted by parents who want to have the option of their child starting school at the statutory age, but in reception rather than year 1. It is pretty obvious that that makes sense for some children born at one minute to midnight on 31 August, and even more so for a premature baby born at that time. It is easy to extend that line of argument to include more children who would benefit from starting in reception class aged five.
I welcome the discussions between Bliss, parents and the Department for Education on schools admissions policy and that, as a result, new advice was issued in July. I congratulate Bliss on all its work representing families in which premature babies have been born.
My hon. Friend is making a strong case, and I congratulate her on securing the debate. Earlier this year, I was fortunate enough to meet the Minister’s officials and Bliss on that point. I want to put on the record my thanks for the fact that, in answer 4 in that advice, the Government specifically refer to premature children who would have been in the lower age group had they been born when they were due. That is a welcome advantage for parents who are having such conversations with local admissions authorities.
I thank my hon. Friend for his intervention. I not only congratulate Bliss, but I am grateful that the DFE has taken a big step forward. I particularly welcome the fact that the new advice states:
“There is no statutory barrier to children being admitted outside their normal year group”,
“flexibilities exist for children whose parents do not feel they are ready to begin school”
in the September following the child’s fourth birthday.
The questions and answers provided in the advice on the DFE website are helpful, on the whole, but I particularly want to draw the Minister’s attention to answer 8, which states:
“Parents who are refused a place at a school for which they have applied have the right of appeal to an independent admission appeal panel. They do not have a right of appeal if they have been offered a place and it is not in the year group they would like.”
Parents may make a complaint, but the advice states that they cannot appeal. Surely, there should be a right of appeal. It seems to me that although there may be no statutory barrier to a child being admitted to a particular year group, there is no statutory right. That means that although some authorities work to help and support parents, others can continue to make it extremely difficult for parents to exercise a justified choice.
The other barriers that I have mentioned will also prevail—financial, in relation to child care costs; and parents’ confidence and empowerment in relation to requesting a different time of entry and possibly a different year group. I would be interested to know the Minister’s plans to monitor local authorities’ actions on the new advice, to promote best practice and to make sure that full information is available to parents.
I was contacted late yesterday—I have not had time to check this material, so I will refer to it only briefly—by someone who has looked at several London local education authorities’ admissions policies, of which 49% apparently did not conform to the new advice. I apologise that this is second-hand material, but it needs to be checked. It states:
“Admission Arrangements For…2014/2015—Request to delay entry to school (known as deferred entry). Parents of children below compulsory school age may defer their child’s entry to a Reception class…until later in the school year. However, a Reception class place must be taken up by the start of the summer term. If entry is deferred beyond the summer term, parents will need to reapply for a Year 1 place”.
That just shows that although the DFE has played its part, there must be follow-through if the system is really going to change.
In the case of premature births, I imagine that it will be possible to involve health visitors, as well as pre-schools and nurseries, and to use the new advice to secure a place in reception for a child aged five. I certainly hope that that will be much easier, but of course it will not be so unless all local authorities operate within the new advice, which is really important.
I want to mention one or two case studies. I need not give too many, because there are just so many and they are very similar. In a case of premature birth, a child born at 32 weeks struggled enormously with the transition to mainstream school after their parents’ application to delay entry to reception by a year was rejected by the local education authority. I also have a story of twins. The tragedy is that the parents felt that they had to put their children into the reception class. Sometimes the whole experience is of a totally broken down system. It is only when the children are withdrawn from school that it is accepted that they have to start reception in another school year. I am sure that everyone will agree that the experience of starting school and then being pulled out must be avoided.
Clearly, a lot of proactive work has to be done to ensure that the advice makes a difference. I repeat the question: how will the Department ensure that the questions and answers are promoted to admissions authorities and parents? That information should be available not just to those parents who are seeking information, but to all parents. Furthermore, there is a need to monitor published admissions policies.
I remain concerned about how a parent can succeed in exercising their choice when we are considering a child who is so immature, but not prematurely born, that he or she is not ready to start school until the age of five and then needs to experience a reception year. I want to hear the Minister’s views on this matter. What information does a parent need to supply to the local authority to provide a convincing case?
