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Westminster Hall

Volume 590: debated on Tuesday 13 January 2015

Westminster Hall

Tuesday 13 January 2015

[Mr Philip Hollobone in the Chair]

Grammar School Funding

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Wallace.)

What better way to start a parliamentary Tuesday than with a debate on grammar school funding, in the name of Sir Edward Leigh?

Thank you, Mr Hollobone. It is a convention to say what a pleasure it is to serve under your chairmanship, but in this case it is heartfelt.

This debate is about the funding not only of grammar schools, but of successful, well performing comprehensives with good sixth forms. I am proud to declare that one of my children attends a grammar school, and I am proud to have two excellent grammar schools in my constituency: Caistor grammar school and Queen Elizabeth’s high school. They are centres of excellence, and I salute the Lincolnshire county councillors who have always kept in mind the importance of our grammar schools and saved them.

The phasing out of grammar schools in most of the country was one of the greatest policy disasters of the post-war era. By the 1960s, grammar schools were so successful that we achieved an unqualified and unprecedented level of social mobility—it was greater than anything this country has achieved in its long history, before or since. Many of the nation’s poorest, most deprived people were given their first great chance to move up. Those schools were so successful that the independent sector feared that it would fade and decline into irrelevance, barring the odd Eton or Harrow. Across the country, we need to nurture those centres of excellence and learn lessons from them that we can apply across the state sector as beacons.

The purpose of this debate is not to honour grammar schools, but to ensure that they are not buried by stealth. A growing concern has emerged recently about the disparity of per-pupil funding for grammar schools, which also affects high-performing comprehensives with large sixth forms. Changes in the past three years have adversely affected grammar schools disproportionately in comparison with other state schools. The minimum funding guarantee of minus 1.5% gives the appearance of preserving per-pupil funding. However, as Mr David Allsop, the headmaster of Queen Elizabeth’s high school in Gainsborough, notes:

“Sixth form funding has been dropping much more significantly and we have managed to maintain our funding as flat by increasing the number of students in the sixth form.”

In 2013, Mr Allsop analysed Lincolnshire schools that were not academies, and looked at per-pupil funding. The grammar school that he heads was the least well funded school per pupil in the county. It receives £4,474 per pupil on average, while a similar sized comprehensive school in Lincolnshire receives £6,481 per pupil. Those figures are from the Government’s consistent financial reporting data. If we are to promote educational excellence, it is not a good idea to give the best school in Lincolnshire, which everybody tries to get into, only £4,000 per pupil per year, while giving the worst performing comprehensive in Lincoln, which nobody wants to go to, £7,000 per head per year. That is a daft way to run our education system.

We are asking only for fairness. Back in the 1960s, one of the criticisms of grammar schools was that they were treated unfairly well by county councillors. It is ironic that the reverse is now happening. Grammar schools are in a uniquely bad position, in terms of state funding.

My hon. Friend makes a compelling case. Is not the reason why grammar schools are so badly funded comparatively that they have disproportionately high numbers of pupils at sixth forms? Is not the real issue the way in which the Government have dealt with sixth-form funding, rather than with grammar schools funding per se?

That is exactly right, and I will come to that point in a moment. Mr Roger Hale, who runs the successful Caistor grammar school, wrote a heartfelt plea to me. Of course, he will struggle on and do his job—that is what teachers do—but he said:

“We were one of many schools who answered the call from Michael Gove to set off on our own as an Academy so that we would have better control over our resources. In the first few years, this worked very well. However in the last 18 months, the funding we receive to be an Academy has been sharply reduced.”

I have read letters from grammar schools from all over the country that say the same thing.

On the face of it, it seems fair that the Government equalised post-16 per-pupil funding between schools with sixth forms and further education colleges. A lot of the problems are due to the law of unintended consequences. I do not think for a moment that Ministers intended to hit grammar school funding adversely, but their laudable aims had unintended consequences. The funding for FE colleges and schools was equalised, which was fair enough. However, that ignored the significant further pastoral support and enrichment programmes for pupils in sixth forms. Sixth formers take on a broader programme of AS and A-levels, in addition to supervised study, sport and other programmes, in contrast to FE students. Per-pupil costs for sixth forms are in many cases higher than they are for further education colleges. Sixth formers, on the whole, have between 20 and 25 taught hours per week, while the figure for those in further education colleges is closer to 17. Furthermore, that equalisation was achieved not by choosing a figure in the middle of the previous levels of sixth-form and FE funding, but by brining sixth-form funding down to the same level as further education.

I am grateful for the argument made to me by Mr Önaç, the headmaster of St Olave’s school in Orpington. He said that the scale of the reduction that the change has brought has been huge, and that it often amounts to a whole fifth of the per-pupil budget. Although it has applied across schools, it has affected grammar schools, because almost all of them have sixth forms that comprise a much larger proportion of their total school population than other schools. That is why we have this problem. I am not sure that it was envisaged at the start of the changes.

It is a shame that the hon. Gentleman did not make the debate about 16-to-19 funding as a whole, because the same would equally apply to sixth-form colleges, which also have to pay VAT.

Although I wanted to talk about the problem affecting grammar schools—one should be absolutely honest—as I said at the beginning of my speech, the problem affects not only grammar schools, but successful comprehensives with large sixth forms. The hon. Gentleman is right to make that point. I hope we can look at this issue in a bipartisan way. It should not be about grammar schools versus other schools, but about fairness. All sixth-form pupils, whatever school they are in, should be funded as equally as possible.

Supplemental funding for the disadvantaged is widely welcomed, and we all accept it. Part of the reason why I and others are such passionate advocates for grammar schools is that they provide a superb helping hand for pupils from less-advantaged backgrounds.

I have a number of brilliant grammar schools in my constituency, but one of the reasons why they are comparatively underfunded is that, compared with the other schools in my constituency, they do not attract the pupil premium because they have fewer pupils from disadvantaged backgrounds. The funding system, which is skewed towards disadvantage, has disadvantaged grammar schools, so the claim that grammar schools help disadvantaged pupils is belied by the statistics.

Grammar schools can help people, in particular those from ethnic minorities. In the school that my son attends, 60% of the pupils are from an ethnic minority background, which is high. I believe that, if there were more grammar schools, we could do more to help people from disadvantaged backgrounds. One of the problems is that there are not enough grammar schools. We are not going to get into this debate now, but I wish county councils had the freedom to set up more grammar schools if they want to do so. That is what localism is all about.

The way that the funding is worked out—there is an over-emphasis on pupils who qualify for free school meals—is not adequately grounded in the hard evidence of the additional costs associated with disadvantaged pupils. The Government have injected additional funding into four sections: pupil premium; special needs; pupils who have failed GCSE English; and pupils who have failed GCSE maths. As I have said, that intention is laudable, but unfortunately, in many cases, it means that the Government have perhaps unwittingly pumped four different funding streams into the same child.

We also need to recognise that that funding increase has a converse effect on the opposite end of the spectrum in grammar schools and sixth forms more generally. It would be counter-productive to unbalance the funding of education so much towards disadvantaged pupils that we undermine centres of excellence in the state sector that we want to protect. This is not a zero-sum game: we can help disadvantaged pupils and promote centres of excellence. Surely that is the right way to proceed.

The number of young people over the age of 16 educated on a full or part-time basis has increased in recent years as a result of raising the participation age to 17 in 2013 and 18 in 2015. Schools and further education colleges have come under pressure to expand to accommodate such increased numbers. That is fair enough, but at the same time, the funding pot for post-16 education has become fixed, and the method of distribution has changed from a model that included higher levels of funding for courses with large practical elements, and incentives for institutions with high levels of success and retention.

The simplification of the funding system—funding is attached to the student rather than the course—is welcome, but the impact on high-achieving academic schools with large sixth forms, including the grammar schools in my constituency and others, has become considerable. The funding system means that, in some local authorities, students receive more funding for education from 11 to 16 than from 16 to 18—can that be right?—even though it is widely recognised, and obvious common sense, that the cost of delivering the curriculum increases as a student gets older. That is why many universities feel justified in charging fees of £9,000 a year.

As students move through the school system, they can exercise an increasing level of choice over the subjects they study, which tends to reduce financial efficiency. More broadly, there is a bigger perspective, which I want to end on. We need to think about that point, which I want to emphasise. The world is becoming more and more globalised. As the Prime Minister keeps telling us, Great Britain is competing in a global race for excellence. For us to compete successfully, we need more scientists, more engineers, more mathematicians, more doctors and more innovators.

What evidence can the hon. Gentleman give to show that areas with selection at 11 produce more people in those professions than areas that do not have selection at 11?

I think I can establish that grammar schools provide real add-on value and are, in themselves, centres for excellence. I do not want to get into a wider debate about whether there should be more or fewer grammar schools in Lincolnshire, but the Government have decided that the existing grammar schools should survive. Nobody in the Government, or the Labour party, suggests that grammar schools should be phased out. Presumably, they accept that those schools have a contribution to make. All we are asking for is fairness. I am not saying to the Government that there should be more grammar schools, although I might well believe that. I am simply saying that I want fairness. The Government have decided that the schools should exist, so they should be funded fairly. The removal of additional programme weighting for sciences, technology and mathematics is particularly unwelcome.

I had thought that the grammar schools system controversy was found only in Northern Ireland, but it would seem to happen in England as well. The research notes we have received show that the Government gave a commitment as far back as 2010 that the disparity in funding would be addressed by 2015. Does the hon. Gentleman see any sign of that? Why the disparity?

The disparity exists for the reasons I have described, but we have a quite excellent Minister who has committed his whole life to education. We are all waiting for his response.

It is vital that our young people are equipped with the knowledge, understanding and skills that will enable them as individuals, and the United Kingdom as a nation, to compete successfully in a global marketplace. That is so obvious and we all agree with it. Changes to post-16 educational funding were examined in isolation from funding for 11-to-16 education, and therefore little is understood about the cumulative effects of decision making on particular schools.

Different types of school are affected in very different ways. Schools for 11 to 18-year-olds with large academically successful sixth forms—I cannot make the point too often that that category includes both grammar schools and high-performing comprehensives—have lost large chunks of money. Whatever one’s view on the grammar school debate, and whether one thinks they are good or bad, that is undoubtedly true. It is rooted in fact. Those are often the very same schools that are unfairly funded pre-16.

The sacrifices demanded of those schools compared with schools for 11 to 16-year-olds, in which levels of income have remained relatively stable, have been significant. As a consequence, the curriculum for students is narrowing, class sizes are increasing, teaching time is reducing and support staff are being withdrawn.

We are sleepwalking towards a future in which some of the country’s best performing schools—centres of excellence—will no longer be able to offer a broad and balanced curriculum to their students. Music and modern foreign languages will join Latin and Greek A-level to become largely the preserve of those whose parents can afford to pay for their education. Our nation’s brightest students will have access to fewer opportunities and resources than their peers. Is it fair that bright students whose parents cannot afford to pay are disadvantaged? Where is the fairness in that?

Christ the King College, the best school in my constituency for providing quality work for children—others schools are improving but that one is the best—is not a grammar school, but a good comprehensive.

The debate is about not just grammar schools, but good comprehensives. By the way, my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) wanted to be here to make some of the points I am making, but she has to serve on a Committee elsewhere. I am grateful to all my colleagues who have turned up this morning. There is a lot of concern throughout Parliament about grammar school funding.

What we need is not 80% or 90% of funding allocated on pupil-led factors, but simply funding per pupil fairness between pupils. To that end, we need to achieve a meaningful, basic entitlement, and genuinely fair and transparent funding. That would ensure that all of our children, whatever background they come from and whichever kind of school they attend, can enjoy a broad, balanced education that will equip them for life in the 21st century.

Order. The debate will finish at 11 am and I do not want to call the Front-Bench Members later than 10.40 am. We have just under an hour and six Members are seeking to speak, so we are looking at nine or 10 minutes each. Please do not exceed that time, because that will mean that someone at the end will have less. We have just had an eloquent plea for fairness from Sir Edward and I would like you to apply that to yourselves. We will be led by Damian Green, an exemplar.

It is a pleasure to serve under your chairmanship, Mr Hollobone. I am delighted that my hon. Friend the Member for Gainsborough (Sir Edward Leigh) not only secured the debate, but set it out in the way he did. Sixth-form funding is a real issue and I hope that even those across the educational ideological spectrum who oppose the existence of grammar schools can be, as he said, united on that, because children’s chances are being affected. That is at the root of what we seek to bring to the Minister’s attention.

As it happens, I attended a grammar school and I support them in my constituency, more widely in Kent and throughout the country because they provide a route for disadvantaged children to reach the top of the academic ladder. Providing that opportunity is one of the core objectives of any sensible education system.

Given the right hon. Gentleman’s opening remarks, does he regret that the debate is limited in scope by its title to only 160 or so schools? The issue that he seems to want to highlight affects many more institutions throughout the country.

The hon. Gentleman may have a discussion offline with my hon. Friend the Member for Gainsborough about the title of the debate, but my hon. Friend and I have made it clear that we are not talking only about grammar schools. There are comprehensive schools in my constituency, including one extremely good one, and there are others around the country—the hon. Gentleman mentioned sixth-form colleges. This is a wider debate but, clearly, among the schools most appallingly affected by the unfairnesses in the funding system are grammar schools.

Is this debate about grammar schools in fact about the fundamental unfairness of the whole funding formula? That is what we are actually talking about, that is what the F40 campaign is all about and that is why we need to see fair funding for pupils wherever they are.

We all agree that we want fair funding. It is not an easy issue and Ministers in this and previous Governments have grappled with it. The principle that we all start from is that allowing all children to reach the full extent of their potential must be the aim of every school.

When the rhetoric and emotion that have begun to enter this debate, and which have gone on for decades, are stripped away, all grammar schools are is specialist academic schools. Under successive Governments, we have thought it a good thing to allow schools to specialise in music, sport, science, maths or languages, but the one thing that the education establishment has never allowed schools to specialise in is academic excellence. That has always seemed completely perverse: we allow schools to specialise, but not at being good in schoolwork.

The right hon. Gentleman is discussing specialising in academic excellence. In Northern Ireland we have attempted to do that. Does he agree that grammar schools in England, as in Northern Ireland, need to continue to do more to dispel the perception of elitism that continues to dog the sector?

Absolutely. There is a different debate to be had about how grammar schools can attract children from across the economic and social spectrum. They are particularly successful at attracting students from minority communities in the UK, which is hugely welcome—and, I suspect, illustrates how committed to the education of their children such communities are. As I say, however, that is a separate debate. The point of this one is that grammar schools and other schools with large sixth forms deserve a fair funding regime, along with all other schools.

A number of complex interactions have led to the unfairness. The Minister needs to address two basic issues: first, that post-16 funding is not protected in the way that the rest of the schools budget is, so that any school with a large and growing sixth form is in a financial straitjacket—grammar schools in particular are disadvantaged, but not only them. Secondly, there is the wide amount of local variation that has arisen, again from perfectly good motives. That can be illustrated in a number of ways.

Some of us attended a meeting of grammar school heads and I was struck by one of the illustrations, which comes from Buckinghamshire, although I am sure the same would apply in Lincolnshire, Kent or other areas in which there are many grammar schools. We were shown what would happen if a Buckinghamshire school moved next door: if it moved to Oxfordshire, it would gain 6% in funding and if it moved to West Berkshire, it would gain 8%. If it moved to nearby urban areas, it would gain even more—in Reading, it would gain a 10% uplift and in Luton it would gain 18%. One can understand all the reasons why such disparities might have arisen, but it is not unreasonable for the heads of successful schools to observe the situation as an unfairness from which they suffer in their daily lives.

One of the reasons why I wanted to contribute to the debate was the effect of unfairness on the day-to-day teaching at the two grammar schools in my constituency, Highworth and Norton Knatchbull. Mr Paul Danielsen, the head teacher of Highworth, told me that, despite being oversubscribed, having full classes and having made staffing reductions and other economies, the school can no longer offer the full range of provision. He thought that some schools, at the extreme, might not be able to operate at all—I think that that is unlikely, but it is a possibility. We are talking about the cumulative effect of funding decisions.

Is there not a further irony? At a time when we want a broader curriculum taught post-16, it is often grammar school sixth forms that teach the most challenging A-levels, such as single sciences, which are among the things that lead to more scientists and engineers. Is there not a terrible danger that the squeeze on funding might reduce that breadth, rather than increase it?

My hon. Friend is not only right, but uncannily anticipates my next point.

The practical effect on day-to-day education is a smaller offer in the sixth form for many pupils. Highworth school does a lot of challenging A-levels. Languages are a particular problem, unfortunately, because they have become a less attractive subject for many pupils. German A-level classes are being run with class sizes of 11 and French and Spanish ones with class sizes of seven. With the financial squeeze, they might no longer be viable, which would be appalling. Already in that school, the number of A-levels offered has gone down from 40 to 32, which is completely perverse. I know that the Minister agrees. It is a nonsense that good pupils at good schools are being penalised. They are losing opportunity, and levels of attainment that could be reached are not being reached.

What has happened has not been because of Government intention. Much hugely beneficial education reform under this Government has massively improved the life chances of millions of young people in the country, and I applaud that wholeheartedly. The one perversity in the system, however, is damaging the life chances of children—of some of our most academic children at some of our best schools. I fervently hope that the Minister and the Government can address that in the months head.

It is a pleasure to serve under your chairmanship, Mr Hollobone, as always. I echo congratulations to my hon. Friend the Member for Gainsborough (Sir Edward Leigh) on securing this important debate.

I want to take the opportunity to highlight some of the work achieved by the four grammar schools in my constituency: Dartford grammar school for boys, Dartford grammar school for girls, Wilmington grammar school for boys and Wilmington grammar school for girls. Like my hon. Friend, I should declare an interest, in that I went to Dartford grammar school, I am a governor at Dartford grammar school for girls, where my daughter goes, and my son has, fortunately, just passed his 11-plus and is hoping to go to Wilmington grammar school. Grammar school education therefore runs through my DNA. It is essential that we enable it to continue to be successful.

Grammar school education plays a crucial role in providing a diverse range of educational opportunities for children and helps to prevent there being a one-size- fits-all system. Children are different—we all know that—so we should not have an educational system in which every school tries to be the same. Grammar schools also provide social mobility for aspirational people and their children. I accept and concede entirely that grammar schools are not for all children, but many thrive in the academic environment of such schools.

It is essential that we allow grammar schools to thrive financially—that is the substance of this debate. Like all schools, grammar schools need to be adequately funded. I urge the Department for Education to be as flexible as it can with any grammar school approaching it with funding issues—something I know schools are able to do.

The Government have maintained funding for schools. I welcome some of the changes that have been made but, as my hon. Friend the Member for Gainsborough pointed out, we must ensure that there are no unintended consequences. There clearly have been—that has been part of the problem with funding grammar schools—and they have impacted disproportionately on grammar schools. That situation must change.

The change in funding for A-level pupils from a per-A-level structure to a per-pupil structure has tackled an issue of concern to some people: that pupils were simply being asked to take more and more A-levels when universities were looking only at the top three that pupils were able to pass. I understand why the Department for Education wanted to recognise that issue in the funding structure, but the changes have had a disproportionate impact on grammar schools, particularly those that relied on the extra funding that the previous system provided.

I will keep my comments short as many people want to speak, but I want to establish a thread to run through the debate—that grammar schools are simply good schools and that we need good schools to flourish. I am grateful for the Government’s support for existing grammar schools, which has enabled all four grammar schools in my constituency to expand and encourage and enable more pupils to attend and enjoy the benefits that they provide for the local community.

The Department for Education has recognised the importance of allowing specialisms in schools. My right hon. Friend the Member for Ashford (Damian Green) made the important point that we need to allow the specialism of being good at academic work. That has been recognised by the Department through the university technology colleges being built around the country. I was proud to see the first UTC in Kent open in my constituency. That college specifically encourages pupils to specialise in maths, engineering and science, providing a block or cork for the gap in skills that we had. Having organisations that allow specialisms to flourish can be highly successful. Grammar schools can also provide specialism in academic work, enabling some children to obtain the benefits of that specialism.

In addition, there is now a general recognition that it is perfectly right and effective to allow streaming within schools, so as to have children taught according to their academic abilities. I fail to understand why some people feel that it is perfectly fine to stream within schools but not between them. That argument against grammar schools is illogical.

Grammar schools also help the schools that surround them. There is a myth that they somehow bring other schools down—that they cream off the pupils with the top abilities in a particular area, and as a result of having a grammar school as a neighbour other schools collapse and fall down. In my experience, that is simply not the case. Next to one grammar school in my constituency is the Leigh academy, which is the most over-subscribed school in the county of Kent. It leads a trust that is, perhaps, one of the best in the country. It is a non-selective school in a constituency that has four grammar schools, yet is the most popular school in the whole county.

It is often said, quite rightly, that education is about maximising each child’s abilities and ensuring that they reach their full potential. All children are different, and we must enable the existence of an education system that reflects that fact if we are going to achieve that goal. Only a diverse system of education will be able to cater for the needs of all of our children, and grammar schools provide a crucial part of that diversity.

It is a pleasure to serve under your chairmanship, Mr Hollobone. I add to the congratulations given to my hon. Friend the Member for Gainsborough (Sir Edward Leigh) on bringing this important issue forward at this time, when there a great deal of interest in the role of and proposals for grammar schools.

I am fortunate to have grammar schools in my constituency, and they remain extremely popular. One measure of that popularity is the distances from which parents apply to them because of the high quality of education pupils receive there. Like other Members who have spoken, I should declare an interest, as I am going to give some examples from the grammar school in Rugby where my own daughter is a pupil.

As with other grammar schools, a feature of grammar schools in Rugby is that their sixth forms are very large. They provide post-16 education for many feeder schools across the town, and those who start their secondary education in one of our—very good quality—comprehensive schools very much aspire to have the opportunity to move to a grammar school sixth form, so sixth-form funding is particularly important.

We had a previous debate about funding for education in this Parliament, and the cross-party F40 campaign—a very effective campaign organised in this place by my hon. Friend the Member for Worcester (Mr Walker)—has drawn attention to the differences in education funding per head. The Government have, appropriately, provided an extra £390 million for the 69 worst-funded authorities, of which Warwickshire is one. That is a welcome attempt to address the problem, but it is not a cure, as substantial differences remain in per-pupil funding.

To give a local example, the average student is allocated £917 less funding in Warwickshire than the self-same student would be allocated in Birmingham, a difference of 21%. There is no dispute today that the impact of deprivation needs to be addressed and that additional resources should be targeted at it. However, that should not affect the majority of schools nor those schools with larger proportions of brighter children or children who do not attract additional funding. In Warwickshire, a student with no characteristics attracting additional funding is allocated just £3,569 of funding—£381 less than the DFE’s minimum funding level of £3,950 for a key stage 3 student.

Does my hon. Friend agree that his points effectively prove the need for floor funding, so that funding is fair and decent for all forms of education, including grammar schools and other good schools, and that that is the way forward, certainly when we bear in mind additional funding from the pupil premium and other such funding streams?

My hon. Friend is entirely right. In this debate, we are calling for a fairer funding formula for schools across the board. I am concerned that pupils in Warwickshire are receiving less than the DFE’s own minimum.

I turn now to the effect on sixth forms. They are at an additional disadvantage as a consequence of the good intention to equalise post-16 funding between sixth forms and further education colleges. That decision did not allow for the fact that schools provide supervised study, teach additional elective subjects and provide sport and other enrichment programmes, so there is more teaching time in schools than at further education colleges, where students often have a proportion of free time. In some instances, that has led to a loss of £1,000 per student.

This has had a particularly adverse effect on Rugby high school. If it had been an 11-to-16 school and its numbers had remained the same each year, its funding would have been static at £2,042,000. Unfortunately, the changes in post-16 funding have resulted in a 15% reduction in the school’s sixth-form funding—the equivalent of the salaries of 6.7 teachers paid at point 6 on the main professional scale. Schools such as Rugby high school, whose academic sixth forms are large in relation to the remainder of the school, have been particularly affected, although, of course, the issue also affects high-performing comprehensives.

The result is that Rugby high school receives less funding for post-16 students than for students aged 11 to 16. The figure is £4,080 for students post-16 and £4,350 for students aged 11 to 16, so there is £270 less per pupil when students transfer from GCSE courses to A-level courses, despite general agreement that the curriculum becomes more expensive to deliver as students pass through secondary school. We are perhaps getting to a situation where funding for 11 to 16-year-olds is having to subsidise sixth-form students because of a lack of sixth-form funding. That £4,080 represents just 45% of the £9,000 a top university would charge in tuition fees when students move on from sixth form. That massive difference cannot possibly be the best way to ensure that those studying for A-levels and preparing for entry into university get a top-quality education.

The funding issue has meant that schools such as Rugby high school have had to be very creative in balancing their books. The school has a particular problem because it is the only secondary school in Rugby without a sports hall and cannot provide sport. In addition, it has had to increase class sizes, reduce teaching time and, most significantly, drop some subjects. Particularly vulnerable subjects, which may disappear from the curriculum altogether in coming years, include modern foreign languages, music and Latin.

The solution to the problem is twofold. First, we need to speed the move towards a national formula that will provide agreed national minimum funding per pupil at each key stage. Secondly, we particularly call for an end to the anomaly of post-16 students being funded at a lower level than pupils aged 11 to 16.

I have a great interest in supporting the excellent education provided by grammar schools and good comprehensives, and I very much look forward to the Minister’s response to the points that have been raised.

It is a great pleasure to serve under your chairmanship, Mr Hollobone. Unfortunately, public grammar schools are all too often dismissed in public debate as a mode of education supported by an out-of-touch elite interested only in the education of a privileged few. Indeed, last August, the hon. Member for Stoke-on-Trent Central (Tristram Hunt) accused the Secretary of State for Education of pursuing education policies based on “1950s Grammar School nostalgia”. I disagree. Such comments, which seek to make grammar schools a tool of ideological division, do not serve well those pupils who attend our grammar schools up and down the country and get so much out of them. It is not nostalgic to want our children to benefit from a rigorous education that inspires them to aim high, achieve excellent results and lay the foundations for success. I want those principles embedded in all schools, and we should embrace that approach to education generally. That has been at the heart of the Government’s policies, and it needs to remain so.

Some people may wish to talk about increasing the number of grammar school places, but we are here to discuss the challenges facing the 164 grammar schools in our country today. As a number of colleagues have said, there is a real concern that we are putting our grammar schools at risk—not, perhaps, because of a wilful desire to eliminate them, but as an unintentional consequence of some of the funding reforms that have taken place.

I have two outstanding grammar schools in my constituency: South Wilts and Bishop Wordsworth’s. They have faced similar, increasingly challenging financial settlements, primarily because of the decision to ring-fence the education budget for five to 16-year-olds, while the 16-to-18 budget has no such protection. That has had a significant impact, particularly on Bishop Wordsworth’s, which faces a deficit of more than £300,000 in its sixth-form budget this year. In the past three years, it has seen a 7% reduction in its per sixth-form pupil funding. Next year, it faces a budget deficit of more than £150,000.

I am not here to advocate special treatment for grammar schools, because this issue affects all 16-to-18 providers. However, there is a case for arguing that the problem needs to be re-examined and that we need to look at the principle of ring-fencing. It is illogical that a school can run healthy surpluses in its 11-to-16 budget, but that they are immediately absorbed by a growing deficit in its sixth form.

If we are honestly to discuss the financial difficulties facing grammar schools, in particular, we need to acknowledge the wider social mobility issues. Grammar schools must remain focused on doing more in that respect. It is true that, although 16% of pupils are eligible for free school meals in an average school, the figure is considerably lower in a large proportion of grammar schools. However, that is because the pool is smaller in the first place, and those figures do not tell the whole story because they are so small.

Importantly, we need grammar school heads to focus on extending the benefits of a grammar school education to as many as possible in the community, as Stuart Smallwood is doing at Bishop Wordsworth’s. I welcome the steps Salisbury grammars have taken to reach out to local primaries by running 11-plus coaching sessions in schools that have traditionally sent fewer pupils to grammars at 11. However, I ask the Minister how that can be sustained when budgets are in the position I have outlined. If we are to advocate more funding, we must unambiguously acknowledge the value of grammar schools—the transformational impact they have on children’s life chances and ability fully to achieve their aspirations.

I am a governor, not of one of the grammar schools, but of Wyvern college, which is very much on the up under a new headmaster. I can attest to the thoughtful partnerships that exist between grammar schools and schools such as Wyvern. Grammar schools act as beacons of excellence, and they raise standards across the board by working constructively with other local schools.

In welcoming today’s debate, I want to highlight the particular challenge facing grammars whose sixth forms are in dire need of cash injections. Many children in my constituency and nearby commute to Salisbury to attend sixth form, because many schools in the area do not have sixth-form provision. That demonstrates how grammars are perceived as the means of completing a high-quality education in south Wiltshire, providing opportunities not afforded to those educated from 11 to 16 at other schools nearby.

When I visited the Minister for Schools, all he really wanted to focus on was the percentage of pupils on free school meals. His logic was, essentially, that unless schools raise that percentage, they will encounter difficulties. It is quite obvious that they cannot sort out the problem overnight, and the Minister’s argument is an empty one when it comes to dealing with the realities schools have been faced with overnight.

On funding and particularly the pupil premium for some of our poorer children, does my hon. Friend agree that there are occasions when the excellent grammar schools in cities such as his and mine lose some contact with the community by taking a majority of pupils from some of the richer rural areas further away? Does he agree that, if the DFE gave grammar schools a bit more flexibility on entrance qualifications so that people who have great potential but who are not necessarily well coached beforehand could come in, that might increase the number of pupils getting the pupil premium?

I am grateful to my hon. Friend for his characteristically constructive and thoughtful intervention. There is a debate about how the 11-plus exam works and how it could be improved so that it brings in more people. Grammar schools in Salisbury are looking carefully at that issue. However, I repeat that that reform—that enhancement of the journey of moving to grammar school—will not happen overnight. There are some issues to do with the flexibilities, such as discretion over the catchment area, and so on; but let us not be ashamed of the fact that grammar schools are about academic excellence. There is an exam for entry to the school at 11, and we should not be ashamed of the academic criteria.

I urge the Minister to acknowledge the vital role that grammar schools play in social mobility and to allow them to do more of what they do. Let us celebrate the excellent outcomes that they achieve, and not be inhibited about talking about excellent grammar schools. We would do well to have a model of and approach to education that celebrates their achievements and acknowledges the desire that we all have for excellence in all secondary schools, whatever form they take and wherever they are. I believe that that is the motivation of all of us who are here for this morning’s debate.

It is a delight to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Gainsborough (Sir Edward Leigh), who secured the debate.

I do not particularly want to enter into the “grammar schools or not” debate. I declare an interest as a product of that social mobility of the 1950s, related to grammar school education, that my hon. Friend mentioned. However, I also spent 38 years of my teaching career in very large comprehensives, and want to mention, as he did, the fact that large, successful comprehensives with large sixth forms face some of the same issues as grammars.

Call me a conservative, Mr Hollobone, but I start from the principle that I do not want any child’s education today to be sacrificed for a possible nirvana in 20 years’ time or for something that our education system has constantly failed to bring about since 1945. We are where we are, however.

I am in the great position, for a Member of Parliament, of representing a constituency with no particularly bad school, secondary or primary. There is a mix, which includes two large grammar schools—Lancaster royal grammar school for boys and Lancaster girls’ grammar—and, also in Lancaster, an extremely large Church of England comprehensive, Ripley St. Thomas, which has a large sixth form. I am beholden to their heads, who have raised the problems, including the decision in 2013 to bring payment for sixth forms on to a level with that for further education colleges, without taking into account the cost of the extras provided by school-based sixth forms. That reduction, by about £1,000 per pupil, has a massive impact, as other hon. Members have said, on schools that have large sixth forms.

In addition, the sum in question is the maximum. I am told by Mrs Nicholls, the head teacher of Ripley St Thomas, that per sixth form pupil

“£3700 is the maximum we can receive but it is almost unattainable as it reduces depending on attendance, hours of study, completion and success factors.”

The grammar schools I mentioned raised similar issues. Mrs Nicholls reports that, as other hon. Members have said:

“A level classes, once typically 10-15, are now increasingly over 20 with sets of 25+ not uncommon. Sadly, subjects which do not recruit in large numbers are, out of financial necessity, being dropped”.

The head teacher of Lancaster girls’ grammar school, Mrs Cahalin, says:

“Traditionally we have always looked to allow external students to join our sixth form so that they can benefit from an outstanding sixth form education and very few girls leave, so our sixth form has been very large and so we will be hit far more.”

So schools must now take into account the people who want to join. Mrs Cahalin added:

“We also offer a large number of science courses which are more expensive to teach”,

as other hon. Members have mentioned. Dr Pyle, the head teacher of Lancaster royal grammar school, says:

“Class sizes are increasing, and we share some teaching with the girls’ grammar school”—

to allow for that—

“but the real threat is to the breadth of the curriculum. At the moment we are practically the only state school in the north of England to offer Latin and Greek A-level. We still offer German and Music to A-level—but we know that all of those subjects have been cut elsewhere.”

Those problems are in the system because of the decisions made in 2013. However, I want to consider the future, too, because costs are coming down the line. As to the teachers’ pension scheme, the Government have confirmed that they are introducing changes to the employer’s pension contributions for teaching staff from September. Making up the difference for that change alone will increase the employer’s contribution that schools need to make for their teaching staff to 16.48%, from 14.1%. That is a 2.47% increase. Salaries are the biggest cost that schools have, and that change will come down the line in September. Teaching staff have received a 1% pay award for 2015-16. Support staff have recently agreed a pay increase of 2.2%. All those things are at present unfunded in the grant system to schools. On top of that, the introduction of the single-tier state pension from April 2016 has implications for the employer’s national insurance contribution.

What that means, I am told by Mrs Cahalin in particular, is another increased cost—of 3.4%, for salaries and pensions. She says that in her budget for 2015-16 she expects a drop in income of at least £100,000, with increased costs of £100,000. That means taking £200,000 out of the school’s budget—and the prospect of many subjects disappearing. As Dr Pyle and Mrs Nicholls say, there is now the prospect that grammar schools, which were, as hon. Members have said, looked to as centres of excellence, will provide just the minimum. They will provide the minimum three A-levels, whereas they used to provide courses with four A-levels, and they will restrict entry by other people to their sixth forms, because of cost.

That serious issue affects children’s education today. I have mentioned my professional life in education, trying to turn around state comprehensives, and have also described the incredible institutions that are to be found in my constituency, alongside successful comprehensives. Dr Pyle says:

“Our proudest boast has been that pupils from exceptional state schools like ours can take on the independent sector and win!”

It seems to me ironic that under a coalition Government with a Conservative majority, we may lose that. I hope that the Minister will address the problems raised by my hon. Friend the Member for Gainsborough, and the serious concerns expressed by head teachers about funding problems coming down the line for the future, because of salary and pension decisions taken by the Government.

I am proud to represent a town that has some of the best schools in the country and is in the top 10 for GCSE achievement; I am talking about both grammar and non-selective schools in Slough. I am very concerned about the consequences of the sixth-form funding situation for all schools in Slough. When I was first elected, not all the schools in my constituency had sixth forms, but they now do. Some sixth form pupils transfer from their secondary school to a grammar school, to do the A-levels that they want, but there is a thriving set of schools in the town. I am concerned that despite claims about protection of a balanced school budget, several Government decisions are harming those schools, particularly for children who want to stay on to do A-levels.

Targeting funding towards children with particular characteristics, measured by deprivation and low attainment, penalises schools that have low numbers of such students, as we have heard. That equally affects academic comprehensive schools in relatively prosperous areas, as many Conservative Members have said. Also, recent changes to the way the relevant characteristics are measured and funded through the local formula have resulted in some of Slough’s successful non-selective schools losing funding; Slough and Eton school in my constituency is an example. Our modelling for Slough for next year’s budget indicates that that suffering might be more widespread, largely because of the reduction in post-16 funding.

I am very concerned because I am with the parents of my constituency who recognise that although East Berkshire college is the right setting for some 16-year-olds—the adventurous kids who like the mix of vocational and academic subjects available there—there are other kids who need the closer pastoral network that exists in a school or want to carry on the sporting history and so on that they have developed in school. It is wrong that the Government’s funding arrangements for 16-plus are removing that choice for parents; one of my concerns about grammar schools is that the people who do the choosing are not the parents but the schools.

I wish that we had a range of schools that did not exclude children out but included them in, but that is beside the point in a debate about funding—at the heart of it, funding at sixth-form level. Funding for all post-16 providers is being reduced to the level associated with further education colleges, but school sixth forms just do not have the economies of scale associated with large college provision, so are disproportionately affected. Grammar schools with large sixth forms are the most seriously affected by the changes.

I have looked at the plans for schools in my constituency. Upton Court grammar school, which, I profoundly regret, changed its name from Slough grammar school, has given me a list of some of the ways in which it is affected:

“Cuts to the curriculum—we have already had to reduce the number of subjects that we can offer to students at GCSE and A level. We have collaborated with a nearby school to retain some subjects…Increased class sizes—to avoid operating at a loss we have comprehensively reviewed our work force needs and increased class sizes.”

It goes on to state that

“at a time when costs such as salaries (costs of living) and pensions (government reform) are rising our income is being reduced. The only thing we can do to counter this is reduce the breadth of the curriculum even further and reduce the level of pastoral support we offer to students.”

Frankly, that is not a record of which any Government should be proud. We must help all our schools with successful sixth forms to provide pastoral care and the range of options that kids are capable of following.

I congratulate my hon. Friend the Member for Gainsborough (Sir Edward Leigh) on his speech and the way in which he introduced the subject. He was entirely right to concentrate on the overall objective of fairness. The tone of the debate has been excellent in every respect. I went to St Bonaventure grammar school in Newham in the east end of London—for a time, its headmaster was the current chief inspector of schools, Sir Michael Wilshaw. I am pleased to have noted during the debate that three colleagues present contributed to a pamphlet on working class Conservative Members of Parliament, which says everything about how colleagues see grammar schools as a focus for opportunity.

In Southend, we have the following grammar schools: Westcliff high school for girls, Westcliff high school for boys, Southend high school for girls and Southend high school for boys. I am delighted to tell the House that those schools have produced a number of Members of Parliament; I am not so pleased to tell the House that they have produced more Labour than Conservative ones. A number of those Members now sit in the House of Lords, but my hon. Friend the Member for Wellingborough (Mr Bone) also went to one of our excellent local grammar schools.

I would like to mention just a few of those schools’ achievements. Four pupils from Westcliff high school for boys competed in the UK Bebras Computational Thinking Challenge, a national competition sponsored by the university of Oxford and ARM Holding plc. They will appear in the Bebras hall of fame for 2014. Recently, Southend high school for boys and Southend high school for girls qualified to represent England at the World School Championships Athletic in China in June this year.

To return to the remarks made by my hon. Friend the Member for Gainsborough, this debate is very much about fairness. The idea that any political party is going to abolish grammar schools is, frankly, for the fairies. That argument is over. I have my own views on grammar schools. When my right hon. Friend the Home Secretary was the shadow Secretary of State for Education, she had in mind the expansion of the number of grammar schools. It is a shame that my party abandoned that policy, but I will not revisit that argument. The issue is entirely a matter of unfairness in funding per pupil.