The advice given in answer 4 is far more open to individual interpretation than the one on premature births. It is quite likely that such a child does not have special educational needs as such—there is often misclassification. It is just that the child is not developmentally ready or mature enough at the age of four. By the age of five, they have simply had one year’s growth and maturity, and they need the experience in a reception class.
Will my hon. Friend extend what she said earlier about the knock-on effects of not getting this right, and of not matching the learning experience to the child’s stage of development later on? Like her, I used to teach older children in the primary sector. The knock-on effects to a child’s confidence are repeated as they get older, with really damaging effects.
Absolutely. I thank my hon. Friend for reinforcing the case. It can be seen as an issue just for some middle-class parents who perhaps want to get their children to the top of the class. I want to reiterate that that is not the case. Unfortunately, it is about trying to shoehorn individuals into a one-size-fits-all system, and that is the problem. We must all love and make the most of the individual differences of our children both in our families and in our schools.
We must consider whether some of the issues of summer-born children can be overcome with a play-based curriculum and excellent teaching in the reception class, where the needs of individual children are being taken into account. I would like the answer to be yes, but we have changes in the primary curriculum and assessment and testing regimes, which put constraints and pressures on schools and teachers. Even with an excellent teacher, the individual interests of the child may require a start in reception at the age of five. I do not think that such a move would open floodgates because most parents want their children to fit into the system as it is. Not all summer-born children are adversely affected by being the youngest in their year and there will be variations in any effects. It is difficult to see that age-adjusting test results, as proposed by the Institute for Fiscal Studies, is an entirely valid approach.
Undoubtedly, the early start to formal schooling and the testing regime in this country compound the summer-born problems, which leads me to conclude that, ideally, we need to rethink our approach to the all-important learning settings and experiences for the four to seven-year-olds. The school experience should suit the individual child; the child should not be made to fit the school because of the potential adverse outcomes over their lifetime.
Meanwhile, we have to do the best we can. We must identify the problems and cope with them within the existing system. We must have more flexibility in school starting time, and parents need to be empowered and enabled to make the best choices for their child. Currently, what is in the best interests of the child can be ignored in favour of slotting everybody into an arbitrary 12-month period.
There are so many cases that I could cite, and I am happy to talk about them with the Minister—even those relating to the transfer from primary to secondary school. The whole matter needs to be considered carefully. We must assess the scale of the problem and monitor the impact of the new advice. Having monitored the situation, we must consider whether the schools admission code needs changing in the future.
We also need to consider assessment within the early years foundation stage and how summer-born children are being assessed. This is a huge issue, but my message today is that if parents can demonstrate that they have a strong case that is in the best interests of their children, they should be empowered and enabled to allow their child to start school at the age of five as required, but in reception year.
I will be brief. Let me first congratulate my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) on securing this incredibly important debate. It is an issue that is not aired or talked about enough, and we need to put it at the top of the agenda when we talk about education.
I want to raise the case of my constituents, Mr and Mrs Slade, who approached me two years ago because they wanted their daughter, Ava, who was born at the end of August, to delay her start to school by a year. I have some sympathy with such a view because my older daughter Isabella is also an August-born child. She is doing absolutely fine at school now, but when she first started, her age did make a difference. If she had started a year later, it would have made a difference, but in a positive way.
As I said, Mr and Mrs Slade approached me two years ago, and I wrote to the Department. The then Minister of State for Schools, my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb), gave me a prompt reply. He said:
“It must be the parent’s choice when their child starts school and the law provides flexibility for parents on this issue.”
That was absolutely great news, but he then went on to explain that the parents had to talk to the school, the head teachers, the governing body and the local authority. That was where Mr and Mrs Slade found the huge difference between the theory and the actual practice of getting a delayed start for their child. They battled for almost two and a half years with Reading borough council, which was not as helpful as it could have been.