We have with us an excellent Minister, for whom I have the highest regard. He has visited a number of schools in my constituency. I have met the heads of the grammar schools in Southend, and the meeting was attended by the gentleman in charge of their funding. That was very positive, but I have now been waiting six weeks to hear what the outcome of that meeting is. I say gently to my hon. Friend the Minister that officials need to be geed up on this matter. The House will rise at the end of March; this Member of Parliament will not wait until the end of March for a firm assurance that the four grammar schools in Southend are going to be funded fairly.

At Southend high school for boys, the deprivation rate is 5%, yet it receives £4,503 per pupil; at Southend high school for girls, the deprivation rate is 6%, and it receives £4,540 per pupil; at Westcliff high school for boys, the deprivation rate is 5%, and it gets £4,503 per pupil; and at Westcliff high school for girls, the deprivation rate is 4%, and it gets £4,449 per pupil. Those are among the lowest funding figures in Essex, in both absolute and relative terms. That is an absolute disgrace.

Does my hon. Friend agree that it is absolutely illogical to have a post-16 funding system that penalises the very schools that are producing the results in STEM subjects that we so desperately need? That is clearly one of the driving issues in this debate.

I absolutely agree. The funding for the four grammar schools in Southend is totally unfair compared with others in Essex.

Another indicator is free school meals. Between 1.4% and 2.2% of pupils at the four grammar schools in my constituency are eligible for free school meals; Colchester County high school for girls has only 1.3% of pupils eligible for free meals and a record low deprivation rate of 1%, but it receives a lot more money—about £450 more per pupil—than my local schools.

Head teachers have voiced concerns about the 10% reduction in their budgets between 2012 and 2017. Such reductions are obviously understandable in the case of services that fail to manage their budgets efficiently, but that is not true of the four grammar schools in Southend, which do an excellent job. Importantly, the Government have announced that those studying four A-levels will receive about £400 more a year, and that those studying five or more A-levels will receive around £800 more. I just cannot understand how those amounts have been calculated. It costs around £1,000 per student per year for each successfully completed A-level.

Supporting underperforming schools in disadvantaged areas is a commendable aim, but it cannot be achieved at the expense of grammar schools, which are some of the best-performing schools in England. The Government should do their utmost to invest in the talented young people who want to work hard and take up extra A-level subjects. Their aspirations must be backed by sufficient funding calculated appropriately in collaboration with education professionals, rather than pulled out of thin air, as currently seems to be the case.

Perhaps at the outset I should say that I was educated at a comprehensive school, I taught at a comprehensive school, and my daughter attended a comprehensive school. The hon. Member for Gainsborough (Sir Edward Leigh) very deftly tried to change the terms of the debate away from the title on the Order Paper. He opened his speech by saying that the debate also applies to comprehensive schools. It is a pity that he did not actually put that in the title of the debate and say that it would be about sixth-form funding. I understand why he might have put it in the terms he did—the juxtaposition of the terms “grammar” and “school” is catnip to his Conservative colleagues. Had he said that the debate was about 16-to-19 funding, many other colleagues from areas of the country that do not have one of the 164 remaining grammar schools might have liked to attend and raise with the Government their concerns about 16-to-19 education funding in schools and sixth-form colleges in their constituencies. It may well be that another debate is needed to enable a broader cross-section of the House to participate.

In introducing the debate—I thank the hon. Gentleman for the advance copy of his speech, which he supplied to me prior to the debate, and wish I was that well organised—he said:

“Supplemental funding for the disadvantaged is widely welcomed”.

He then went off script and said “we all accept that”, and yet, towards the end of his speech, he said:

“What we need is not 80% or 90% of funding allocated on pupil-led factors”,

but simply “funding per pupil”. I do not know how the hon. Gentleman squares those two statements, and how he can achieve that without reducing funding to the other schools in his Lincolnshire constituency. He might want to explain to the head teachers of the other schools in his constituency how much of their budget he thinks should be cut to accommodate what he said in his speech.

The right hon. Member for Ashford (Damian Green) went as far as saying that the current 16-to-19 funding system introduced by the Government is

“damaging the life chances of children.”

That is very serious, and I hope the Minister will respond to that charge in his summing up.

The hon. Member for Dartford (Gareth Johnson) talked about grammar schools in Kent, but he did not talk about the overall impact of a selective system and how Kent overall gets poorer results than many comparable non-selective counties. That feature in defence of grammar schools was not entered into during the debate. The hon. Member for Rugby (Mark Pawsey) also criticised the effects of the Government’s policy on 16-to-19 funding.

The hon. Member for Salisbury (John Glen), along with many others, said that what was happening was due to the unintended consequences of what the Government have done on 16-to-19 funding. He called for a re-examination of the policy of ring-fencing the schools budget for five to 16-year-olds because of the impact it is having on the 16-to-19 budget. I would be interested to know the Minister’s response to that suggestion. By the way, if it is an unintended consequence, that calls into question the competence of the decision in the first place, because if funding at 16 to 19 was going to be levelled down while protecting the five-to-16 budget, it was obvious that that would have significant impacts. Presumably Ministers, and the submissions they received from civil servants—we do not get to see those—went through fully and in detail the consequences of taking the decision and the impact it would have on sixth forms and sixth-form colleges.

The hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw), who, like me, is a former school teacher, pointed out all the other additional costs that are coming down the pipeline for schools. Again, the Minister should respond to that point. I recall from an earlier debate that the hon. Member for Lancaster and Fleetwood taught in comprehensive and secondary modern schools, so he has a full experience of both sides of that equation.

My hon. Friend the Member for Slough (Fiona Mactaggart) pointed out the impact of 16-to-19 funding on all post-16 providers, not just the selective ones—although all post-16 providers are selective in some ways, because that is the very point at which selection is permitted within our system overall. The hon. Member for Southend West (Sir David Amess) agreed that 16-to-19 funding was unfair and gave examples from his constituency.

I should say something about grammar schools, as that is the advertised title on the Order Paper. Overall, it is the Opposition’s view that a system of selection at 11 is not the way to raise school standards or to promote social mobility. In fact, that is currently the Government’s position. Instead, we should focus relentlessly on supporting schools to raise standards for all pupils regardless of their backgrounds. The most effective way to do that is through promoting great teaching and leadership in our schools. The evidence for that is absolutely clear internationally. Andreas Schleicher, who is often quoted by the Government and who oversees the OECD programme for international student assessment scores, has made it absolutely clear that the international evidence shows that systems with selection for children at the tender age of 11, and all that that entails, perform less well than non-selective school systems.

Far from promoting social mobility, selective systems entrench social division. The difference in the domestic average wages between the top 10% and the bottom 10% of earners is much wider in selective areas than in non-selective areas. Schools that select at age 11 are also highly socially selective institutions overall. Almost all the remaining 164 grammar schools in this country have fewer than 10% of pupils eligible for free school meals. In 2010, 96,680 year 7 pupils received free school meals from a total of 549,725 pupils in state schools. Of the 22,070 grammar school pupils in that age bracket, only 610 were receiving free school meals. It is undeniable that the poorest children are losing out, in part because in some areas almost everyone who passes the 11-plus has had private tuition of one sort or another.

I will not go into great detail about the evidence from the past—it is probably not where we should go in today’s debate—but suffice to say, the rose-tinted view of the selective system of the past is not true. At its height at the beginning of the 1960s, a third of grammar school pupils got only three O-levels, and only 0.3% of grammar school pupils at that time with two A-levels were working class. It is therefore a myth that grammar schools were great engines of social mobility. There are many reasons for the great surge in social mobility, but selection at 11 is not one of them.

That is why the current Prime Minister was absolutely right in 2007 when he said that those who wanted to expand the number of grammar schools were

“splashing around in the shallow end of the educational debate”.

He went to say that his party was in danger of becoming “a right-wing debating society” rather than

“an aspiring party of government”.

That is why the current Government have held on, largely, to the policy of not allowing more schools that select at age 11, although they have permitted a loophole to those that he said were

“clinging on to outdated mantras that bear no relation to the reality of life”—

they have created a loophole to allow the expansion of selective provision by stealth to locations many miles away from existing grammar schools.

Let us agree to disagree on grammar schools. In the last couple of minutes of his speech, will the hon. Gentleman focus on the fact that the Labour party presumably is committed to a fair funding formula for all schools with successful sixth forms?

Yes, I can do that, and I can confirm that. Labour policy remains that the remaining selective schools should be a matter for local parental choice. Our policy has not changed on that since it was introduced in 1998, and it has been reconfirmed by the current Government. In the course of the hon. Gentleman’s speech, he was right to point out that sixth-form or 16-to-19 funding is causing a great problem for many schools across the country. Of course, there is no different formula for grammar schools—I would like to make that point, so there is no myth about it. The difference in funding between grammar schools and others is largely because of the difference in their pupil intakes, because of all the factors we have heard about. However, he is right that many schools, including grammar schools, have been hit very hard by the severe cuts in sixth-form and college funding that the Government have imposed. As I said, it might have been more fruitful to have a debate under that broader title to allow others to introduce that subject.

Finally, there are a few questions that the Minister needs to address. Was the decision to slash 16-to-19 funding intended to impact hardest on sixth forms, colleges and, indeed, selective schools? What was the rationale for that decision? Was the result deliberate, or is it, as many hon. Members have suggested, an unintended consequence, in which case there would be an issue of incompetence in relation to the decision?

Since 2006, the Conservative party has said that it is against more selection at 11. Is that still the case? Will the Minister tell us what is happening with the decision about the satellite grammar school in Kent? Will he pledge to include financial data in performance data relating to academies, so that we can debate them?

The issue of competence relates to a budget deficit left to the current Government by the Government whom the hon. Member for Cardiff West (Kevin Brennan) supported and served in. That is the basis behind everything that we are discussing this morning.

I congratulate my hon. Friend the Member for Gainsborough (Sir Edward Leigh) on securing this important debate, and other hon. Members on their thoughtful and principled speeches, on which I will continue to reflect. Creating a world-class education system that enables parents to send their children to good or outstanding schools is central to the Government’s plan for education. As my right hon. Friend the Member for Ashford (Damian Green) said, the Government’s education reforms have massively improved the life chances of millions of children in this country, and they will continue to do that. Grammar schools, with their focus on the highest standards of teaching, play an important role in delivering on that goal. There is no ambiguity about the Government’s views on grammar schools.

My hon. Friend the Member for Rugby (Mark Pawsey), my right hon. Friend the Member for Ashford and other hon. Friends referred to unfairnesses in the funding system. That is inherent in the way local authorities historically have been funded for their school budgets. In 2014, we announced the introduction of minimum funding levels, which will allocate, as has been pointed out, an additional £390 million to the least fairly funded local authorities for 2015-16. That includes Warwickshire, which received £15.4 million, and North Yorkshire, which received £9.8 million. That increase in funding represents a huge step towards removing that historical unfairness in the schools funding system. The Government have made more progress in that area than any recent Government. That puts us in a much better position to implement a national funding formula when the time is right.

As my hon. Friends will know, faced with the historically high budget deficit when we came into office in 2010, the Government needed to identify savings from across Whitehall and the public sector. Despite that, we have consistently prioritised funding for schools, ensuring that spending has been maintained in real terms. The schools budget for five to 16-year-olds has been protected since 2011, in addition to which the pupil premium to support disadvantaged pupils is worth some £2.5 billion this year. Those commitments have been possible only because the Government have found savings elsewhere, including other parts of the education budget, but I understand the concerns that the burden of those savings in education has fallen disproportionately on grammar schools or successful comprehensive schools with large academic sixth forms.

Two concerns have been particularly prominent in today’s debate. First, as my hon. Friend the Member for Wycombe (Steve Baker) pointed out, grammar schools are more likely to have large sixth forms, which may have seen reductions to funding as we have reformed the 16-to-19 funding formulas. Secondly, grammar schools are less likely to be eligible for funding made available on the basis of low prior attainment and deprivation, as the hon. Member for Slough (Fiona Mactaggart) and other hon. Members pointed out.

As the hon. Member for Cardiff West pointed out, funding for grammar schools is allocated in precisely the same way as funding for all other schools, whether academies, local authority maintained schools or non-selective schools, but I recognise that some features of the funding system will have resulted in grammar schools receiving less funding than many non-grammar schools in similar areas.

I will deal with those concerns in a moment, but I should first like to pay tribute to the exceptional results achieved over the last five years by some of the schools mentioned by my hon. Friend the Member for Gainsborough in his opening remarks. Since 2010, 100% of students attending Caistor grammar school have achieved at least five GCSEs at grades A* to C, including English and maths, and in 2014, 96.8% of students received 10 A* to C grades. Also at Caistor grammar school, 76.4% of A-levels were at grades A* to B, and at Queen Elizabeth’s high school, 61.5% of A-level grades were A* to B. Those schools are achieving remarkable high-quality, high-standard academic education results.

My hon. Friends are right that grammar schools are less likely to be eligible for funding made available on the basis of, for example, low prior attainment or deprivation. Local authorities set their own funding formulas to decide how to distribute funding for pupils aged five to 16. Low prior attainment is a common factor used in those local formulas. Given that grammar schools select their intake on the basis of ability, they are by definition unlikely to have pupils who have attained poorly in the past, so they are unlikely to qualify for that element of the local funding formulas. The purpose of low prior attainment funding is to ensure that as many young people as possible leave school with the right knowledge and skills to be able to succeed in adult life and in modern Britain. For a strong economy and society, it is important that we continue to target funding towards pupils who are not on track to do that.

Equally, grammar schools are less likely than other schools to have large numbers of pupils from poorer backgrounds, including pupils eligible for free school meals. Local authorities have to use a deprivation factor in their local formulas, meaning that schools with higher numbers of such pupils will receive additional funding. The evidence is clear that economic disadvantage remains strongly associated with poor academic performance.

My hon. Friend the Member for Salisbury (John Glen) will be aware that all grammar schools can adopt a pupil premium admissions priority for children eligible for free school meals, provided that they meet the entry criteria. Currently, of the 164 grammar schools, 32 have done so and 65 are consulting on adopting that priority in their admissions criteria from September 2016. The Government have encouraged greater collaboration between grammar schools and local primaries specifically to identify those disadvantaged children with potential at key stage 4, and to encourage them to take the 11-plus and apply to enter a grammar school.

Closing the attainment gap between those from poorer and wealthier backgrounds has been the central objective underlying all the education reforms in our plan for education, but of course the pupil premium is in addition to the main dedicated schools grant, which means that no schools are losing out as a result of the pupil premium, regardless of their pupil demographic.

As my hon. Friend the Member for Gainsborough pointed out, grammar schools tend to have a greater proportion of their students in the sixth form than other 11-to-18 secondary schools. That means that any reduction in funding for pupils aged 16 to 19 will have a greater impact.

My hon. Friends are right that we have ended the disparity between school sixth forms and colleges. By August 2015, schools and colleges will be funded at the same level for similar programmes. However, there has been some mitigation—transition funding so that schools do not suffer abrupt changes to their funding straight away. We fund all 16-to-19 providers for study programmes of 600 hours per year for full-time students. That is sufficient for a study programme of three A-levels plus one AS-level, and up to 150 hours of enrichment activities, over a two-year study programme. There should be no need to cut those extra-curricular activities, which are such an important part of a rounded school education. In addition, as has been mentioned, we have, in 2013-14, increased the rate for larger programmes of study. For students who are studying four A-levels, the school will receive an extra £400 per pupil, and for those who are studying five A-levels, the school will receive an extra £800.

Tackling a £150 billion budget deficit has had to be a priority for a Government with a clear long-term economic plan to return our economy to one of strong growth and increasing employment and opportunity. Despite that, the schools budget has been protected in real terms, but I acknowledge that difficult decisions have had to be taken and I accept that some of those decisions have impacted on funding.

Order. I thank all hon. Members who took part in that interesting and important debate. I ask all those not staying for the next debate to leave quickly and quietly.

Care Sector

I am grateful for the opportunity to open a debate on the important subject of the future of our care sector and the contribution that the Department for Business, Innovation and Skills must play to ensure that the sector thrives.

I will start by providing some facts, after which I will set out the challenges, the opportunities and the actions that BIS can take. According to research undertaken for Skills for Care, adult social care in England is worth an estimated £43 billion to the economy, both directly and indirectly, and it supports 2.8 million full-time equivalent jobs.

The care sector is not a small adjunct to the NHS; it employs some 1.5 million people in 1.3 million full-time equivalent jobs, or about 6.4% of the entire work force. The sector is bigger in employment terms than the construction industry or the transportation, storage and postal services industries combined. Women make up 82% of the care sector work force. Despite the squeeze on public spending over the past few years, the sector has grown and added more than 210,000 jobs.

The challenges are clear. Our population is changing. We are living longer—a good thing, not a bad thing. The age structure is changing, and the fastest-growing section of the population is the over-85s. By 2030, it is estimated that there will be 2.3 million people aged over 85. Other things are also changing. Many people are having children later, and families are living further apart. There are more family break-ups and divorces, and there are more single people in later life who may not have family support structures.

On present trends, the care work force will need to grow by some 1 million workers by 2025. If the trends are to be addressed, 40% of the projected increase in the working-age population will need to enter the care sector, so a huge proportion of our work force potentially has a part to play in the sector. To put it another way, England could face a shortfall of 718,000 care workers over the next 10 years. If those challenges are not addressed, the care sector will act as a brake on growth and a threat to the hard-won gains in labour market participation by women.

I sought to have this debate with colleagues from BIS, because I believe that the Department has a crucial part to play in addressing the care sector, in the same way as it works with any other part of our economy. As long as the sector continues to be sponsored in Government solely by the Department of Health, I do not believe that the blinkers will come off in terms of addressing the opportunities and the threats that the sector poses for our economy. All too often, the Treasury views the care sector as a dead-weight cost to the economy, but I believe that it must be viewed as a vital part of the nation’s economic infrastructure and a key enabler of labour market participation in later life and by women.

The Government have recognised that issue when it comes to investment in child care, and I believe that the same value and recognition must be given to adult care. A study by the Institute of Education, published in autumn 2014, found that 50-somethings feel sandwiched between child raising, caring for elderly parents and the expectation, which is rightly growing, that they will work longer because life spans are increasing.

The first six weeks of an informal caring role by a family member can be decisive in determining whether that person will remain in work. The triggers are well documented, many and varied. When someone is caught in the middle of a care crisis as a result of an accident or a fall, and they have to juggle working responsibilities with child-raising responsibilities and uncertainty about the quality and reliability of care, that often becomes the trigger—the final straw—for them to decide that they cannot carry on working.

Even when employers accept that they should offer the option of flexible working—many more employers are now doing so—it is not always sufficient to enable such people to stay in the work place. One in six carers reports quitting work to care full time, and the factors that I have described drive them to make that important, life-changing decision, which affects their health and probably also their long-term wealth. Of course, it should be a choice, but for many people it turns out to be a necessity because no alternative is available for them.

Many such employees are businesses’ most important and valuable staff. Companies have invested in them over years. They are people in their 40s, 50s and 60s who hold the corporate memories of the businesses for which they work, and employers cannot afford to lose them lightly. Strategies that enable those employees to make real choices rather than finding themselves forced out of the work force are, therefore, very important. The situation will get worse unless the contribution of the care sector, and that of the wider personal and household services sectors, is recognised.

In 2012, during the period for which I had the privilege of serving as Minister with responsibility for care, one thing that I did was to convene a summit involving Carers UK, Employers for Carers and a range of academics and others from around Europe to look at different approaches to addressing some of the issues that I have outlined. As a result of that summit, a task and finish group was set up to look at the economic case for investing in and developing the sector, particularly the personal and household services sector. That group involved six Departments, including BIS and Her Majesty’s Treasury, as well as leading academics, charities and employers. It reported in 2013, setting out a compelling business case for the multiplier effect that can be triggered by increasing the demand for personal and household services and, as a result, supporting labour market participation.