Mr and Mrs Slade said to me that the local authority effectively hid behind some of the clauses of the admissions code. They admitted that even if their child started in the year when the local authority wanted her to start, she would cope, but no one wants their child just to cope; they want them to thrive in school, and that is what this debate is about. Parents are best placed to judge how well their child will do in a school setting, which is why we should do more to empower them to make those decisions, obviously in consultation with local authorities and governors.
I welcome the guidance that the Department has issued, and I congratulate the Minister on the work that she is doing. I also back my hon. Friend when she says that we need to monitor the advice that is being given and to see whether local authorities are complying with it. We need to give more information to parents, governors and governing bodies. I was a school governor many years ago and feel that this issue should be built into governor training, to explain to governors how they can help parents who want a delayed start for their offspring.
When the then Minister of State wrote to me in 2011, he stated:
“Ms Slade should also be aware that if her daughter were to be educated out of her chronological age group whilst at primary school, any secondary school which she later moved on to would not be obliged to continue this arrangement.”
We also need to consider that matter. I look forward to the Minister’s response.
I congratulate my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) on securing this debate and on her campaign, including the early-day motion, on the issue of summer-born children. I absolutely share the concerns that she has raised about the issues affecting those children. In the Department for Education, summer-born children are heavily represented—I was born in July and the Secretary of State was born in August, although we both went to primary school in Scotland, where the cut-off dates are slightly different.
My hon. Friend made a variety of points, encompassing some of the overall issues about the school system and the early-years system, as well as the specific issue of the admissions code. What we are seeking to do with our education reforms is to increase the level of flexibility that head teachers and teachers have—for example, over how they implement the school curriculum—so that children are not pushed through material that they are not yet ready for and so that more care is taken about the individual’s level of capacity at a stage of learning.
We are also trying to remove some of the barriers between early years and school, so that there is not a sudden jump between them but rather a continuum of age-appropriate learning for children. Those changes are also important in ensuring that each child is treated as an individual rather than as part of a block of children who are pushed through the system.
The statutory school admissions code allows for flexibility in school starting dates, as my hon. Friend pointed out. It requires school admission authorities to provide for the admission of children in the September following their fourth birthday, so that the maximum amount of reception education is available to all children. However, children do not reach compulsory school age until after their fifth birthday, and no parent is obliged to send their child to school before then.
As my hon. Friend pointed out, we released new guidance this summer, making it much clearer to schools about where their responsibilities lie and where the responsibilities of local authorities lie. We need to allow some time for that new guidance to filter through and to ensure that all local authorities and schools understand it. Nevertheless, in that guidance we certainly addressed some of the concerns that she has raised today.
What we want to do is to empower parents to be more demanding about how their child’s level of development is reflected in whether they join reception or year 1 when they enter school after reaching the compulsory school age. My hon. Friend made valid points about issues such as child care costs and other children in the family, which will also have an effect on the decision that parents reach, but I do not think that we can impose a solution from Whitehall.
The way to do things is to empower parents and ensure, first, that they have the complaints and appeals procedures at their disposal and, secondly, that the DFE is following up on those procedures. We have a working group on admissions, which is monitoring this issue. As a Department, we will also be monitoring any complaints made by parents, such as the one that my hon. Friend the Member for Reading West (Alok Sharma) mentioned in his speech, and following up to ensure that our guidance is being adhered to.
At the moment, we do not have data that would demonstrate how many parents of summer-born children request that their child is admitted to the reception class at the age of five, or how many of those requests are granted. That is something that I will look into, to see whether it is possible to get more information to understand what might be the scale of the problem. However, like my hon. Friend, we are concerned about the level of correspondence that we are having on this issue and the level of complaints about it, which is precisely why we issued the new guidance to clarify the situation for schools and local authorities.
The point about flexibility is important, because all children are different. Some children may benefit from entering year 1 as soon as they reach the compulsory school age, while others would benefit from entering reception. It should be the parents who are the primary decision-makers when it comes to deciding which route is most appropriate for their child and which environment will enable their child to thrive.
If someone sends their child to an independent school, it is clearly available to them to decide which year group they go into. When it is really in the best interests of the child, I want that flexibility to apply to all parents, right through to a situation where perhaps there are disadvantages in the background. So I welcome the Minister’s words, but I would just like her to be a little more proactive as well as responsive to the problem.
We are absolutely clear that parents should be able to say to a school, “We want our child, who is aged five, to enter reception”, if they feel that that is in the best interests of their child. That is what we are elucidating in the new guidance that we issued this summer and that is what we will be following up on with local authorities and schools.
One of the reasons why we issued the new guidance is that we felt that earlier guidance was misunderstood and that it was not necessarily clear enough. I also agree with my hon. Friend’s comment earlier about the “floodgates”. Like her, we do not think that the new guidance will open the “floodgates”; we think that it is about schools being responsive to parental needs and that there are not a massive number of complications in doing that. We want schools to be responsive to parental needs. However, only the parents of a limited group of children—those born between April and August—can lawfully delay entry by a full year. It is those children we are talking about in this debate.
I agree with what my hon. Friend said about the research evidence on summer-born children. We know that they have lower average attainment than their older peers. The attainment deficit decreases over time as they progress through the key stages, but it persists throughout their schooling. Absolute age is the dominant reason for that but it is not the only reason, and there is a statistically significant effect from the starting age or the length of schooling. That is why we want to give maximum flexibility.
I have mentioned the non-statutory advice that we issued on 29 July. We make it absolutely clear that there is no statutory barrier to children being educated outside of their normal year group and that it is unlawful for an admissions authority to have a blanket policy that children are never admitted outside of their normal age group. We make that very clear in the guidance.
I note from my hon. Friend’s comments that she feels that some of that guidance should be clearer, and that is certainly something we can look at. However, the new guidance is considerably clearer than the earlier guidance. We say that the following factors should be taken into account when making a decision about entry: the impact on the child of entering year 1 without having first attended reception class; whether a prematurely born child would naturally have fallen into the lower age group if they had been born on time; and whether delayed social, emotional or physical development is affecting the child’s readiness for school.
Of course, the guidance has just been issued—no doubt partly due to the campaign by my hon. Friend and her colleagues—and we will need to see how it affects behaviour and the level of complaints that we receive.
I very much welcome the new advice. The Minister will know from a whole spreadsheet of evidence submitted by one of my constituents, Mr Graeme Vousden, that before the new advice was published, local authorities across the country were thwarting the wishes of parents. Subsequent to the publication of the new advice, will she collect evidence to see whether the behaviour of local authorities changes as a result of it?
The Department will certainly want to look at that, to see what the impact of the advice is and whether further advice to local authorities is required. I know that the hon. Member for Mid Dorset and North Poole may seek a change to the statutory admissions policy itself, but I think that we should look at what the impact of this new advice is.
In general, what we want to do is to encourage flexibility and responsiveness to parental needs. There is a wealth of evidence about the importance of following a specific child’s development. We are trying to encourage that development through more flexibility over pedagogy, based in the early years and in school, so that teachers can adjust teaching practice according to where the child is in terms of their level of development. A combination of empowering parents about deciding which year their child joins school and giving teachers the flexibility to teach in the best interests of the child, rather than jumping through hoops in a particular year, will help to ameliorate the situation.
Such decisions are best made at a local level. We have been clear with local authorities about where their responsibilities lie, and about the fact that we want to see them being flexible and giving the parents the choice for their five-year-old child of joining reception or year 1. Having too much central guidance the other way would be wrong. What we need to do is to ensure that local authorities are absolutely aware of their responsibilities.
Spinal Cord Injuries
It is a real pleasure to serve under your chairmanship this afternoon, Dr McCrea. I am pleased to see that the Minister is here for this debate on the important topic of continuing health care for spinal cord injured people. The all-party group on spinal cord injury has had some difficulty engaging with Ministers over the past two years. The Health Minister with responsibility for quality, Lord Howe, and more recently the Minister for Housing, the hon. Member for Hertford and Stortford (Mr Prisk), have both refused to meet the group, which is very unfortunate.