Employees become carers, and 2.3 million people move in and out of caring responsibilities every year. The number of carers is rising because of the demographic trends that I have mentioned. Carers seek services that enable them to make a choice; 41% of carers would like to work if suitable care and support services were available.

One of the conclusions of the task and finish group was that barriers to work, and to remaining in work, are not so much about employer support as about access to good services. Carers want to work; eight out of 10 are of working age, and about 3 million are currently working. That means, however, that some 1.4 million are not working, and many of them would like to be able to do so. If we want more people to work longer, and if we want more women to be able to work, there has to be more help for carers.

What can BIS do about the situation? It is important to stress that employers are becoming increasingly aware of the risks to their businesses of a labour market that becomes less flexible over the next 10, 15 or 20 years as demographic changes work through and the labour market tightens. Employers recognise the increasing demand for care, support and personal and household services, but they also recognise the danger of market failure if that demand is not met, and if the problems that I have described become much more serious and constrain the growth of our economy as a consequence. I am not suggesting that BIS currently does nothing about the matter; it has a good record, particularly on carers.

I hope, however, that we can widen and deepen the Department’s engagement and understanding of the risks and opportunities. Notwithstanding the constraints on the Government’s time, I wonder whether there might be an opportunity to open that dialogue. Many people in the sector would welcome the opportunity to have a dialogue with the Department for Business, Innovation and Skills.

The Department can also play a part in encouraging local enterprise partnerships to do more. I have conducted a fairly ropey survey of LEPs to ascertain which are engaging seriously with care sector issues, and only a very small number have any reference to the care and personal and household services sectors in their strategies, plans and actions. Those sectors do not appear to be on their radar. One rare example of an LEP that is doing something is, I am sorry to say, not in my constituency or in London but in Greater Lincolnshire, where the LEP is working with Skills for Care and doing some really good work. That may be a model, or at least a starting place, for other LEPs to follow.

Another area in which the Department can help immensely is in addressing the low pay, low status culture that pervades the sector. The National Audit Office estimated in a recent report that as many as 220,000 carers are paid less than the national minimum wage. Surely, it is time that we ensured that that is properly and vigorously pursued. It is not sufficient for Her Majesty’s Revenue and Customs to say, as it often does, that it is unable to mount prosecutions because of inadequacies in employers’ documentation. We pursue those who defraud our benefits system and those who fail to pay the tax that they should be paying. We have invested large sums in strengthening HMRC’s capacity to pursue those who cheat the tax system, and we need to ensure that exploitative employers who cheat their employees—there are good employers in the sector who do not cheat their employees—are prosecuted, thereby setting an example. The Low Pay Commission and, indeed, the HMRC say that the problem is getting worse, not better, so we need action to ensure that those who are exploiting their workers are properly pursued.

In the past 18 months, I have led two independent commissions examining the future of residential care and the future of home care, and both commissions, with experts, academics and people from the sector, have concluded that the sector’s long-term sustainability requires better terms and conditions and that the sector’s goal must be a living wage if it is to attract and retain the staff it needs. Indeed, the sector has among the highest staff turnover rates of any part of our economy. As a consequence, at its worst, those in receipt of care services report seeing as many as 50 different care workers a year. How can someone develop a relationship and have an understanding of the needs of the person for whom they are caring if the next thing they are likely to be doing is moving to Tesco to stack shelves, rather than seeing care as a long-term career? In recognition of that, I hope the Department, either by itself or with others, will consider commissioning work to understand the extent of the hidden subsidies in the sector. Low-paid workers often receive top-up payments through the working tax credits system, rather than from resources directed to ensure that people are paid a proper wage in the first place—in other words, rather than investing money in the service.

We need to work with Skills for Care and the sector to bridge the work force gap by increasing the number of men working in the sector. Some 94% of young people agree that care work is a suitable profession for a man, which is certainly right. A quarter of 16 to 25-year-olds say that they would never consider care as an occupation, and a third of young men say that they do not know enough about care as an occupation. Changing the status of care jobs, giving care jobs key worker status and improving training, pay and conditions could all make a significant difference in shifting the dial on the sector’s credibility as a place to work and build a career and a life.

The care sector’s contribution to the UK economy is all too often overlooked; it is seen as a cost, not as the huge contributor that it is to our economy. As our population ages, the care sector will be critical to our economic success. It will be critical to delivering the Government’s agenda, which successive Governments will now need to have, of promoting later and longer working lives. The care sector will be vital if we are to maintain this Government’s successes in increasing female participation in the labour market. I hope that, through this debate, we can kick-start more work, more thought and more action to ensure that we recognise the sector’s contribution and to ensure that that is properly reflected in Government policy and Government spending decisions in the next and subsequent Parliaments.

It is a great pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my right hon. Friend the Member for Sutton and Cheam (Paul Burstow) on securing this debate and on his many years of intensive, dedicated work on these issues. Although I am the Minister responding to the debate, I do so with a degree of trepidation because there are probably few people who have a greater understanding or are able to speak with more eloquence about care and carers than him, particularly with his ministerial experience but also with his interest in the issue going back many years. Since leaving ministerial office, his interest has continued through his chairing of the commission on residential care—of course, the Demos report came out of that—and he continues to take up such issues at every opportunity. It is unsurprising that he will have a key role in speaking on care as the election approaches.

I am sure the care sector will be a key issue that is discussed in great detail during the election period because, as my right hon. Friend said, it has an impact on so many different parts of our lives. It is about quality of life for people as they age or, indeed, for people with disabilities who require care. It is also about the role of women in the workplace and how they can combine that role with their caring responsibilities. As he rightly pointed out, care is an issue for men, too, not only in terms of their own caring responsibilities—although the majority of caring responsibilities in our society still fall to women—but in terms of the economic and employment opportunities for men within these sectors.

In a short debate, it is difficult to do justice to every issue, but my right hon. Friend rightly recognises that this debate is part of an ongoing dialogue. He made the helpful point that this is not only a debate and dialogue to be had with the Department of Health. The Department for Business, Innovation and Skills also has a crucial involvement, as indeed do many other Departments, including the Department for Work and Pensions and the Government Equalities Office, which is the other Department for which I wear a hat. The Government Equalities Office is hugely interested in these issues, and it is already working with other Departments on some of the thorny problems about how we can help carers who are in employment to continue working, if that is what they wish to do—and, as he said, many do—alongside their caring responsibilities.

My right hon. Friend clearly set out the care sector’s significant contribution to the economy. The sector brings in billions of pounds to the UK and creates millions of jobs, with mix of private provision and public and voluntary sector jobs. Care will become more salient as our population continues to age. I am sure he agrees that it is a cause for celebration that people are living longer and that medical advances mean that we are able to cure more diseases and prolong life, but, of course, that creates significant challenges on how we can age well and how we can have quality and dignity throughout longer lives, which will often mean that people work longer, particularly given the economics. We must recognise the important role of older people in our economy. Ros Altmann, whom the Government appointed as the champion for older workers, is doing a sterling job, and she will produce a report in the not-too-distant future setting out how we can better value the role that older people play within the work force. It is quite right that that is happening.

My right hon. Friend discussed the sandwich generation, which is a particularly resonant issue. That group of people—mainly women, but not exclusively—are feeling pressure from both sides. They have responsibilities to children or even grandchildren; equally, they have caring responsibilities for elderly parents or other relatives. Although a huge amount of love and joy comes from caring responsibilities, at the same time, the pressure of fulfilling them often also creates a huge amount of stress. Often carers must battle with public services to get what they need to provide those individuals with quality of life, while trying to hold down a full-time job. The pressures certainly mount up; carers are some of the most pressured people in our society.

In those circumstances, it is perhaps not surprising to hear the statistic that my right hon. Friend quoted: one in six carers quit work to care full-time. That is a huge loss to the economy. Some of those people wish to do so, which is absolutely fine, but when people are forced to do so, we lose the contribution that they could be making. As my right hon. Friend rightly says, the businesses and organisations for which they work suddenly have a gap in experience, knowledge and skills, which they must try to fill. In many cases, it takes significant time before a new person can fulfil that role in the same way. There is an economic opportunity cost.

My right hon. Friend is right that many employers now recognise some of those risks. There are many enlightened employers out there; I engage across my employment relations role with companies that recognise that equality in terms of gender, race, religion and sexuality is an important business issue in recruiting and retaining the right talent. They recognise that a more agile work force can not only help the business to respond to emerging challenges but give individual employees much more flexibility. That attracts a wider pool, which includes people with caring responsibilities. Many of those companies—often, but not exclusively, larger companies—are starting to see the business risks and huge potential advantages of getting it right and putting in place policies that allow people’s working lives to fit in with their responsibilities outside work.

My right hon. Friend is also right that as the trend of decreasing unemployment continues—it is still too high, particularly for young people, but it is certainly moving in the right direction, and its rise in the past few years has been a great success story—it places more pressure on employers trying to find the right people and the right mix of skills within their organisation, making it even more important for them to be able to hold on to the talented people that they have.

The Government clearly have a role to play in that. As I said, we engage with employers to encourage best practice on a regular basis, but we have also made legislative change. For example, as my right hon. Friend will know, last June, the right to request flexible working was extended to all employees. That will be helpful in changing views on flexible working, which had been stigmatised in some corners as being only for a particular group of people and as creating unhelpful divisions within workplaces. Instead, it is becoming much more the norm: the modern way of doing business is that, where flexibility is possible, it will be accepted by default. Clearly, there will sometimes be business reasons why an employer cannot agree to a flexible working request, and that is built into the system. That kind of change can help drive the difference that we need.

My right hon. Friend discussed the quality of the caring work force, which is hugely important. As he said, it is about who the elderly person sees coming in to support them. He said that some people see up to 50 different care workers in a year. That is clearly not a situation that any of us would wish in our older years, and we should not encourage it. Staff turnover is hugely important, and a range of things can be done to help address it.

My right hon. Friend rightly mentioned the status of caring as a profession. Training and qualifications are one way to signpost that, which is why the Department of Health is supporting the social care sector through the social care work force programme, which focuses on improving quality, and introducing the care certificate in April this year for new health care assistants and social care support workers. Apprenticeships also have a role to play in ensuring that employers have proper standards and are training people appropriately.

My right hon. Friend mentioned the hugely relevant issue of the need for more men in the care sector. If there is a shortage of workers in a particular field, it makes sense to consider who is going into that line of work, in the exact same way that when considering the huge shortage of engineering skills that our country faces and how we can bridge that gap, we look at the fact that only 7% of engineers are women. Clearly, the biggest pool of people we are not currently tapping into is girls and young women, whom we must encourage to study science, technology, engineering and maths and to open their horizons, rather than being led by dated stereotypes about what girls can do.

Similarly, if we need to expand the number of care workers and there is a huge shortage of men in the care profession, the biggest pool available for expansion is boys and young men, and we need to get them to consider caring as a profession. Again, stereotyping is important, as are the messages we send children about the roles of men and women, and whether boys can be nurturing and caring and—yes, dare I say it?—play with dolls. We should see habits of care and nurture as being just as appropriate for boys and men as for girls and women. It is important, and it will help us plug the skills gap.

I want to address the national minimum wage, because it is hugely relevant to the care sector, perhaps unfortunately. In an ideal world, we would all want people to be paid significantly more than the national minimum wage, but the present economics of the sector mean that many care workers rely on the national minimum wage for wage protection. There have been a number of well-documented cases involving people not being paid what they are due, particularly in the care sector, which, as my right hon. Friend said, has traditionally been a low-wage sector.

The law is crystal clear. Care workers, like any other workers, are legally entitled to receive at least the national minimum wage. If they travel between care appointments, the time spent travelling is working time, so they must also be paid the national minimum wage then. If they must pay for their uniforms, any money deducted for that cannot count towards national minimum wage calculations; they must be paid the national minimum on top of that.

The law is absolutely clear. Many employers comply—that is fine, it is appropriate and it is what should happen—but some do not, and failure to pay is a serious issue. That is why there are tough consequences for employers who break the law. If anyone is concerned about whether they are being properly paid the national minimum wage, they should contact the pay and work rights helpline on 0800 917 2368. Every complaint will be investigated.

It is important that people know that number, but it is also important for third parties to be able to make referrals about abuses of national minimum wage rules, so that they can be investigated. Is that a change that could happen?

I do not think that there is anything preventing that from happening at the moment. Every complaint is investigated, and it is important to stress that all complaints are made in confidence. Her Majesty’s Revenue and Customs will not just go and say, “Is Mr Joe Bloggs being paid appropriately?”; it will investigate the entire work force if necessary. Many of the care investigations that have taken place have found arrears for tens and, in some cases involving very large companies, for hundreds or thousands of workers. Those are obviously complex investigations.

Proactive investigations happen. There was a particular period of targeted enforcement in the care sector, from 2011 to 2013. We recognise that the issue is important and are returning to the care sector for proactive work. That process is now under way, so more will happen. Currently, 94 employers in the care sector are being investigated for national minimum wage issues, and when those investigations conclude, we will see whether they have broken the law. If so, there are tough penalties, including naming and shaming, and we have taken steps to increase the resources available to HMRC for that vital work.

Sitting suspended.

Probation Service

[Mr David Crausby in the Chair]

It is a great pleasure to have secured this debate and to serve under your chairmanship, Mr Crausby.

If the Minister has looked at my many previous interventions on this subject, he will know that I have had concerns about the Government’s Transforming Rehabilitation plans right from the start. Those concerns have been borne out by my recent conversations with probation officers and offenders in my constituency and reinforced by the recent report from the chief inspector of probation into the early implementation of Transforming Rehabilitation.

Today I will talk about those implementation issues, but I will also question the Minister about the underlying rationale for, and risks associated with, Transforming Rehabilitation. The Probation Service was a well-performing service. Every single probation trust in the country was assessed as being “good” or “excellent” under the Ministry of Justice’s own measures—indeed, my own probation service in Greater Manchester had a reputation for innovative and effective work. It makes no sense at all to tear all that up and arbitrarily divide up the work of the probation service without there being any evidence of the effectiveness of the new model. That places public safety at risk.

Ministers said that change was needed to address the high level of reoffending among those serving short custodial sentences, and they proposed introducing supervision, for the first time, of those offenders on their release from prison. Everyone agrees that that is entirely right and welcome. However, the probation service never had responsibility for supervising those offenders, so high rates of reoffending among them cannot be characterised as a probation service failure. Indeed, probation trusts, such as my own local trust, were keen to have the chance to work with this challenging group.

Yet in June last year the Government embarked on a radical restructuring, abolishing all probation trusts and replacing them with 21 privately owned community rehabilitation companies and a diminished National Probation Service, which has responsibility for high-risk offenders. Contracts were signed just before Christmas, on 18 December. This massive restructuring has been rushed through by the Lord Chancellor and Secretary of State for Justice without any piloting or testing of the new approach. The Government were warned by experts, probation staff and the Opposition, as well as in the House of Lords, that their timetable was reckless. In 2013, the chairs of probation trusts wrote to the Lord Chancellor and Secretary of State for Justice, describing the plans as risky, unreasonable and unrealistic.

As soon as the changeover began last summer, problems began to emerge. There have been reports of staff shortages, IT problems, records going missing, staff supervising offenders “blind”—with no information about offenders’ offending history or personal circumstances, because staff lack access to records—and administration staff being unable to access records to manage supervision appointments.

My hon. Friend paints quite a dire picture as things are developing under this new-look service. Does she agree that it is rather sad that those high-performing probation trusts never got the opportunity to consider taking on an expanded work load? They were, after all, the experts and they, too, could have delivered this expanded service.

My hon. Friend is right. It is highly regrettable that the expertise and commitment that we all see in our probation service was not taken advantage of and that probation staff were not given the opportunity to deliver these new programmes of post-release supervision.

Indeed, in Greater Manchester we had piloted such a programme—the Choose Change programme—and learned many valuable lessons about the challenges of working with this particular group. Since Greater Manchester Probation Trust obviously no longer exists, and so cannot take forward the lessons from Choose Change, perhaps the Minister will say how that learning will be transferred across to the new structures, so that what we now know after that experiment is not lost.

I congratulate my hon. Friend on securing this debate. I hope that she agrees that we had a perfectly good service before the Government tinkered with it. For ideological reasons, the Government made changes and used a private sector model. However, everyone knows that in the private sector—I know, because I worked in it—before any changes are made, a pilot scheme is introduced so that companies learn from their mistakes. Does she agree?

I agree with every word that my hon. Friend said. Indeed, it is surprising to me that one of the first acts of the Lord Chancellor and Secretary of State for Justice was to cancel some of the pilots in relation to these new structures, rather than adopting the sensible approach of continuing with them and evaluating the lessons learned before proceeding with the new model—if there was evidence that it was the right model to follow.

In the aftermath of the changeover, probation officers have talked to me about an overwhelming work load, about IT systems that do not speak to each other and require the same information to be inputted over and over, and about random allocation of staff to the new community rehabilitation companies or the new NPS. Morale has suffered, staff are stressed and the human resources support in the new NPS in particular has been inadequate throughout this period of major change, given that the MoJ closed down the shared support service and that communication to staff has been haphazard and often delayed.

Offenders have also noticed problems. I met offenders in my constituency late last summer and they told me that they were constantly finding themselves seeing different offender managers who did not know anything about them or their circumstances. Now the chief inspector of probation has produced a highly critical report of the early implementation of the changes and the problems that have been experienced, and it bears out much of what I and other MPs have been told.

The report specifically recognises that the speed of the implementation caused problems that could have been avoided or mitigated. It makes a number of suggestions about how those problems can be addressed. The Minister may argue that these problems are teething problems and that the recommendations in the report will be followed, but in fact the problems run deeper. They are a reflection of a model that fragments the management of offenders, adding bureaucracy, damaging effective communication and increasing risk. I have genuine concerns about the implications of Transforming Rehabilitation for public safety, and indeed for the safety of officers supervising offenders.

My first concern is that there are clearly issues about access to the full and timely information necessary for the initial risk assessment to be made. It was worrying to read in the chief inspector’s report of delays in obtaining information about an offender after they had been sentenced, because that information is needed to enable a full risk assessment to be carried out.

The MoJ claims that that situation is not different from what happened previously, when an offender could be allocated to an offender manager who would not necessarily have the full information at the first appointment. I appreciate that Ministers want the allocation process to be speedier, with an expectation that cases will be assessed on the Offender Assessment System, or OASys, within two working days of sentencing, rather than five weeks, as can be the case now. However, that would represent a huge step change in service standards. How confident is the Minister that such an improvement can be achieved?

Moreover, even if the assessment can be done speedily, there is increased risk from the fragmentation that arises from having two entirely separate services. If the initial risk assessment and allocation are wrong, there will inevitably be a delay in getting the offender to the right place and therefore a delay in the offender’s building a relationship with his or her supervisor, as well as in beginning the appropriate programme of support to address their offending behaviour.

It also seems that the information for forming an assessment, even if timely, may not be sufficient. I was pretty shocked that the inspector identified a failure to address diversity issues in the assessment and allocation process. Ethnic, religious and cultural background may have a bearing, for example, on the language needs of an offender or on appropriate sentence planning, such as what unpaid work might be suitable.

There is a high prevalence of mental health problems and learning disability among offenders, and those need to be identified at the outset; the offender manager must be made aware, so that tailor-made sentence planning and effective communication with the offender takes place. Understanding the offender’s family circumstances is relevant. Child care responsibilities may impact on sentence planning and information about family members and relationships is especially important in relation to risk and safeguarding.

Clearly, these all-important matters go to the heart of successful intervention to address offending behaviours and to protect the public. What steps will the Minister take to address the concerns raised by the inspector in relation to reflecting diverse circumstances in reports and in the allocation process?