The advantage of engagement is that it enables Ministers to understand better the needs and difficulties of individuals who have to deal with severe spinal cord injuries. Such individuals face great hardship and difficulty, and Ministers should at least be prepared to engage with them and hear what they have to say. I am sure that the Minister will do so today.
I first became aware of the difficulties faced by spinal cord injured people during my work as a practising personal injury solicitor before I came to the House about 12 years ago. I was particularly engaged with the Midlands Centre for Spinal Injury at the Robert Jones and Agnes Hunt orthopaedic hospital in Oswestry. Individuals were often admitted with severe spinal injuries from accidents, and the capacity of the—[Interruption.]
Sitting suspended for a Division in the House.
I was just talking about the extraordinary work of the Midlands Centre for Spinal Injuries, which I witnessed some years ago and which continues. In connection with the immediate response to serious accidents where people have spinal cord injuries, a miraculous transformation can be carried out, provided that the right level of care is offered by specialists in the immediate aftermath of the accident.
The continuing effects of spinal cord injuries are important, and I want to concentrate on those today. Spinal cord injury results in a combination of the loss of motor, sensory and continence function, making it unique among long-term conditions. It is also a non-improving condition. Once rehabilitation is completed and health care needs have been identified, they are unlikely to decrease. Indeed, they are likely to increase over time, with complications brought on by ageing and as the condition continues. It is essential, therefore, that needs are well managed by a dedicated and trained team who understand spinal cord injuries. That will ensure that health complications and significant cost implications for the national health service are avoided or minimised.
How care is administered is a major concern to many people living with spinal cord injuries. It is not just the individual who is affected by the spinal cord injury; often, the family and the immediate community around that individual must cope with profound pressures. There is an increasing worry that health care provision is becoming a postcode lottery, with clinical commissioning groups interpreting the national framework differently to meet their budgets, rather than the specific needs of spinal cord injury patients.
The landmark legal case of Pamela Coughlan in 1999 set a precedent for how patients with a certain level of injury should expect to be treated. Ms Coughlan, a C5/C6 complete tetraplegic with no significant additional health needs, took her primary care trust to court when they attempted to transfer care provision responsibility from NHS continuing health care, within which health care is free, to the local authority, where charges may have applied.
The hon. Member for Wrexham and I spoke beforehand about this issue and I wanted the information to be recorded. Perhaps the Minister will take it on board as well.
We have a specialised 15-bed unit that looks after the whole of Northern Ireland and its population of 1.7 million people. That unit has everything: trauma, orthopaedics, neurosurgery, neurology and an intensive care unit. There are dedicated teams for physio, nursing, occupational therapy, social work, psychology, dietetics, art therapy and complementary therapies. All that happens under one roof for all the people in Northern Ireland. The hon. Member for Wrexham said to me, “That is the sort of thing we need in my area.” I wanted to put that case on the record. Perhaps the Minister could look to Northern Ireland as an example of something that has been done and done well.
I thank the hon. Gentleman.
Going back to Ms Coughlan and the issue of continuing care, the ruling found that patients with a certain level of spinal cord injury have health care needs of a “wholly different category” than can be legitimately provided for by a local authority. These are profoundly and almost singularly serious conditions. Even spinal cord injured people with greater health needs than Ms Coughlan are finding themselves assessed as ineligible or seeing their care packages severely restricted, without any evidence of reduced need.
As local health budgets for continuing health care are being squeezed and, in many cases, reduced, many of these people are experiencing reduced care packages and unfair, and potentially unlawful, decisions on eligibility for continuing health care. There are many examples of continuing health care packages being denied or dramatically reduced after reassessments, without evidence of clinical improvement.
One individual who has been affected is John Burns. He addressed the all-party parliamentary group on spinal cord injury last year, and it is occasions like that that show the importance of all-party parliamentary groups. They allow individuals such as John to speak to Members of Parliament and explain the difficulties.
John, who is married with three teenage sons, is a C2 tetraplegic following a water sports accident while on holiday with his family in 2007. Due to the extent of his injuries, John was initially put on a ventilator and awarded NHS continuing health care. After a period in a spinal cord injuries centre, John was discharged into a care home and was successfully weaned from his ventilator. Although he remained paralysed from his neck down, his continuing health care funding was consequently withdrawn, and he was told to expect to remain in a nursing home for the rest of his life. Without the appropriate funding, John was unable to receive the care and support he needed to be with his family and return home. He described that period as being like a “prisoner,” as he was denied time with his wife and sons in his own home. That is the type of individual that we, as a community, should be aiding, rather than denying them health care.
In a meeting with the Spinal Injuries Association, the then Minister of State with responsibility for care services, the right hon. Member for Sutton and Cheam (Paul Burstow), expressed concern about John’s case. Thanks to the involvement of the Spinal Injuries Association, an independent nurse was assigned to assess John’s case and immediately argued in his favour that funding should be reinstated. Yet John had to go through that process to restore the care that had been taken away from him. One can imagine the worry and distress experienced by John and his family during that period.
Despite the precedent of the Coughlan judgment, a large number of spinal cord injured individuals with health care needs demonstrably equivalent to or even greater than those of Pamela Coughlan are still denied NHS continuing health care. The culture of ineligibility continues. What action is the Minister taking to ensure that, where appropriate, spinal cord injured people have access to NHS continuing health care and that the legal ruling is adhered to? Is there a process for monitoring the level of care that individuals with severe spinal cord injuries are receiving from their immediate provider? How will the Department monitor the level of provision that is being given?
The Government must ensure that locally produced policies do not impose inappropriate and potentially unlawful care packages on a spinal cord injured person. Will the Government ensure that clinical commissioning groups adhere to the Coughlan judgment when deciding NHS continuing health care eligibility for spinal cord injured patients? Does the Minister believe that there should be a presumption of eligibility for tetraplegics when determining continuing health care? In addition to their injuries, such individuals and families should not have imposed on them the burden of worrying whether the care they received in the past will continue.
There is also concern that multidisciplinary teams assessing spinal cord injured patients for continuing health care frequently exclude health professionals with expertise in spinal cord injury when reaching their decisions. Along with the judgments that set legal precedents for NHS continuing health care, such as the Coughlan judgment, assessors and decision-making panels must carefully consider evidence from spinal cord injury clinicians and health care professionals from the NHS spinal cord injury centres. It is important that those individuals, who are so skilled in providing care, have input into the process of deciding what care the NHS is to supply in future. Will the Government take action to ensure that health professionals with expertise in spinal cord injury are included in multidisciplinary teams throughout the process?
There have been instances in which local commissioners have introduced policies that randomly restrict the amount of money available for “care at home” packages to the cost of non-complex care in a nursing home, disregarding the special care needs of spinal cord injured people and their right to family life. In an increasing number of clinical commissioning groups, local implementation policies place restrictions on the size of “care at home” packages, often based on arbitrary caps set against the equivalent cost of a placement in an establishment such as a nursing home. That has happened, for example, in the Sheffield clinical commissioning group cluster and in north-west London despite Department of Health practice guidance outlining the rights of people to choose where to live and to take risks, and despite the court’s indication that an individual’s human rights need to be balanced against cost.
The excellent spinal research charity Aspire commissioned Loughborough university to independently consider the impact on people with spinal cord injury of being discharged to nursing homes. The research found that living in a nursing home has a damaging psychological and physical impact on people with spinal cord injury. Spinal cord injury patients should not be expected to live in institutions rather than with their families. Generally, such people view care homes as a last resort.
The individual must be at the centre of the assessment process. Improving the implementation of NHS continuing health care will benefit its members, the clinical commissioning groups and the wider spinal cord injury community. Such issues affect people across the UK. They cause families and individuals profound worry, and they must be addressed urgently. The legal ruling must be adhered to, and the culture of ineligibility must end.
It is a pleasure to serve under your chairmanship for the first time, Dr McCrea.