The Minister may not be surprised to hear that I am particularly concerned about the need for specific, tailor-made approaches for women offenders. The weaknesses in preparing assessment reports, identified by the inspector, are of real concern in this context, but there is also concern about the nature of the interventions that women will receive. As far as I can see, none of the community rehabilitation companies or the organisations that they are working with appear to be specialists in managing women offenders.

In recent years, there has been some good learning and recognition of the specific needs of women offenders and of what works. Specialist women’s centres are effective and positively regarded by offenders. I recently met a group of female offenders in Manchester—Women Moving Forward—who told me how important the support they received from the women’s centre was and who expressed anxiety about future provision, as well they might when women’s centres lack any certainty about their funding after March.

This morning, I met some people from Barnardo’s, who told me about their concerns for children affected by people who may be in prison or on some probation regime, or something of that nature. Does my hon. Friend agree that more must be done by the Minister and others to ensure that we get the correct approach from Government, so that offenders with children are identified and these factors are properly taken into consideration, so that the whole family can be looked at properly, rather than a prisoner or offender being looked at entirely in isolation?

My hon. Friend is right on many levels. First, it is important that family circumstances—particularly the presence of children and other vulnerable family members—are properly understood, so that safeguarding issues can be addressed properly. Secondly, what he said relates to my point about the need to understand particularly the circumstances of women offenders. Many women offenders are mothers: that impacts on the kind of responses and programmes that will work for them and what sentence planning will be appropriate. Mothers in particular will have to balance child care responsibilities with the demands of the sentencing plan.

Thirdly, my hon. Friend makes a good point about the whole-family approach. A stable, comfortable and happy family life helps an offender to overcome offending behaviour, so the ability to take that holistic view of family circumstances would be a real opportunity to address the offending behaviour of many offenders who could be supervised in the community. Indeed, the Minister may want to say how this might be taken forward in the context of his expectation that the community rehabilitation companies will be more innovative than the old probation service. I have not yet seen any evidence of that, but he and the CRCs might like to turn their attention to that area.

I am concerned about specialist provision through women’s centres for women offenders and women at risk from offending. The Prison Reform Trust points out that CRCs will be “expected to fund” ongoing provision after March. Can the Minister therefore assure us that specialist provision will be guaranteed? Given the concerns about this small, often highly vulnerable group of offenders, will he undertake to carry out an annual audit under section 10 of the Offender Rehabilitation Act 2014, to confirm that Transforming Rehabilitation is meeting the needs of women offenders?

As I have said, one important change in Transforming Rehabilitation is that, for the first time, offenders who have served short custodial sentences of less than 12 months will receive supervision on release. That has been universally welcomed, although there is little sign yet of when it will actually happen. Of course, it is vital that the CRCs and the National Probation Service have the resources to do the job. Again, there are some serious worries. The report from the inspector specifically raises concerns about staffing in the new NPS. Can the Minister say what expectation there is about the proportion of those leaving custody who will be deemed to be high risk and under NPS supervision? The inspector recommends a full evaluation of staff resources and this surely must be undertaken as a matter of urgency, so that we can be sure there is adequate provision for the supervision of high-risk offenders. Will the Minister say how he intends to respond to that recommendation?

Of course, the NPS needs adequate contingent resource to address the fact that risk is not static. Categorising offenders as low, medium or high risk is massively to oversimplify. Transforming Rehabilitation recognises this: if there is a concern that an offender who has been categorised as low or medium risk becomes high risk, a fresh assessment will be carried out and he or she will transfer from the community rehabilitation company to the NPS. That is hardly likely to be an infrequent situation.

An offender who is identified as low or medium risk can quickly become high risk if circumstances change. Many offenders are volatile or vulnerable and prone to erratic and potentially dangerous behaviours in response to difficult or unexpected life experiences, such as loss of a job or the ending of a relationship, bereavement or the arrival of a new member of the household. Many come from relatively chaotic backgrounds, where such changes in their circumstances happen fairly frequently. We may see a substantial proportion of offenders move at some time in their sentence from medium or low to high risk, which will necessitate their transfer to the NPS. Has the Minister an assessment of the likelihood of a transition and can he assure us that the NPS will have the resources it needs to deal with it?

I wonder who will be carrying out the assessments at different levels, when people are allocated to various parts of this new-look probation service, and how confident we can feel. Probation officers tell me that they are not perfectly sure yet who is going to do what in the system. Yet here we are, hurtling along on this great change programme that is under way.

It is worrying that those working in the system are still not clear about who is doing what. This is symptomatic of an approach that seems both unnecessarily complicated and fraught with difficulty.

I understand that the system depends on the CRC identifying and escalating a case where there is a perception that risk is increasing—someone in the CRC will have to make that judgment—and then the determination of the risk level will be made by an officer in the NPS. Will the Minister say how the NPS will carry out effective risk assessments of offenders with whom it has not previously had any contact because they have hitherto been managed entirely in the CRC? How can those assessments be objective, given that the NPS has a stake in the outcome, as it will become responsible for any offender that it assesses as high risk? Equally, how will we know whether the CRCs are escalating risk appropriately when they, too, have a stake in the outcome of the risk assessment? I understand—perhaps the Minister can confirm this—that the CRCs will continue to collect outcome payments, even after offenders transfer to the NPS, if the reoffending targets are met.

How will the payment-by-results element work, and what incentives will the NPS and the CRCs have to ensure that we get the crucial risk identification assessment and identification process absolutely right? Although low and medium-risk offenders can become high risk, conversely high-risk offenders can become lower risk over time. I would have thought that we hope rehabilitation programmes have that outcome, but the system does not seem to make provision for it. Once an offender is with the NPS, they stay there, even if their risk subsequently reduces. Will the Minister tell us why high-risk offenders who are subsequently reassessed as low or medium risk will not be transferred back to the CRCs? What are the resource implications of that structure?

What monitoring will be undertaken of when cases are escalated? For example, if there is a pattern of cases escalated very soon after the initial allocation, that might suggest delays in the provision of information or poor data at the time of sentence. A pattern of escalation later in the sentence might offer an early warning of weak intervention in the CRC.

Might it not also reveal that the personnel in the new organisations do not have the appropriate range of skills and understanding and that they are washing their hands of difficult problems as quickly as possible and dealing with only the easy ones?

We have seen that kind of parking approach in other privatised programmes. In the Work programme, for example, the most difficult clients, for whom it was difficult to produce effective outcomes, were parked by the providers. My hon. Friend is right to highlight that risk.

What will happen if an offender is wrongly allocated to the NPS? Can he or she challenge the assessment of the risk if they think it is wrong? That is important, given that it appears that once an offender is allocated to the NPS, they are stuck there. It is important that we know whether the Minister has thought about the effect that that will have on the relevance of the interventions that the NPS receives and the expectations and preconceptions surrounding the offender, which might feed into their chances of resettlement.

Finally, I want to say something about transparency. The public has a right to know whether an upheaval on this scale has been worth it. They must be able to find out whether the contracts are working effectively, whether we are being more effectively protected, whether reoffending has been reduced as a result of the changes and whether public money has been well spent. A Labour Government would extend freedom of information legislation to ensure that the community rehabilitation companies are covered, but the Government opposed that during the passage of the Offender Rehabilitation Act 2014. Shamefully, they made it impossible for a future Government to reverse the contracts, except at great cost to the taxpayer. Can the Minister assure us that the contracts include strong break clauses to ensure that the public does not end up paying for failure if they do not deliver the reduction in reoffending, which we are told is the goal of Transforming Rehabilitation?

All the concerns I have highlighted today should have been addressed before this wholesale, high-risk, evidence-free reorganisation of the probation service went ahead. It seems that ideology, not evidence, characterised the Government’s approach. Perhaps the Minister will reassure us with his answers today. I look forward to his response.

Order. I intend to call the first Front Bencher at 3.40 pm. If the three Members who wish to speak keep their remarks to not much above 10 minutes, everyone can be accommodated.

I congratulate the hon. Member for Stretford and Urmston (Kate Green) on securing this important debate, which allows us to discuss the changes in great detail. I thank her for her speech, which accords with my thoughts. Policing and the probation service is a devolved matter, so the Minister is not directly responsible for what happens in Northern Ireland.

This debate is about probation changes. I want to make some brief comments about Northern Ireland, and then I will make some observations about what the hon. Lady said and raise my concerns. Often, when something happens on the UK mainland, it becomes a line of thought for Northern Ireland, and I would be concerned if that happened with probation services.

The changes to the probation service in Northern Ireland are all monetary. Budgets have been reduced, which has had the effect of increasing reoffending. The budget for the Probation Board for Northern Ireland has been reduced to approximately £18 million, which, it has said, is likely to increase reoffending. I, like probably everybody else here, believe that investing in probation saves money in the long term. It saves money in the criminal justice system and ensures that offenders do not reoffend. The 12% cut to the budget of the Probation Board for Northern Ireland has put the service under more pressure and will lead to more reoffending. That, in a nutshell, is where we are in Northern Ireland. Changes have been made to the Probation Board to cut costs. The hon. Lady outlined the potential changes in England and Wales, and I want to make a couple of observations about that.

I am concerned about what is being discussed here because we in Northern Ireland look to the mainland for policy direction. We look to the mainland for what is right so we can consider it when we make policy in the future. I am conscious that the difficulties in the Government’s proposals might affect us. Under the new plans, in England and Wales private companies and charities will be offered payment by results for supervising people released from jail. Every offender who leaves jail, including those who have spent only a few days in prison, will have to complete a year-long supervision period, and they will return to custody if they reoffend.

People have expressed concerns that the plans to privatise 70% of the probation service will lead to more criminals reoffending while on parole or probation while the changes are being put in place. The hon. Lady outlined that issue clearly. She put myriad questions to the Minister, for whom I have great respect. He is deeply interested in this subject, and I look forward to his response.

Some 400 serious crimes are committed by people on probation or parole each year. The National Association of Probation Officers, the probation union, claimed that that figure could rise, as there will not be enough staff in the private sector to recognise the risks properly. My concern is that restricting staff and changing criminals’ supervising officers will increase the chance that criminals will reoffend. The hon. Lady outlined that problem clearly. Under the Government’s plans, public sector probation will focus purely on public protection, and the winners of the rehabilitation services contracts will deliver reductions in reoffending. The statutory probation agency could continue to sit on boards, but, crucially, unless it manages the contracts for rehabilitation, it will have little authority and no budget to influence reconviction rates. There is a clear need for tougher reoffending targets. Perhaps the Minister in his response can indicate whether the Government’s intention is to set targets. If such targets are met by the companies, will they be rewarded in some way to encourage them to do more?

Undoubtedly, the system needs changes and the aims are admirable, but how effective the changes will be is another question altogether. More than half a million crimes are committed each year by those who have broken the law before. The reforms will finally address the gap that sees 50,000 short-sentence prisoners released on to the streets each year with no support or incentive not to reoffend.

Although the reforms are a welcome step in the right direction if done correctly, people have concerns. Payment by results is a frightening possibility, because for many of the people released from prison, the results can be a long time arriving. There is also a risk that that might mean that companies target those who will likely get them good results. I am sure that that is not the Government’s intention, but that is a potential result that we need to keep in mind and consider putting safeguards in place to prevent.

The hon. Gentleman is making some considered points about how the programme may or may not apply in Northern Ireland. My advice would be that he could gain the benefits that the Government aspire to achieve from very different means that would have far fewer risks to public safety. We care about what happens in Northern Ireland, just as he cares about what happens on the mainland, so I urge him to consider alternative approaches that may be safer.

I thank the shadow Minister for that valuable assistance to my line of thought. Westminster Hall debates provide an opportunity to discuss these matters and see what we can do. We all believe in the United Kingdom of Great Britain and Northern Ireland altogether and I hope to see that retained.

One of the changes that perturbs me greatly—there are public safety concerns—relates to the access of all staff to detailed case records. Some cases contain details of victims, including rape victims. Access could mean that their names become known outside the system. What precautions will the Minister put in place to ensure that that does not happen?

The hon. Member for Coventry South (Mr Cunningham), who just left, mentioned a pilot scheme. In many cases, pilot schemes are an opportunity to get it right, which goes back to what the shadow Minister said. I wonder why such a scheme was not considered to bed the programme in, allow us to learn from what was wrong and improve on that. We in Northern Ireland could have taken from that the best way of operating, because, no doubt, we will consider such a programme in the future.

Undoubtedly, any work that supports offenders is welcome. We want to help to make staying out of trouble a reality. However, that needs to be achievable. This programme will certainly help in that process, but we need to be wary of cutting or changing the probation service so much that it can no longer function efficiently.

We want to keep our services working as well as they possibly can. That may mean encouraging private companies to work alongside them, but let us be mindful that it is just that—our services and private services working alongside one another in harmony for the benefit of the community—and not a replacement for the great probation service we already have. I thank the hon. Member for Stretford and Urmston for giving me the chance to speak on this matter.

I welcome the Minister to his post; I felt that he should have been appointed to a job much earlier. I caution him, however, that he has been given a bed of nails and predecessors who have raised issues about the development of this policy have been short-lived in post. I hope that today we can at least take some of the issues raised by the inspector’s report and, as the hon. Member for Strangford (Jim Shannon) said, by NAPO—from the front line—on what is happening at the moment and see how they can be addressed. For an initial report on such a change, the inspector’s report is damning.

As an aside, with regard to the inspector’s post, we have seen coverage in the press about potential conflicts of interest. I welcome the report, which I think demonstrates that the inspector has gone about his job well. I must say, however—the Select Committee on Justice has been in correspondence with the Secretary of State on this—that justice needs not only to be done, but to be seen to be done. The same can be said for probity, transparency and governance.

The Secretary of State needs to give a clear response at some stage on how an appointment has been made without a full, wider declaration of interests that covers potential conflicts of interest. In no way do I question or impugn the independence of the inspector, but that process issue must be addressed.

I identified about 29 or 30 worrying points in the inspector’s report about how the process has operated over the past few months. My hon. Friend the Member for Stretford and Urmston (Kate Green) mentioned the allocation of cases, which was fundamental to the restructuring process. The report makes clear in its first paragraphs that the key issue in allocation is the associated assessment and documentation. It says not only that the processes were time-consuming with regard to allocation, but that the documentary evidence did not support a full and clear reading of all the factors. That is surprising. It says:

“our view is that the new processes linked to allocation should be completed by the member of staff preparing any report for court.”

At this first stage in establishing how a case is allocated, there is a lack of clarity about who undertakes the process. Not even the documentation is clear or appropriate.

On timeliness, the inspector argues:

“The majority of cases were allocated…within one working day”.

However, he then demonstrates that a number of cases were allocated wrongly: they went to the NPS instead of the CRC. He says:

“These cases had to be reallocated from the Community Rehabilitation Company back to the National Probation Service with all the work and disruption that this involved.”

More than work and disruption is involved; there is anxiety about the safety and security of prisoner supervision.

The report is even more worrying on the risk of serious harm screenings. Proper screenings for risk of serious harm are fundamental, but, what do we find? It says:

“Staff were not clear about whether the new risk of serious harm screening replaced the previous one or was additional to it.”

One element of that was deportation—this is an issue that Government Members have raised recently—but there is nowhere in the new form and paperwork to record those issues. That is quite remarkable, because deportation is usually associated with criminals who have undertaken serious acts.

The inspector argued for a fuller serious harm analysis than provided at the moment. He says:

“We found that in many cases a full risk of serious harm analysis had not been completed by the National Probation Service, or if it had been done, the Community Rehabilitation Company had not received it.”

Therefore, the analysis is often not being done properly, the paperwork does not cover all the critical aspects and, even if it is done, the CRC does not receive it in sufficient time. He says that, as a result, offenders

“could be assigned to the wrong grade of staff and subsequently need to be reassigned.”

A junior member of staff could therefore supervise a serious offender and be out of their depth. That puts not just the general public, but that member of staff at risk.

On that point, my hon. Friend will be as concerned as I am—the Minister will be, too—to hear about a report passed to me by a member of staff who had heard of a colleague who had not been informed that she was supervising a sex offender. During that supervision, she was subject to a sexual assault. Had that information been provided, first, she might not have supervised that offender, given her grade, and secondly, she certainly would not have seen him on her own.

Some shocking examples are emerging. They are, admittedly, anecdotal, but we also have the inspector’s report, which says this is about more than just individual problems.

On the supply of information to the CRCs, I was interested to see that the report’s authors interviewed two offenders, who said:

“staff who had seen them did not know anything about them”.

As they said, it was not a particularly “good start” when even the probation officer they were supposed to be supervised by did not know them.

We raised the issue of IT before the reorganisation started, and we have done so since. All the evidence we have had from staff completely confirms what the inspector says, which is that the IT system is “slow running” and has “an unreliable search facility”. However, there is one issue I found extraordinary—indeed, it is almost farcical. When does the probation officer most need the IT system? Usually, when they are in court. However, under the current system, they cannot connect their laptops to the network when they are in court—there is no remote connection. That is farcical—or it would be if it were not so dangerous and we were not talking about the supervision of people who have offended and who put the community at risk.

On electronic records, the report says:

“Not all staff understood the system had the ability to upload and store a range of documents electronically”.

On the IT change process, the report says:

“the perception amongst staff we interviewed was that many of these changes were introduced at short notice and with little opportunity for formal training,”

which is exactly what we have said in several debates in this Chamber over the past six months. The management then introduced workarounds to try to get people up to speed, but the inspector says they

“were cumbersome and were not fully understood or, therefore, used by staff.”

On the links between individual IT systems, the report says:

“We found most operational staff and managers were completely unaware that the two existing systems could be linked so that each system updated the other whenever a new assessment was completed.”

What is most worrying, however, is the issue of warning flags, which are meant to go on the system to warn staff about threats relating to the behaviour of individuals being supervised by probation officers. The report says:

“We found these flags were often either not used, or carried out of date or misleading information.”

That is absolutely shocking, to be frank.

All through, the report confirms what we have heard from staff. We have heard consistently that there are not enough staff. Speaking about staff grades and allocations, the inspector—I think he is being diplomatic at this stage—says:

“Not all areas had the ideal balance of probation officers and probation services officers to cover courts”.

We now have evidence from NAPO and staff on the front line that some probation officers are being allocated cases and work beyond their training and pay grade. Again, that puts the service and officers at risk.

On resources overall, the inspector says:

“We found National Probation Service teams struggling to complete all the new tasks required”.

Why? Because of the Transforming Rehabilitation changes themselves, which were putting staff under pressure. The report also says:

“Most areas had kept staff numbers in court teams static, but new processes meant that more resources were needed in courts.”

In evidence from the front line, we are finding that staff are focused on trying to keep up with the pattern of change, rather than on dealing with the serious issues raised by their work. That is a real worry.

Let me give an example. On domestic violence, my hon. Friend the Member for Stretford and Urmston referred to women, and domestic violence and child protection are largely about women. We are now finding that there are insufficient staff to ensure the supervision of courses, particularly building better relationships courses. The Warwickshire and West Mercia community rehabilitation company sent out a letter advising staff that there are insufficient staff to enable courses to be completed properly. It says:

“Due to these exceptional circumstances”—

that is, the lack of qualified staff—

“CRC staff will be returning some cases to court due to insufficient time left on the orders to complete the BBR programme. Where possible, we will suggest the domestic Violence Work book module”.

Staff are therefore offered a manual, rather than an actual course to tackle building relationships, which is core to domestic violence cases. The letter basically says that it has not been possible to recruit sufficient staff and sessional tutors.

Also on staffing, real concerns have been raised with us about diversity. There needs to be an independent assessment of the allocation of staff with regard to ethnicity and diversity. A couple of surveys done with regard to at least two probation trusts support the view that black and ethnic minority staff are over-represented among the CRCs, as opposed to the NPS. That is not only unfair with regard to the staff, but it impacts on diversity issues in service delivery. Again, that issue must be addressed and it goes beyond what the inspector has said.

A whole range of the staffing issues set out in the inspector’s report reflect what front-line staff have told us, even to the point of managers saying:

“Several senior probation officers were not clear what appropriate tasks could be allocated to them.”

There is also a lack of overall management of some issues in the CRCs and the NPS because management have been diverted to dealing with the change process, rather than the day-to-day management of staff and casework.

It is no wonder, therefore, that the inspector comments that, in some CRCs in particular, staff morale is extremely low. The feedback we get from NAPO and its members on the front line is that staff morale is still at rock bottom, and it has not lifted, despite the Secretary of State’s decisions, which he assured us would at least give staff some security about their long-term future. That certainly has not happened.

Staff are doing a good job as best they can under intense strain, and I pay tribute to their loyalty, commitment and dedication to the service. It is a tragedy that the Secretary of State has embarked on this venture—this adventure—which will continue to have a negative impact on staff and the service. I hope that the report will lead the Government to give some thought to addressing the issues that the inspector sets out. Perhaps the system needs much more detailed long-term consideration.

I argue again that the service should never have been privatised. However, it is totally unacceptable to include in the contracts a poison pill clause to try to prevent a future Government from introducing their own reforms. When the next Government are elected in May, I hope that those clauses will be totally disregarded.

I will be brief so that the two Front Benchers can respond in good time. I thank my hon. Friend the Member for Stretford and Urmston (Kate Green) for getting this debate, which is necessary and important.

I am a member of the Justice Committee, and we have listened to a great deal of evidence about the operation of the probation service. We have heard some very serious, deep concerns from long-standing, committed, professional people who want to deliver a good probation service. They now find themselves being hawked around to the lowest bidder, as the tendering process gathers pace. It is quite shocking that, by May, 80% of rehabilitation services of all kinds will be in the private sector, not the public sector. Whoever is elected to form the next Government in May will have to preside over a system over which they have quite limited control and where there is a real problem with communication between the different sectors of the service.

Our duty as Members of Parliament is to hold the Government to account, and the duty of members of the Justice Committee is specifically to hold the Ministry of Justice, including the Lord Chancellor and the other Ministers, to account. They have three roles that apply to this debate. The first, obviously, is ensuring the safety of the judicial system, so that those who are convicted are genuinely convicted. Secondly, there is the role of the prisons and what happens in them. Do people come out of prison more or less likely to offend and more or less well equipped to deal with the challenges of society? From that stems the problem of reoffending. I am far from convinced, however, that dividing up a service and attacking the professionals in it all the time, as well as the current Lord Chancellor’s obsession with privatising every conceivable aspect of the judicial process, helps to achieve any of that, and does not make the situation considerably worse.

We have had evidence from NAPO, which has provided briefings to the Committee and to many hon. Members, and I want to mention some of its concerns:

“Same day reports (SDRs) and oral reports at Court do not allow sufficient time to carry out checks with police and children’s services”.

That must be a matter of concern. Staff shortages have led to cancellations of sex offender programmes and domestic violence programmes, and obviously extreme danger goes with that. Because of a

“lack of fully qualified probation officers…domestic violence cases are being allocated to Probation Service Officers who are not experienced or qualified to work with these complex cases”.

Apparently, the

“National Probation Service (NPS) in some regions is no longer sending representatives to Multi Agency Risk Assessment Conferences”

because there are not enough staff.

The whole point of a rehabilitation process is to link all the agencies. What is happening is the opposite of that—the break-up of the link between them. Instead of meetings of a group of professionals from different public sector organisations, there are meetings of competing private companies—some of which are inhibited by data protection law from sharing information with each other. We have reached an absurd situation and I hope that the Minister will tell us that everything is well, that things are going to get better and that he will halt the privatisation process that is going ahead with such speed.

At the Justice Committee before December, we were informed of potential conflicts of interest with the new chief inspector of probation. The Secretary of State promised us an answer by today. Today is not yet finished; there are still nearly nine hours to go, in which an answer can be given. Perhaps the Minister will tell us what action has been taken on that issue, which is of great concern to the public.

The debate is about the probation service, and it is also about the kind of society that we want to live in. I had the good fortune to go with the Justice Committee on a visit to young offenders institutions in Denmark and Norway. I have also visited quite a lot in this country. I pay tribute to the people who work in YOIs. It is not an easy job. One of the most interesting times I had was a long session with a group of young offenders in Feltham, where I went with my hon. Friend the Member for Feltham and Heston (Seema Malhotra). It was just us and the group of young offenders. Listening to their stories was very sad, and so was listening to what they had done. Listening to their lack of ambition for when they came out was even worse.

Surely, the criminal justice system must be based on the idea that, although those who have committed crimes must face a judicial process and there are occasions when it is right to send someone to prison or give them community service—there is a range of options—the primary objective is to bring them out as better people, with personal ambitions and a personal network, rather than as people facing the same issues they faced before with a high likelihood of reoffending. We all pay the price for their reoffending, in the lost skills of those who go to prison and the damage to communities.

We talked to people at the MultifunC institutions in Denmark and Norway, and the system is expensive to operate; I do not doubt that. It is much more intensive and professionally supported than our services, but the level of reoffending is below 20%. Ours is well above 50% for pretty well all categories, and well above 70% for others. Something is going badly wrong.

There is no evidence to suggest that privatising the probation service, Prison Service and all other forms of rehabilitation and support does anything but create competition in the private sector and a miasma of bureaucracy. The losers are the ex-offenders, the community, and those of us—all of us—who must pay the costs in reoffending, more prisons and more sentencing. Surely, there is a better way to go about this—one that would show some respect for those who have given their lives to the probation service and who in a decent and professional way try to improve people’s lives, rather than working solely for private sector companies whose main interest is making money out of the system.

It is a pleasure to serve under your chairmanship, Mr Crausby. I congratulate my hon. Friend the Member for Stretford and Urmston (Kate Green) on securing the debate this afternoon. We have had to contrive ways to obtain every debate that has ever been held on probation reform, since the idea was first proposed. We have had Opposition day debates, and we had to table amendments to the Offender Rehabilitation Act 2014. The Government provided no opportunity to hon. Members to debate this important issue. I therefore pay tribute to my hon. Friend, and thank the hon. Member for Strangford (Jim Shannon) and my hon. Friends the Members for Hayes and Harlington (John McDonnell) and for Islington North (Jeremy Corbyn) for their speeches, and my hon. Friend the Member for Stockton North (Alex Cunningham) for the interventions he has made.

It may seem that the horse has bolted, because the Government have signed the contracts. I know that the Minister is new to his job, and came to the post after the Act was passed, but I assure him that the concern felt by the Opposition—and, I suspect, by some Conservative Back Benchers—has not gone away. We are probably more concerned than we were previously. When the Act was going through Parliament, our concerns were hypothetical. We were told that we were scare- mongering, and not getting on the bus and showing the enthusiasm that we should, but we were proved right. It gives me no pleasure to say it, but the concerns that we raised, and that the Government were warned about, are by and large starting to come true. The Government need to take that seriously. The Minister needs to act. He needs to do something about the situation, not just sit and shake his head. What is happening is serious, and involves public safety and the morale of an organisation, or many organisations, with an important job in communities.

My colleagues have spoken clearly about the catalogue of errors that has characterised the Government’s probation policy. We could have filled a much longer time, if we had been allowed to, and could have got under the skin of the issues. I am saddened that Members of Parliament have not been given a proper opportunity to debate the detail, except in debates such as this one, when we make speeches cataloguing our concerns. The Government have never given us the opportunity for proper line-by-line consideration of the proposals. If they could have got away with it, we would have had no debate on probation.

It is worth repeating that the probation service does highly skilled and challenging work, which receives little attention when it is done well, but which is crucial to keeping communities safe. Reoffending rates are still far too high, and much more needs to be done to break the cycle of repeat offending. We know that. If the Minister intends to tell us that the Government had to do something because reoffending rates were far too high, my reply is that they are still too high. I venture to suggest that they will still be too high in a year.

Probation undertakes a very difficult task. Should the Minister’s predecessor have considered asking far more of the trusts, which were without exception graded good or excellent? They were not dysfunctional, failing organisations. I would argue that their staff were some of the most entrepreneurial—probably too much so for some of my colleagues’ tastes—go-getting, ambitious people to be found anywhere in the public or perhaps even the private sector. They were very prepared to innovate, and were not doing the nine-to-five. Those people lived and breathed their job, and many, I am sad to say, are now lost to public service. That is a great shame. We should have demanded far more of those trusts and raised the bar. Last year’s “good” should have become this year’s “excellent”, and last year’s “inadequate” should have become “good”. We should have raised the bar. That has not happened and those organisations no longer exist, which is a great shame.

The Secretary of State rushed the changes. Many of us will never forgive him for that. The speed at which they were rushed through was appalling. He did not even manage to test the policy to check that it worked. I was amazed to hear the Minister of State, Ministry of Justice, the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), say on the “Today” programme that the proposals and changes had been thoroughly tested and piloted. Nothing of the sort happened. There were pilots, which the Labour party backed—we supported piloting the idea, because we were not ideologically opposed to it and thought that there could be some learning—but the Secretary of State cancelled them. There was no opportunity to learn or to make mistakes on a relatively small scale.

Everything was completely rushed and the Secretary of State cancelled the pilots. It would be good to hear Ministers acknowledge that that is what happened, rather than misinterpreting events and saying that the changes had been piloted. There were pilots, but they were cancelled and never got under way. Even though much time, energy and thought had gone into preparing for them, they never happened. We warned at the time that that was scrapping any opportunity for the Government to test or improve the model, or to learn from mistakes on a small scale. Instead, every single teething problem—as predicted—every dodgy bit of IT and every failure in communication is now being experienced in all areas and by all staff members on a national scale. That cannot be a sensible way in which to implement any such change.

We have heard what a shambles the transfer has been, with probation officers in some cases—Ministers have denied this, but I know for a fact that it happened—having their names picked out of a hat to decide whether they would be working for the National Probation Service or a CRC. That is a disgraceful way in which to treat members of staff in any organisation.

The problems that we are talking about, however, cannot be called teething problems any more. This is not the odd unsent e-mail; this is widespread, high-risk problems with staffing, communications and IT. An hour and a half debate is simply not sufficient to deal with those problems. I want to drive the point home about the lack of opportunity that the Government have allowed in the House for Members to contribute to and improve the proposals. Today, however, we have had a flavour of the problems.

The inspectorate found that the IT systems were a “barrier” to staff using time effectively; that new tasks had not been integrated with old systems; and that significant amounts of work were being duplicated by different programmes and processes. The new processes

“take longer and are more complex than previous arrangements”.

Inspectors reported meeting offenders who had been seen by probation staff who knew nothing about them, while other offenders were juggled between many different members of staff before finally meeting the officer who in theory was to manage their case. Whatever the inadequacies of the previous system, at least we knew who was responsible. It is frightening that that is not happening any more.

Things are not running as the Justice Secretary had guessed they might—it was a guess—and the allocation of staff and resources to the NPS and the CRCs is not working out as expected. There are staff shortages across the system, with many people having left. A greater number of cases are being transferred to the NPS than was originally expected, and NPS teams are struggling to manage the high-risk case load alongside the other new duties demanded by the fragmented service.

As we have heard from colleagues, there are now perverse incentives in the system around risk allocation. On top of everything else, the new risk assessment tools are taking time to bed in, as everyone said they would. We know it takes time for practitioners to understand how to use new risk management tools effectively and get used to them, but no time was allowed. Why introduce a new risk management tool at the very time that so much turmoil is being inflicted on the system? It seems to be the worst possible way in which to implement even a good idea—not that it was a good idea.

Extremely worryingly, officers are reporting that lower-grade staff are working with cases way beyond their training, experience and even pay grade, including complex domestic violence cases, life-sentence prisoners and cases involving child protection. That is a huge safeguarding problem. Will the Minister commit at least to investigate those cases urgently, because they will be of huge concern to the public? I am realistic: probation and management of offenders is not the No. 1 concern of voters in any of our constituencies, but they get completely exercised about domestic violence and child protection not being dealt with properly by the right people—by people who are trained and qualified appropriately. The Minister needs to commit to investigating that as a priority. The Minister has a responsibility to verify and reassure us on that.

Staff are telling me that they are having to replace one-to-one supervision with group supervision, or to cancel or postpone offending behaviour programmes, which includes treatment for sex offenders. When I worked in the Prison Service, such programmes were very special and considered to be most effective. They were rigorously validated and academically robust, which I think is probably still the case, but if those programmes, which we know are effective, are being cancelled or delayed due to a lack of facilitators, that is most concerning to Opposition Members. Is the Minister investigating the extent of that problem? He might not be able to answer today, but perhaps he can commit to writing to the Members present in the Chamber to let them know the answer to some of our questions, although he has been asked rather a lot.

What is troubling is that most of the issues are not short-term problems that one might expect with a new system or process, so it is not good enough to say, “Okay, we realise that there are difficulties. These will be ironed out. Please be reassured.” In this case, the problems have been built into the service by the Government’s reforms. The Government have created a host of problems that they will have to live with if they persist with their model. In essence, the problems have been created by the service being split needlessly in two. At the end of the day, when we look back on the reforms, that will be identified as the key mistake. Changes took place because the Justice Secretary had a gut feeling that it was the right way to proceed. That will be regretted.

The fragmentation of the service has, unfortunately, done the harm that many Members of the House saw coming. The inspectorate put it like this: it said that

“splitting one organisation into two…has created process, communication and information-sharing challenges that did not previously exist. Many of those issues will remain a challenge for some time to come”.

The inspector puts that very clearly. I have a huge amount of respect for Paul McDowell. Whatever the circumstances of his appointment and whether the Justice Secretary knew about them and informed the Select Committee—he clearly did not inform the Committee, but he has to answer to the Committee for that—the inspector, to his credit, has done a very good job with his report.

In reality, fragmentation means that work is being duplicated and information is not being shared on time, which makes supervision less responsive and puts public safety at risk. Not only are there problems with information sharing between probation organisations, but staff are reporting poorer communication with partner organisations, which includes the police and child protection agencies. When things go wrong we take time to look at why, and inevitably there are recommendations. Almost every serious case review I have read has highlighted problems with information sharing, especially with partner organisations. It is deeply concerning that staff are raising concerns that information is not being shared with the police and with child protection agencies.

We know what helps probation to work better: we need partnership working and good relationships with other agencies—we know how important those are. A good relationship between the offender and the probation officer is crucial. Quick response times matter, as do seamless communications. Those things are not luxuries but a basic necessity, and they have been put at risk by the reforms.

Reoffending rates are far too high, and we would have gladly worked with the Government—indeed, we still would—to test ideas and find ways to bring. out the best in public, private and voluntary expertise. All three sectors have a role to play in reducing reoffending. I would have put a lot more pressure on trusts not only to work with a greater number of agencies and to commission more, but to hold the ring and be accountable for performance. That would have been a far better and safer way to proceed, but the Justice Secretary had no interest in evidence or in testing his ideas, and the service is now paying the price of this hurried upheaval.

A recent survey of probation staff showed that 98% had no confidence in the Government’s plans, 97% had no confidence in the Justice Secretary and 55% were looking to change job. The expertise of those staff is the one thing holding the whole flipping experiment together! They deserve absolute credit for that, but the Government and the public should be exceptionally worried if experienced senior officers continue to leave the service. We heard on the radio this morning about the concerns that prison officers have about their safety at work. I do not want to think of probation workers having the same kind of anxieties as their colleagues in the prison service.

The Minister has an awful lot of questions to answer. I feel for him in many ways—this problem has been landed on him and is not, I know, one of his making. However, he is the one in the job now so it falls to him to answer the questions. How much does he think the reforms will cost? In Committee on the 2014 Act, his predecessor, the current Attorney-General, resisted every opportunity we gave him to provide us with numbers on what he intended to spend on the programme.

What will the Minister do about staff morale? Morale is very important in this line of work—it really matters. Staff need to be supported to understand the new processes, particularly given the findings of the inspectorate. Many staff do not even understand the rationale behind the changes, and I can understand that. He needs to do something about that, so I want to hear from him what he intends to do.

I also want to know about payment by results. It has been used as a bit of a fig leaf, with Ministers saying that all will be well because we will pay only for outstanding results. That is not true, but we have not been told how much of the payment will be dependent on the results and how much will simply be paid anyway. It is important that we know the answer.

What is the Minister going to do about the communications and IT failures? Is this an issue with resources, with management or with training? Is it an issue with all three? We need to understand that.

Will the Minister guarantee funding for women’s centres? That is an issue of massive concern. Women’s centres can do a lot to reduce reoffending, as they are very effective at cutting it.

We know that the contracts contain clauses promising companies millions of pounds of taxpayers’ money if they are terminated early, and that we are unlikely to be able to afford to buy ourselves out of them, as we might wish to do. Will the Minister outline what break clauses exist in the contracts, so that we can at least be assured that we will not have to pay those companies for failure? What plans does he have in place should a company fail? We have seen health care companies such as Southern Cross fail; what will happen if companies in the probation sector fail?

We are committed to extending freedom of information so that we can find out exactly what is happening in the companies. Does the Minister have any thoughts on that? Do the Government have any intention of allowing FOI to apply to community rehabilitation companies?

Lastly, I pay tribute to the loyalty of the staff, who work so hard and are dedicated to rehabilitation, in both the NPS and the community rehabilitation companies. It is not true that the most experienced and the brightest and best went to the NPS, and everyone else went to the CRCs. There are outstanding, long-serving staff in both organisations who do a tremendous job in very difficult circumstances. I want to make it clear that the Opposition opposed the reforms from start to finish and we will be crawling all over the contracts to ensure that whatever break clauses there are will be applied, and quickly, in the interests of public safety.

It is a pleasure to serve under your chairmanship, Mr Crausby. I congratulate the hon. Member for Stretford and Urmston (Kate Green) on securing this important debate. I have known her for a long time. I have a great deal of respect for her and know she takes a serious interest in these issues.

I am going to prioritise answering the various points raised by Members during the debate and come to my prepared remarks afterwards. I will deal as quickly as I can with all the matters put to me.

All the existing expertise of our fantastic public sector probation staff is still there in the system. Most people are working at the same desk, doing the same job as before. That is highly valuable. I should point out that the report of Her Majesty’s inspectorate of probation goes up to September last year, and there have been significant improvements since then on a lot of the issues that Members have quite properly raised. To give just one example, the rate for completion of the risk of serious recidivism report within two days is now at 80%, which is a significant increase. We have every confidence that that figure will carry on increasing, and I hope that that reassures Members. [Official Report, 21 January 2015, Vol. 591, c. 1MC.]

We were accused of bringing in the reforms on the basis of ideology, not evidence, but given that we have all agreed that reoffending rates are too high—it is a serious problem, as every Member who has spoken has said—I gently say to the Opposition that it would be wrong not to take the best expertise within our brilliant public probation service, the fantastic expertise in the voluntary and community sectors, of which no mention has been made by Opposition Members this afternoon, and the expertise that exists in some private companies. We want to have the best of all three working to tackle these issues.

I will make some progress. I will not succeed in answering the questions already put to me unless the shadow Minister allows me the little time I have left to do so.

The hon. Member for Stretford and Urmston asked why we did not simply get probation companies to deal with the under-12-month group. Frankly, on the financial model we were operating on before, that would not have been affordable. The previous Government tried to do it under their “custody plus” plans but had to scrap the attempt before implementation. We believe that the reduction in reoffending that we expect to see will enable us to extend provision by the companies to that important group.

The hon. Lady and one or two other Members mentioned the random allocation of staff to the National Probation Service and to CRCs.