I congratulate the hon. Member for Wrexham (Ian Lucas) on securing this debate and on his persistence in pursuing the matter. I have noted what he said about his frustration in securing meetings with a couple of Ministers. At least we have had the chance this afternoon, albeit interrupted, to debate this important issue, and I am more than happy to talk to him if there are issues arising from this debate that he wants to pursue further.
The hon. Gentleman makes the point that how care is administered is incredibly important to the individual, and he also mentioned the profound impact that spinal injury has on the whole family and everyone involved. He talks about the emergence of a postcode lottery, but if we are honest with ourselves, the postcode lottery has always existed to some extent. The interpretation of rules has always varied somewhat across the country. Indeed, the Coughlan case was brought because of a failure to apply rules properly. I will return to that in due course, but it is essential that all areas of the country apply the rules properly, according to the guidelines, and apply the precedent that has been set.
I also pay tribute to the important work of the all-party group on spinal cord injury, which has had a major impact on issues affecting the estimated 40,000 people with spinal cord injury in the United Kingdom and Ireland alone. Every eight hours, a new person is told that they will never walk again, which is a stark reminder of the scale of spinal cord injury.
Thankfully, research is making important strides in developing new techniques to help spinal cord injury patients regain as much function and independence as possible. In 2011-12, the Medical Research Council spent £900,000 on research directly related to spinal cord injury. The Government also fund a wide range of research relating to spinal injury, and through the National Institute for Health Research, the Department of Health is funding research on spinal cord injury in biomedical research centres in Cambridge and London.
There is an increasing range of guidance available to provide advice on the causes, treatment and management of spinal cord injuries. Stakeholders such as the Spinal Injuries Association and Aspire provide information and support services for patients and their families following spinal injury, and we should pay tribute to the work of those organisations. In February 2008, the Royal College of Physicians published a guideline for GPs and other health professionals involved in the management of adults with spinal cord injury in the acute hospital setting. I am confident that that range of guidance will be useful for educating people and, critically, professionals on spinal injuries and how to manage them.
More work is taking place to develop guidance for the treatment of those with spinal injuries. The Department has asked the National Institute for Health and Care Excellence to produce guidance on the assessment and imaging of patients at high risk of spinal injury. NICE is developing five pieces of guidance relating to trauma, with expected publication dates in June and October 2015. Each piece of guidance will focus on a different aspect of trauma care. The guidance on spinal injury assessment will form one part of the wider work and is expected to be published in May 2015.
The hon. Gentleman appropriately raised NHS continuing health care for individuals with spinal cord injuries. NHS continuing health care is a package of health and social care that is arranged and funded solely by the NHS for individuals outside the hospital setting who have complex, ongoing health care needs. It is important to say that eligibility for NHS continuing health care is dependent not on an individual’s condition or diagnosis—it is important to maintain this point—but on the individual’s specific care needs. That must be appropriate, so that what is assessed is what the individual needs.
The assessment for NHS continuing health care is complex and involves a multidisciplinary team co-ordinated by the relevant clinical commissioning group looking at an individual’s needs across 12 care domains and assessing how those needs interact. The process determines whether individuals have what is called a primary health need. If they do so, they will be entitled to continuing health care.
The hon. Gentleman specifically referred to concerns about specialist involvement in continuing health care assessments. The national framework, which underpins the assessment and decision making for NHS continuing health care, makes it clear that someone with specialist knowledge is involved in the process, with other highly skilled professionals, such as doctors, nurses, social care staff and therapists. If that is not happening in an area, that is a failure to follow the national framework and should be challenged. I am interested to hear about cases in which that is not happening, because corners cannot be cut—things should be done properly. He made an important point.
The family or representative may also be involved, to ensure that a holistic picture of the individual’s needs is properly identified. After all, the family probably knows best about what the impact really is.
Individuals receiving NHS continuing health care will have their case reviewed three months after the initial decision and annually thereafter. It is important to remember that the focus of the review is not only whether the individual remains eligible, but whether their needs are being properly met and the package of care remains appropriate. Let me be clear, however, that an individual must be kept fully informed about the process and any proposed change to the care arrangement.