If the hon. Gentleman will allow me, I want particularly to respond to the people who made speeches in the debate.

Random allocation of staff happened in a very small number of circumstances when other objective methods of allocation were not available, and was used specifically to choose between staff who were otherwise similarly qualified to be assigned to the relevant organisation.

The hon. Member for Stretford and Urmston quite properly raised the important issue of how we will deal with diversity. We believe it is most appropriate for a detailed diversity assessment to be carried out after allocation, as that can then inform the detailed sentence plans compiled by the offender manager. That fits with the sentencing approach introduced by the Offender Rehabilitation Act 2014.

The hon. Lady also—again, quite properly—raised the issue of what we are going to do as far as the specific needs of women offenders are concerned. I visited Peterborough prison last Thursday and saw the excellent work there—not least in the mother and baby unit; she is absolutely right to raise the issue, as is the shadow Minister. More than 1,000 organisations have registered to play a part as either tier 2 or tier 3 providers in the supply chain, many of them with specific expertise in delivering specialist support to women offenders.

To go further on that point, we are including three gender-specific outputs in contracts with the community rehabilitation companies, meaning that, where practical, providers will have to give female offenders the option of a female supervisor or responsible officer, of attending meetings or appointments in a female-only environment, and of not being placed in a male-only environment for unpaid work or attendance requirements. I could go into more detail on that, but I hope that I have given some reassurance that we have thought seriously about the issues that the hon. Lady was quite right to raise.

The hon. Lady also raised the escalation of low and medium-risk offenders. We are keeping escalation rates under close review, but so far the indications are that the numbers are relatively small. The decision on escalation is always one for the National Probation Service, which, of course, remains wholly within the public sector. We supported both the NPS and CRCs to bed in the new processes so that they are working effectively.

On the issue of freedom of information requests to community rehabilitation companies, the CRC contracts set requirements on providers to give information to the Ministry of Justice if it receives relevant requests under the Freedom of Information Act. That is not completely as hon. Members suggested.

In the nine minutes that I have left, I want to move on to the speech made by my hon. Friend the Member for Strangford (Jim Shannon). He was generous enough to say that he thought that the reforms could be worth while if done correctly—I may be paraphrasing him slightly, but I think that he made remarks along those lines. He asked, as did one or two other hon. Members, why we did not pilot the reforms. I refer him to the pilots undertaken at both Peterborough and Doncaster, which the shadow Minister mentioned.

It is worth putting on the record that in Peterborough there was a reduction of 8.4% and in Doncaster a reduction of 5.7%. I fully recognise that that is not the same as the Transforming Rehabilitation programme, because we are bringing to bear further measures that will help with the under-12-month group and so on, but those two pilots show that where we have allowed innovation and new initiative, and where investment has come in from outside the public sector, we have brought reoffending down.

No. The hon. Lady will want to hear this because she made allegations about safety and so on. I know she will be reassured that the number of serious further offence notifications between 1 June and 30 September 2014 was 151. That was a reduction compared with same period of the previous two years, when the figure was 181 for both 2013 and 2012.

All hon. Members will know—not least the two distinguished members of the Justice Committee who are present, the hon. Members for Hayes and Harlington (John McDonnell) and for Islington North (Jeremy Corbyn)—that the level of serious further offences is an important indication of how well a probation service is doing. I hope that that reassures hon. Members.

I am not sure that I am distinguished.

Safety was absolutely key to the legal action taken by the National Association of Probation Officers before Christmas. The Secretary of State gave assurances in court that action would be taken by 1 February to address a whole range of issues of which we are unaware because the union is subject to a gagging clause. Will the Minister give us an indication—now, because the time is here—of the actions that have been taken, on a point-by-point basis, to address the concerns raised in court, therefore showing that there is no need for the gagging order to be in place at this stage?

In the six minutes that I now have left, I will try to put as much information on the record as possible. There is certainly no gagging going on here because I want to inform hon. Members as much as I can.

I move on to the speech made by the hon. Member for Hayes and Harlington. First, I thank him for his very kind remarks about me. Along with one or two other Members, he mentioned the position of the chief inspector of probation. First, as the CRCs are within the public sector, there is currently no conflict of interest. Secondly, I refer back to what the Secretary of State said in the Chamber not so long ago: the issue is under discussion and must be addressed. I cannot say more at this moment, but I reiterate the assurance given by the Secretary of State.

I was pleased to hear the hon. Gentleman praise probation staff. I, too, will take the opportunity to do that now. As the shadow Minister rightly said, they are a group of public sector workers who are often forgotten. They are not the first group of public sector workers who come to mind, but they do an absolutely vital job in the criminal justice system. I pay huge tribute to the important work that they do in keeping us all safe. The hon. Gentleman was also absolutely right to discuss the need to raise offenders’ ambition. We will not succeed unless we manage to do that; the issue is very close to my heart.

On the issue of voluntary termination clauses, raised by both the hon. Gentleman and the shadow Minister, I should say that they are standard Government clauses. When the Labour Government were introducing the flexible new deal, they used exactly the same clauses. We would not have had the healthy level of interest and attracted the expertise and commitment that has come in to bring down reoffending had we not used those clauses.

The hon. Member for Islington North talked about a race to the bottom on price. I make no apologies for the fact that value for money is an important consideration in the spending of taxpayers’ money, but I can absolutely assure the hon. Gentleman that we were highly rigorous about the quality of the bids. Every organisation that has bid has previous experience in the service area; that was extremely important to us.

The shadow Minister asked why we had not piloted the reforms. I say to her that the problem across the UK is so significant that we were determined to address it across the country. Conducting a number of small pilots would not have given us the opportunity to do that. She referred to a staff survey; unfortunately, in one of the staff surveys undertaken by NAPO, only about 10% of the eligible staff participated. We are dealing successfully with those issues as they come forward.

It is a good thing to have opened up the market to a diverse range of new rehabilitation providers. We are determined to continue to get the very best out of our public sector workers. We are extremely grateful for the expertise that has been introduced by the voluntary and private sector providers.

Hon. Members asked about the new payment incentives for market providers. They will be there so that we can focus relentlessly on reforming offenders, giving providers freedom from bureaucracy and the flexibility to do what works, but paying them in full only for real and significant reductions in reoffending. For the first time in recent history, virtually every offender released from custody will receive statutory supervision and rehabilitation in the community. We are legislating to extend statutory supervision and rehabilitation to all 45,000 of the most prolific group of offenders.

It is important to realise the cost of crime caused by reoffenders, which the National Audit Office estimates at between £9 billion and £13 billion across society. That is why it has been right to take forward these significant reforms to deal with the very serious issue of reoffending.

Network Rail

Network Rail has a quite extraordinary governance structure. It was set up in that way, as I think almost all parties would agree, with the primary aim of keeping its debt off the Government’s books. However, since a ruling from Eurostat, implemented by the Office for National Statistics here, that debt is now on the Government’s balance sheets, with that decision having been taken finally in December 2013, with the reclassification of the entity taking effect on 1 September 2014.

Last week, when I asked the Secretary of State for Transport whether it was not therefore time to reform Network Rail’s labyrinthine governance structure to make it more accountable, he replied that he would take my question as a representation to cancel the building of a new railway station in my constituency. I fear that exchange probably told us more about the Secretary of State’s character than it did about the governance of Network Rail, hence today’s debate, which follows yesterday’s publication of Network Rail’s report on the post-Christmas disruption. I will focus on two issues—pay and governance—before finally making one or two remarks about Rochester and the applicability of these issues to my constituency.

Yesterday, a report was published by Dr Francis Paonessa, who is the managing director of infrastructure projects at Network Rail. He is paid an annual salary of £425,000 with a further bonus opportunity of 20% of salary. I intend no personal criticism to Dr Francis Paonessa, who is clearly a manager of stature. Before taking his current role with Network Rail, he was the UK managing director of Bombardier, which, under his leadership, secured the important Crossrail contract for building trains, having previously lost out on the Thameslink contract to Siemens. Clearly, running leading infrastructure projects requires a different set of skills, given their complexity, but he replaced Simon Kirby, who moved on to head up HS2 Ltd as chief executive—clearly a huge job, at least potentially. However, the excessive cost structure in the rail industry, led by Network Rail, underlines my party’s belief that HS2 is unaffordable. Half a dozen people at Network Rail, at least, earn similar sums to Dr Francis Paonessa. Mark Carne, the chief executive, earns substantially more. Why has their pay not been cut to reflect the transfer of Network Rail as an organisation from the private to the public sector?

We talk often, as a comparator, about how much the Prime Minister earns, but the numbers of people earning in excess of the Prime Minister’s salary are legion within Network Rail. It has moved from being a private sector to a public sector organisation, and surely we should be told what new standards are being applied in Network Rail following that move.

In March 2012, the Department for Transport wrote:

“As a private sector company, Network Rail sets performance pay levels for its senior staff”—

but it no longer is a private sector company, so who is setting those pay and performance-related pay numbers now? Who are those senior managers accountable to for their pay? Is it the Secretary of State? Is it the so-called members of Network Rail, about which more in a moment, or is it themselves? Mark Carne has announced that he intends to limit his bonus to just 5% of his salary—of course, that bonus will still be more than average earnings across the country and in my constituency.

In particular, we have seen the failures over the post-Christmas period and the disruption that caused to many people across the country seeking to use the network, the extent to which it has become standard to have long-running periods of shutdown over Christmas and new year, the length of some of these infrastructure projects and the closures involved and the lack of predictability about them. In my constituency, we greatly welcomed the new railway station in Rochester, but one point I have from my constituents is why people cannot be warned further in advance about closures, so that they can plan around them.

On the point about the disruption and giving notice in advance, Network Rail had years to prepare for the shutdown of London Bridge station over the recent Christmas period as part of the admirable Thameslink programme. However, they made a huge blunder in organising that, the effects of which have still not been concluded and people’s journeys are still being disrupted. It is not bonuses that the managers should be looking at, but fines.

The hon. Gentleman makes a good point, which comes back to how these people are held accountable and whether that is through the withholding of a bonus or some other form of discipline, such as a reduction in salary. I do not know whether we are talking about fines, perhaps on a regulatory basis, or whether he is suggesting that it should be on a criminal basis—that would be very strong for such a management role. What I think my constituents and his want is accountability, and we simply do not have that with the current structure.

From 1 September 2014, we have had a new agreement between the Department and Network Rail, but there is, I believe at least, a lack of clarity about what difference that agreement is making in how Network Rail is held to account. Why do we still have these 46 public members and a similar number of industry members, ostensibly playing a part akin to shareholders in this organisation? There was a vote back in, I believe, November 2009. Thirty-six of those members—I do not know whether turkeys voting for Christmas is a fair comparison here—voted to decrease their numbers, but 36 voted against that, and that has remained the situation ever since, despite the Government saying again in March 2012:

“We therefore welcome the governance proposals that Network Rail is announcing, including: reducing the number of members to a more sensible level, thereby improving the quality of decision-making.”

Has that happened?

In the same report, “Reforming our Railways: Putting the Customer First”, the Government said:

“Network Rail is a private-sector, not-for-dividend company, limited by guarantee…we believe the existing structure is capable of delivering the outcomes and the savings we need without disruptive and unnecessary organisational change... equity is a strong driver of efficiency and value for money.”

How in this unique, convoluted, labyrinthine governance structure does equity operate as a driver of efficiency? We have these industry members that the board reports to, to a degree. One might think it is useful perhaps to have that reporting line to the customer, but whenever those customers’ interests are involved, that member steps aside on the basis of there being a conflict of interest, so how can that governance structure work and is it really a sensible way for us to proceed?

In my constituency of Rochester and Strood, we have had the impact of the London Bridge changes. The disruption has affected some people. The sheer length of the closure of London Bridge station for Charing Cross-bound trains that we are currently dealing with is an enormous issue. We have to hold Network Rail to account for the costs that it applies, which are largely passed on in fares to the customer, but also for the length of time that these projects take. I would be interested to hear the Minister’s view. Could she tell us what she has done to ensure that that closure period is as short as possible and the costs are as low as possible? I just have an innate suspicion of an organisation that is not accountable, or at least not in a way that I can understand or in the way in which other organisations are.

The Minister will no doubt refer to the report, published yesterday by Dr Francis Paonessa, explaining away, defending and, to an extent, putting Network Rail’s side of the story in terms of the disruption that we saw immediately after Christmas, but that report is not addressed to anyone. I do not know: is it for the board of Network Rail, for its members, for the Secretary of State or for Parliament? It does not say. There is a foreword by Mark Carne and a whole series of explanations and, to some extent, excuses, but who ultimately holds Network Rail to account for that? Why is it being paid so much money? Why is that disruption allowed, and do we really believe that this labyrinthine governance structure and the costs that we see in this industry are the best we can do? I believe that this country can do it better, and it is time we got on with that and dealt with some of the governance issues at Network Rail and ensured that it works better.

Mr Carswell, it is not in order for an additional Member to speak in a half-hour debate unless they have secured the agreement of both the sponsoring Member and the Minister. Has that advance agreement been secured?

My hon. Friend the Member for Clacton (Douglas Carswell) spoke to me yesterday, and I spoke to the Minister. I understand that agreement is forthcoming from her as well as myself.

I am most grateful, Mr Crausby. I think that we have a serious problem with Network Rail. Certainly, on the Clacton line, which affects my constituency, weekend works have overrun several times, which has been very disruptive to commuters trying to get to work on Monday mornings. We routinely have problems and failures on the line and we have seen a lot of weekend closures. That is not very helpful to a seaside town that depends on a lot of weekend seaside tourists coming to visit it. We have seen the problems affecting London stations over Christmas.

My main concern is not so much the rail operators, although I think that in the case of Abellio, they have been insufficiently robust in dealing with their supplier, Network Rail. My main concern is with Network Rail. It is to all intents and purposes a public body, which has recourse to public funds and socialised costs, yet it does not seem to be accountable to the public. It seems to have the structure of a public quango, but the bonuses of a bank. What is fundamentally missing is accountability.

Before Christmas, I wrote a letter to the Secretary of State for Transport, asking whether there were any plans to revisit the Network Rail’s governance structure, because it is not working the way it should and, when errors happen, they are not corrected the way they should be. I got a response that I think was probably drafted, if I can put this kindly, by a private secretary who did not understand the question. I then raised the issue on the Floor of the House last week, and I got a response from the Secretary of State that was perhaps dismissive, perhaps contemptuous, but he is not running a Whips Office any more; these are grown-up questions that demand proper, considered, grown-up answers.

There needs to be a rethink of this organisation’s governance structure. I would be interested to hear whether the Minister has given serious thought to how we might change the governance structure of Network Rail. My suggestion is that it should have greater accountability to Parliament. We could perhaps give a role to the Select Committee on Transport, which could confirm the appointment of senior management to this body. Perhaps this body might appear annually before the Select Committee to appeal for its budget. I do not claim to have all the answers. What I know is that the status quo is not working. There is a lack of accountability, and we need real reform. I would love to hear from the Minister how we can do that. How can we ensure that there is real accountability?

The Government said in March 2012 that Network Rail would invite other companies to compete against its core business. That contestability is perhaps one way to bring market disciplines to the operator. In the same document, the Government said that we could have vertical integration between operators. Perhaps in an area such as Kent, where Southeastern is the main operator, they could work more closely together or even become an alliance or a single body. I just wonder why that is not taken forward. Has my hon. Friend any insights?

My hon. Friend’s suggestion is a good one. There are all sorts of models of accountability. There is the proposal for parliamentary accountability. There is the proposal for restructuring in the way that he suggests, which would provide greater accountability. My fear is that we may have spent longer this afternoon discussing new models of corporate governance in this Chamber than the Minister may have done in the Department over the years. I would like to hear from the Minister what specific thoughts she has about changes to Network Rail’s accountability and governance structure.

Network Rail is a corporatist organisation. It lacks accountability. People who try to do the right thing but who have to travel by rail, who have to buy season tickets and travel on the railway to get to work find that the fares go up but the level of service remains poor. Ordinary people feel an incredible sense of frustration that, for all that they do and all that they are forced to do, the people at the top of Network Rail do not seem to be held accountable for mistakes that their organisation makes. We often hear Ministers talking in this place about accountability to Parliament through the Minister. I suggest that that model of accountability is not working and we need a fundamentally different way to ensure that Network Rail is properly publicly accountable. I would love to hear what that is.

It is a pleasure to serve under your chairmanship, Mr Crausby. I am delighted to have the opportunity to respond to this debate. I congratulate the hon. Member for Rochester and Strood (Mark Reckless) on securing it. This is a really important issue, and he and his colleague, the hon. Member for Clacton (Douglas Carswell), were right to raise it on the Floor of the House last week. I am sure that the constituents of the hon. Member for Rochester and Strood will be delighted with his new-found interest in the railways. It did strike me, in doing some digging, that before last week he had made only two mentions of his local trains in this Parliament. One was to express his profound support for HS2 and what it would do for his constituency, and one was to talk, quite rightly, about the inexcusable fact that constituents on his local franchise were paying RPI plus 3%—a policy that this Government have ended.

The Government’s ending of RPI plus 3%, for which my constituents were used as guinea pigs, and going to RPI plus 1% and now RPI is a positive thing that I very strongly welcome. Did the Minister consult her right hon. Friend the Member for Chipping Barnet (Mrs Villiers) on the many discussions that I had with her about the railways when she was the Minister responsible?

No, I relied on the public record, which I think it is important to do. In fact, the hon. Member for Clacton has spoken more in the last week on the railways than he has done in the entirety of this Parliament, because I can find no record in the public discourse—

Sitting suspended for a Division in the House.

On resuming—

I am sure the constituents of the hon. Member for Clacton are delighted that he has finally spoken up on railways, because my little trawl suggests that he has not mentioned railways in this Parliament.

When I was a Conservative Member of Parliament, I was bound by the Whip, and of course the Minister and her boss in the Department for Transport were then running the Whips Office. It was therefore much more difficult for me to speak freely in the interest of my constituents, and I am grateful that I am now at liberty to do so.

The hon. Gentleman suggests that he could not have asked questions about fares, services and station refurbishments, but he managed 42 mentions of the EU. It is rather depressing that his last comment on the railways dates from seven and a half years ago. Presumably, he could have spoken in that Parliament—no matter. I am delighted to welcome his nascent and new-found interest in the railways, which raises several questions. What is his party’s policy? The UK Independence party’s 2010 manifesto, of course, called for three high-speed lines, not two, with no mention of cost control. We will leave that point and move on.

I propose to make three sets of remarks this afternoon. I will first canter through Network Rail’s current governance structure and correct the hon. Member for Rochester and Strood, or at least answer some of his questions. Secondly, I will ask whether there is any evidence of governance failure. Lastly, I will review recent events, on which there are valid questions that we all need to ask.

In December 2013, as the hon. Gentleman knows, the Office for National Statistics made an independent decision to reclassify the Network Rail balance sheet from the private sector to the public sector, which changed nothing in terms of operational performance; it was an attempt to put public debt on the public balance sheet, which I strongly support. The reclassification does not change the industry structure or the day-to-day operations of the rail network, and it has no effect on fares, performance, punctuality, safety or timetables.

It would be helpful if I could make a little progress.

The reclassification rightly raises the question what the governance should look like, which is why the framework agreement was published in September 2014. The agreement specifically sets out what the relationship between Network Rail and the DFT looks like, and it tries to achieve two things. First, it tries to achieve a level of operational independence. All political parties, including the hon. Gentleman’s party I am sure, would say that Ministers should not be running trains and that there should be an element of independence and control. [Interruption.] The hon. Member for Clacton is chuntering away from a sedentary position, and I am trying to answer some of the questions. He is not particularly interested in railways, but perhaps he might be after today.

For many people, including the UK Independence party, it is not appropriate to have Ministers and, indeed, officials running the railway network; it is appropriate that Network Rail operates as an arm’s length body. However, it is important to deliver accountability and correct governance and structure. Under the new framework agreement, the Secretary of State for Transport, as a special board member, has levers by which to steer Network Rail, including the right to agree business plans and to approve Network Rail’s remuneration envelope.

Did the Secretary of State not previously have those powers as a special board member? Are those powers not due to him under Network Rail’s articles of association, rather than under the framework agreement?

The issue is whether they have been exercised, and since this new structure was introduced, they have indeed been exercised. The Department, representing the Secretary of State, has started to do appropriate things such as attending annual general meetings and being involved in board meetings.

I will make a little more progress, because the hon. Gentleman has asked a lot of questions.

In extreme cases, the Secretary of State has the power to remove the chair or, indeed, to become the sole member of Network Rail. So what is the role? The Secretary of State determines the rail investment strategy and the statements of funding available, and he works with the Office of Rail Regulation to monitor the timely delivery of major projects. Ministers effectively set the high-level strategic and spending approach to the railways and, ultimately, are accountable for the model of delivery and the operation of rail works for the country and for passengers.

Interesting suggestions have been proposed for improving governance. Crucially—this perhaps has not been conveyed clearly, so let me make it very clear—the Department is completely focused on maintaining and reviewing the appropriate role for governance. If governance needs to change to deliver improvements, it will change but based on the work done up until September 2014, and on the analysis of Network Rail’s board and the role of its public members, the current diagnosis is that it does not need to change to deliver the railway improvements that we all want to see.

The hon. Gentleman asked about the number of public members. As I am sure he knows, the number has been cut from 90 to 45. There was an independent external review of whether those members were carrying out their functions effectively, and it was found that they were performing their duties. On whether there is evidence that Network Rail’s governance is currently failing, it is right to raise those important issues, but I think the diagnosis is that Network Rail’s governance arrangements are working appropriately. We must carefully consider the role of the public members. It could have been said in the past that public members did not have the specific relevant experience to carry out that governance role, but they have now been appointed from relevant sectors and have experience and understanding of corporate governance.

The hon. Gentleman referred to some of the compensation arrangements for senior managers. I am sure, like me, he welcomes the fact that the bonuses paid in this year of Network Rail’s operation will be one tenth of those paid in the last year of the previous Administration. Given that the company’s role in carrying out its business has not changed—as a reminder, it is a company of 35,000 individuals with an income statement of some £7 billion a year, and it has £38 billion of investment proposals to deliver over the next five years— the question for the hon. Gentleman is: how much compensation is appropriate to deliver such highly important investment for the country?

What has changed, now that Network Rail has become a public sector body and its debt is on the Government’s balance sheet, is that it does not face the market risk of going bust, being insolvent or falling back on itself when its bond obligations cannot be satisfied.

Like me, the hon. Gentleman has a background in finance. He should therefore know that investors will always have considered that debt to have been effectively underwritten by the public sector, so the reclassification is simply a formalisation of what I suspect savvy investors have known for many a year.

There is no evidence that Network Rail’s governance structure is inappropriate or failing. However, I suspect that the hon. Gentleman’s new-found interest in its governance may be a result of the disruption after Christmas at several mainline stations and, more recently, at London Bridge station, which many people living in his constituency use on a daily basis. I am incredibly grateful to him for giving me the opportunity once again to state very clearly what passengers should expect.

The Secretary of State made it clear at the time that the disruption at King’s Cross and Paddington immediately after Christmas was totally unacceptable. In my view, the situation was inexcusable. Passengers deserve a reliable rail service, clear information and rapid help if things go wrong. I am sorry that, in this case, they did not get those things.

Across the industry, we have to be able to trust Network Rail’s ability to complete vital engineering works on time, and it is essential that the lessons that started to be spelled out in the report, which the hon. Gentleman slightly traduced, are learned. Work continues on finding the most appropriate time of year to do engineering works. I say again—this was said last week—that Network Rail carried out its busiest engineering programme ever over this holiday period. There were 2,000 work sites.

The Minister says that the failures were inexcusable, but she is now excusing the failure. She says that she is sorry for what happened, so what is she actually going to change about Network Rail’s governance to ensure that it does not happen again?

I appreciate the hon. Gentleman’s enthusiasm for railways, which marks a rapid change from his former portfolio of interests.

I am keen to answer the questions, if the hon. Gentleman will allow me to proceed.

As I was saying, an unprecedented amount of engineering work went on over the holiday period, because the main driver of problems on the railways is twofold. First, passenger growth is unprecedented. About 1.6 billion passenger journeys are now made every year, twice as many as before privatisation. Secondly, successive Governments have underinvested in the railways for many a long year.

The hon. Gentleman asked about London Bridge station, as did the hon. Member for Lewisham West and Penge (Jim Dowd). That station is 176 years old, and frankly, it has been ignored, although it is one of the busiest pinch points into London. That work is finally being done, so that residents across the south and south-east can transit in and out of London much more effectively.

I congratulate the Minister on organising a meeting next week with the principal train operating companies running into London Bridge—Southern and Southeastern. Can she confirm that we will also have an opportunity to consider the position regarding London Bridge itself and the colossal debacle that my constituents and many others have had to experience for 10 days now, with little sign of the problems abating?

I agree with the hon. Gentleman; I think that he uses a good adjective. I have visited the station, and my officials have been there. The Secretary of State himself went there during rush hour. We are extremely concerned that the engineering works, which are fantastically overdue, are delivered in a way that does not inconvenience passengers. That gets to the crux of the matter.

This is not a governance problem; it is a failure to work across industry, with passenger benefit front and central. Enormous operational improvements will clearly be delivered by this Government’s unprecedented £38 billion investment in the railways, which is long overdue and will benefit all Members in this room, but it must be delivered by thinking first and foremost about how passengers will use the network and about the benefits for them.

As we saw in the McNulty report published several years ago, the challenge for British railways is to do what we suggested then and join up the objectives of Network Rail and the train operating companies to carry on this unprecedented amount of investment, as we know can be done across the network. I am happy to reassure Members that the Government are committed across the board not only to ensuring operational independence, but, clearly, to delivering better services for passengers in the running of the railways. I am also happy to reassure Members that we remain committed to our huge programme of planned improvements, including the entire rebuild of Rochester station by the end of this year and £120 million of signalling works in east Kent, which I am sure the hon. Member for Rochester and Strood is rising to congratulate the Government on providing.

I am indeed. I rise to congratulate the Government and Network Rail on the new station in Rochester, which will be fantastic. The Minister talks about working together with the operators. The new station is half a mile or so closer to London, and significant investment has been put into signalling changes. It would be useful to know how many minutes that is likely to knock off train times from Rochester into London. Can Network Rail and Southeastern work together more closely on planning that for the new timetable?

Direct Selling Industry

It is a pleasure to serve under your chairmanship, Mr Crausby. As you know, my constituency takes the name of Daventry, but it also has a couple of nicknames. Some call it logistics central because of the number of jobs in the logistics sector there; others call it direct selling central, which is extremely relevant to the debate.

My constituency is a hub for the direct selling industry. On my southern doorstep is Avon. Its former boss, Paul Southworth OBE, is one of the most active people in Northamptonshire business politics I have ever met, and until recently he was chairman of the Northamptonshire enterprise partnership. Andy Smith, a constituent of mine, also happens to be the general manager of Amway UK and Ireland, and there a number of big direct selling businesses just down the road in Corby. For example, Cambridge Weight Plan has more than 100 jobs and exports to more than 25 other countries, and Herbalife UK is based in Middlesex, along with dozens of other companies.

I therefore try to keep a watchful eye on what is happening in the direct selling industry. I wanted to take this opportunity to remind the Minister how important the direct selling industry is to the British economy. The industry has an association—the appropriately named Direct Selling Association—and its member companies contribute about £1.6 billion a year to UK GDP. Some 400,000 people work in the industry, making it one of the largest providers of part-time working opportunities nationwide.

The industry is open to everyone. There are absolutely no barriers to entry, which is why so many mums coming back into the jobs market choose to do so by setting up their own direct selling businesses. In fact, stay-at-home mums account for 29% of direct sellers—many are attracted by the flexibility and social aspects of direct selling—and for a 20% increase in numbers between 2012-2013 and now.

If hon. Members will forgive me for being slightly political for one moment, the Opposition regularly talk down part-time job opportunities as not being proper jobs. I see things very differently. I view every part-time job provided as a massive positive. For many, the flexibility of part-time work allows them the opportunity to earn some extra money when it suits them. For some, it facilitates re-entry into the jobs market. As I said before, there are no barriers to entry in direct selling. It does not matter what age or gender people are or what culture they are from; pretty much everyone can succeed in the industry if they put their mind to it.

One need only look at the recent survey by the Direct Selling Association of its 60 member companies, which discovered that 38% of direct sellers are over 50 years old, yet the number of those under 25 entering the market has increased by 29%. It highlights the breadth of people to whom direct selling reaches out and whom it enables to work. The industry has gone from strength to strength: revenue in the sector last year increased by 7%.

That makes the direct selling industry invaluable to UK plc. Think about it: when the Opposition had some issues with how they ran the economy, jobs in some parts of the country were few and far between. Which industry was still recruiting new blood in those areas? The direct selling industry was. Female unemployment rose more than male joblessness after the recession. Given that 79% of direct sellers are women, the continued growth of the industry has been invaluable in aiding women back on to the employment ladder, thus helping our economic recovery. I am sure that the Chancellor would not forgive me if I did not add that such entrepreneurship is key to our long-term economic plan.

In my constituency, the unemployment claimant rate has fallen to just 1.1%, with just 600 people claiming. Youth unemployment has fallen more than 40% since 2010, and long-term unemployment has fallen by nearly half as well. That is all excellent local news for Daventry, but I am aware that not every part of the country is as fortunate as my constituency. However, I do know the direct selling industry is giving those who are harder to place in employment the chance to start their own business, no matter where they are based. Direct selling is like the Heineken of industries, operating in every part of the country no matter what the economic circumstances or social demographic. It is a phenomenal industry that, in my opinion, does not get the credit it deserves from Government or in our national press, which is why I thought this debate was needed.

In the time remaining, I will say a bit about the benefits of self-employment, and specifically about the opportunities in direct selling, including opportunities for female entrepreneurship. With the help and sponsorship of Amway, one of the biggest direct sellers, I have hosted a lunch and an afternoon tea in Parliament on the subject with some of the great and good of politics from the House of Lords, the House of Commons and local government, and business representatives and some amazing female entrepreneurs and their advocates.

Amway is the world’s No. 1 direct selling company, established in 1959, and Amway business owners operate in more than 100 markets around the world. There are more than 40,000 Amway business owners in the UK alone, selling products across a wide range of industries including skin care, cosmetics, hair care and so on. One good example of an Amway business owner is Brenda Wills. She and her daughter Sally Brinner have been working as distributors for Amway for more than 30 years. Sally was introduced to the business by her parents, who started their Amway business together in the mid-80s, and they have worked together in the industry ever since.

Sally’s parents were drawn to the prospect of owning a business that offered independence, flexibility and a chance to earn a living on their own terms. Some 30 years later, Brenda is still working from home and enjoying an income aged 81, and Sally and her own 27-year-old daughter Victoria, who has been an Amway business-owner since the age of 18, are now driving the business forward. That means three generations of the same family are part of this entrepreneurial industry, which sells products globally.

The Direct Selling Association has had a close relationship with my local university, the university of Northampton, for a number of years. Indeed, DSA representatives regularly visit the university to give talks to students about the direct selling industry, including on how to start up their own business. The DSA provides advice on how students can combine a direct selling business with their studies. One benefit of such a business is that it provides students with something concrete and interesting to put on their CV for life after university; it shows that they have held a position of responsibility and gained some experience in a number of areas by running their own business. Of course, it also encourages something that is almost impossible to teach—the wish, or urge, to be an entrepreneur and run a business. That is the direct selling industry’s strongest suit. Direct selling is the first and easiest of all steps on the ladder to becoming an entrepreneur.

The DSA’s experience is that many young people want to run their own business but do not know how to go about it. The direct selling industry provides a safe environment for them to take their first steps as an entrepreneur. Some stay in the industry, while others use it as a stepping stone. When I was researching material for this speech, I asked how many younger direct sellers there are in the UK and was told that there are around 75,000 direct sellers under the age of 25, 75% of whom are women. That is an amazing statistic.

As a Conservative who has set up and run businesses of my own, I hope I know how important self-employment is, but just in case the Government do not get it, let me read out part of an interview conducted last summer with the Minister for Employment, my right hon. Friend the Member for Wirral West (Esther McVey). The headline was: “‘Young people should think about starting their own business instead of university,’ says employment minister.” She said that, for many teenagers, being their own boss would be better than embarking on a career with a large firm, and she wanted to encourage people who had the “seed” of an idea to pursue it, instead of feeling pressured to follow friends or family into taking a degree. She said that the choices made by people to become apprentices or self-employed are

“equal and good and worthwhile”

when compared with those made by people who go to university. I wholeheartedly agree.

As I am sure my hon. Friend the Minister knows, the direct selling industry can help to deliver the opportunities for people to do exactly what our right hon. Friend the Minister for Employment was talking about. As I have already said, one of the industry’s biggest players is Amway and it regularly commissions a study on how different countries view entrepreneurship. The findings of the latest study were fascinating. Denmark is considered to be one of the top countries within the EU for having the most positive attitude towards entrepreneurship. Perhaps an explanation for that is that the Danish Government encourage the teaching of enterprise skills at school from the age of 16. Whether or not that is a good idea is a discussion for another day. However, the study also highlighted that fear of failure was one of the main reasons given by women, young people and pretty much everyone in the UK for not setting up their own businesses. The direct selling industry contains many excellent people who help people such as that—we know from the statistics I mentioned earlier that this group especially includes women—over the hurdles that help to perpetuate that fear.

In conclusion, I wanted this debate to ensure that the direct selling industry is not forgotten by the Minister or his Department when they are deciding policies in future. I also wanted to explain that the industry provides fertile training ground for entrepreneurs, from people who want to provide a little extra for their families to those who aim big and want to employ others themselves. It gives people the chance to make their lives better, to build self-confidence and business confidence, and to succeed. Thus, I would like to receive one simple assurance from the Minister today: that he and his Department recognise and understand the importance of that industry, and will continue to work with it in future to ensure that it continues to play such a positive part in our country’s economic development.

It is a pleasure to serve under your chairmanship, Mr Crausby. I congratulate my hon. Friend the Member for Daventry (Chris Heaton-Harris) on securing this debate on an industry that is not only important to his constituency—although, as he rightly pointed out, it could easily claim to be the centre of direct selling in the UK—but to communities across the whole country.

We in our profession should have a particular affinity with anyone in the direct selling industry, because what are we politicians ourselves other than direct sellers, going—particularly in the next few months—from door to door and trying to persuade people to buy a product from us? We do not do so for profit, but we often have to use many of the same skills and methods as those who succeed in the direct selling industry. We all know that, simple though it sounds, summoning up the persuasive powers and reserves of charm necessary to persuade a sceptical person on the doorstep that they should give us a little time so that they can listen to our message and understand what we are proposing is not the easiest thing in the world.

It is a huge credit to the people engaged in direct selling that they are as successful as they are and that they are able to build sustainable incomes for their families. My hon. Friend told the wonderful story of Brenda, Sally and Victoria, three generations of one family, all of whom—including Brenda, who is now 81 but still active—are direct sellers; I believe it is for Amway, which is obviously the most famous direct selling company in the world.

Those three formidable ladies provide particular lessons for us. The first lesson is that the income is sustainable. Direct selling is not just something that people do perhaps for a year or two at the start of their careers, although it could be that. It can provide a sustainable income and be a business that provides a livelihood for a family—not just for decades, but across generations.

The second lesson is that, as my hon. Friend pointed out, this is an area of business and entrepreneurial activity that is perhaps particularly attractive to young women, especially those trying to combine work and enterprise with bringing up children. That is because it has a key, innate flexibility. A direct selling business is one that they can run from home, devoting whatever hours in whatever days of the week suit them. What matters is their results, not how they achieve them.

That is why it has been so important that the Government have been focused, and remain focused, on making it easier for people to set up and run businesses from their homes. Of course, not all businesses run from homes are direct selling businesses, but a great number of them are. Previously, there were some pettifogging bureaucratic rules that made it harder for people to set up and run businesses from home—rules on tenancy agreements, meaning that people required a specific change to them, with the agreement of their landlord, before they could set up a business to run from home. We have changed the law so that landlords can agree to home business use without in any way affecting or undermining their residential tenancy agreement.

In addition, there were rules relating to business rates and planning conditions that also militated against people setting up businesses to run from home. Consequently, we have made sure that, in the majority of circumstances, home-based businesses will not attract business rates. We have published revised business rates guidance to clarify that point. That is important, because if someone is setting up a home business they probably do not have a great deal of capital to set it up; perhaps one of the attractions of the direct selling industry is that it does not require a huge amount of start-up capital. However, if they face the prospect of being charged business rates instead of council tax, that could be very off-putting. The change that we have made will help to make the prospect of setting up a home-based business more attractive to people.

Finally, we have published a guide for anyone who wants to set up a home-based business, so that they can find in one place all the information they need to ensure that they are acting properly within the law and to understand what support they get from Government as start-up businesses, as well as what opportunities there are for start-up loans and other financial support from the British Business Bank.

We believe, as a Government, that we have a good record of supporting anybody who wants to set up a business—particularly a business from home. I am sure that that record has played a role in the substantial increase in home-based businesses. The number of home businesses has increased to 2.9 million, a 500,000 increase since 2010. That increase is enabling people who previously either did not have any work or had a job that was not satisfying to them and was incompatible with their other responsibilities to take charge of their lives and provide for their families in a way that suits them.

My hon. Friend made an important point in saying that this way of working enables people to have independence and to run their lives in a way that suits them and their families. It can also suit their broader responsibilities, providing them with an opportunity to develop a business and earn an income that is flexible and fits with the pattern of their lives. I am happy to give my hon. Friend an assurance that we will continue to take into account home-based businesses—particularly direct selling businesses—in the formulation of policy.

My hon. Friend mentioned an interesting study of attitudes towards home-based businesses and direct selling businesses in different countries. He singled out Denmark as a place where attitudes were most positive. He conjectured that that might be a result of the fact that Denmark requires every young person to be offered enterprise education from the age of 16.

I hope that my hon. Friend welcomes—I am sure that he does—the work by the noble Lord Young, who has held a central and distinguished position in a series of Conservative Governments going back over many decades and who is passionate about enterprise education. Lord Young recently produced a report for the Prime Minister called “Enterprise for all”. He proposes specifically to establish a network of enterprise advisers—current or former executives with local businesses—attached to schools, whose job it would be to co-ordinate bringing people into schools who could inspire young people with the possibilities of enterprise and of setting up their own businesses.

That policy is welcome and has now been given over to the new careers company that Christine Hodgson is setting up and leading, to which the Government are committing £20 million. We hope that within a couple of years we will have a network of enterprise advisers across the country and that every school will have somebody with real business experience, embedded and implanted in the local business community, who can bring into schools speakers, programmes and work experience offers that will enable young people who think they might be interested in setting up a business to get some experience and talk to people who have done it.

I say to my hon. Friend’s constituents who are senior executives in the direct selling businesses, and to individuals running direct selling businesses and members of the Direct Selling Association, that they could make contact with their old school, go back as alumni and talk to young people about what direct selling and setting up their own business from home has done for their lives. They could say how it has enabled them to fulfil their dreams and establish financial independence for their families. That would be as powerful a message as any.

I thank my hon. Friend for bringing this subject to the attention of the House. It is certainly one that the Department for Business, Innovation and Skills is focused on.

Question put and agreed to.

Sitting adjourned.