The hon. Gentleman expressed concerns about refusals of NHS continuing health care or the package being drawn too narrowly, suggesting that the Coughlan judgment was not being followed and that cases more serious than the Coughlan one were being refused—I think I have put that correctly, from what he said. I again make the point that if any areas are failing to follow the national framework, that must be challenged. I appreciate that families may not always understand or know how to go about challenging, or what they are entitled to, but we all have responsibility to disseminate that message and to encourage people to challenge decisions that cannot be justified.
The Minister is being very constructive in his response. Is there any process for monitoring the decisions? Organisations such as the Spinal Injuries Association can bring individual cases forward, but there needs to be some sort of system to ensure that the rules, which I am grateful that the Minister is stressing today, are being enforced as a matter of course.
The hon. Gentleman makes a fair point. I was about to say that I will ask NHS England to provide me with an assessment of how the work of CCGs complies with the guidelines. The very fact of that request for information will help focus minds and ensure that things are being done properly.
I am aware that there are some concerns about how autonomic dysreflexia is reflected in NHS continuing health care assessments. It is unique to spinal cord injuries and should always be treated as a medical emergency. The needs of individuals experiencing autonomic dysreflexia are to manage both the risk of episodes occurring and the risks involved if and when such episodes occur. Such risks, and therefore the needs, vary from one individual to another. It would be relevant to establish whether the individual has signs and symptoms of an advancing episode or whether the episodes are random and unpredictable.
It has been suggested that more people with spinal injuries are being placed in nursing home settings, rather than being offered a care package in their own home. The national framework is clear that NHS continuing health care packages should be as far as possible personalised—designed to meet that individual’s needs—and that the individual’s wishes should be taken into account. It is our hope that personal health budgets—a concept developed under the previous Labour Government, but strongly pursued under this Government—will give people more personal control over their care.
We recognise that it is more efficient for people with long-term conditions such as spinal cord injuries to have control over their own budget for health and social care, because they are less likely to duplicate services or to choose ones that are not right for them. Beyond being efficient, however, it is simply what we should be doing: we should be putting the individuals in charge and allowing them to determine their priorities. On that basis, CCGs are already able to offer personal health budgets to people on a voluntary basis, if they consider that it is cost-effective and will improve the individual’s quality of life.
We have also brought in legislation that will allow CCGs to offer direct cash payments as a way of managing personal health budgets. However, to make personal health budgets more of a reality for people, we have put measures in place to ensure that CCGs go further than offering them only on a voluntary basis. As of April 2014, those receiving NHS continuing health care will have the right to ask for a personal health budget, including a direct payment. Using a personalised care planning process, personal health budgets help people choose how to meet their health needs in ways that work for them.
I have just set out how the process for NHS continuing health care is intended to work. Let us not pretend, however, that it works perfectly in every case—it clearly does not. I am delighted that the Spinal Injuries Association continues to have a strong presence on the NHS national continuing health care stakeholder group. It is important that its voice and that of the people it represents are heard.
Eligibility for NHS continuing health care depends on a needs-based assessment. Therefore, some individuals will not be eligible, but they must still receive the appropriate level of care and support. Disjointed care is a source of complete frustration for patients and staff alike. To stay relevant to changing needs, different parts of the NHS and other organisations such as social services have to work more effectively together to drive joined-up care.
The first NHS mandate sets out a requirement to provide
“care which feels more joined-up to the users of services”,
“ensures people experience smooth transitions between care settings and organisations”.
That is vital, and there is a total focus in Government on integrating and joining up care around the needs of the individual patient. On that basis, we have asked NHS England to make huge efforts to focus on delivering integrated care and support to improve outcomes for patients and for people who use those services.
I thank the hon. Gentleman for securing the debate. The issues that we have discussed this afternoon are important, because of their impact on people who have sustained a spinal injury which in itself is completely life changing. We must ensure that the care and support systems work to meet their needs and to enable the best possible quality of life and outcomes for those individuals.
Question put and agreed to.