Tuesday 17 January 2017
[Mr Gary Streeter in the Chair]
Pennine Acute Hospitals NHS Trust
I beg to move,
That this House has considered the future of the Pennine Acute Hospitals NHS Trust.
It is a pleasure to serve under your chairmanship, Mr Streeter. We have a delicate path to tread in this debate. Over the past 10 years, there has undoubtedly been a scandalous failure of care within this NHS trust. It has been well documented; I will come to that in the middle of my comments. There has been a failure in the structure of the trust, a failure of management and, in individual cases, failure by clinicians, and people have suffered and died because of those failures.
That discussion and debate needs to be aired, while ensuring—this is the delicate balance—a solid and credible future for the hospitals in the trust, and particularly North Manchester general hospital in my constituency. The vast majority of clinicians, staff and employees in the trust are committed to the good care of patients, want the best for those patients and devote their careers and time to giving it to them. There is a delicate balance to be struck: I do not want any criticism of the trust to undermine morale further, but we have a responsibility to debate the issues. This is not about the present general debate on NHS cuts or the impact of the Health and Social Care Act 2012; it is specifically about the structures of the Pennine trust and some of its failures, and what we should do to secure its future.
Almost exactly 10 years ago, on 24 January 2006, I sponsored another debate on the Pennine Acute Hospitals NHS Trust; it can be found in Hansard at column 372WH. Shockingly, when I read that debate, I found that it covered almost exactly the same points that I believe we will discuss in this one. On the day of that debate, the front page of The Times highlighted misdiagnoses, with serious consequences, by the radiology teams at North Manchester general hospital, as well as at Trafford general hospital, which is not part of the Pennine trust. At the time, Professor George Alberti and Dr Joan Durose had written a report on the Pennine trust, which had been going for only three years, having been set up on 1 April 2002. The report found low staff morale, poor communications and poor administration, which is almost exactly what the Care Quality Commission’s current report found. The human resources director and medical director of the trust had already left, and after the 2006 debate, the chair and chief executive left.
We hoped for a better future and improvement through Professor Alberti’s 25 recommendations, but today we find that the chief executive of the trust has gone elsewhere and the current director of operations is on gardening leave. We are almost back where we were 10 years ago. In the meantime, there have been numerous warning signs that things have been going terribly wrong. One question on which I shall focus is why, even with all those red lights flashing all over the place for 10 years, with dire consequences for patients, the national organisation of the NHS and, more recently, the clinical commissioning groups did not notice them and sort out the situation.
The first strong warning sign that things were wrong came in a report from Channel 4’s “Dispatches” on 11 April 2011. “Dispatches” sent secret cameras into North Manchester and Royal Oldham hospitals in the Pennine trust, and found very poor care, amounting almost to low-level torture of some patients, who were shown not getting what they asked for. It was a terrible situation. At the time, I took up the case, and I am told that staff were disciplined.
Is my hon. Friend aware that the nurse who was dismissed as a result of “Dispatches” took her case to a tribunal, which instructed the trust to give her back her job?
I was not aware of that. There are obviously many technical details about the disciplinary situation of which I am not aware. However, I saw the programme, and the patients in that situation were undoubtedly treated appallingly. One cannot resile from what one sees directly.
I caution my hon. Friend against reading too much into the “Dispatches” programme. The tribunal overruled the trust. The reporters spent six months in the trust and managed to find two incidents, which they broadcast. When the case was heard by a tribunal, it ruled that the nurse in question should not have been dismissed.
As I just said to my hon. Friend, I will not go into the details, but I probably know more than she does about the situation from the patients’ side, because a relative was affected. I have no doubt that those patients were treated appallingly. I cannot comment on the details of personnel issues, but I can comment on the fact that patients have been badly treated. Given the technicalities of the situation and having watched the programme, I find it worrying that although one or two cases were found after six months, the nurses were re-employed.
After “Dispatches”, the CQC report found scandalous failings within the trust. It found that the safety and wellbeing of patients were inadequate, and that the trust’s responsiveness and effectiveness needed improving, but that the care of patients was good. That report was very worrying; the trust would have been put in special measures, if a new team had not already been put in place to deal with the situation.
As I say, the CQC report found that the care of patients was good, but within a very short time—and after excellent investigative work by Jennifer Williams of the Manchester Evening News and other journalists—an internal report on maternity care was made public, showing that the care provided by some individuals was very poor indeed.
It is worth reading out for the record an extract from that internal report, because we have now had a 13-year period of failure. It is also worth remarking that both that internal report and the CQC report relied on nothing but internal statements by the trust’s staff. A paragraph from the internal report really contradicts the CQC report, as it states:
“Staff attitude has been a feature of a significant number of incidents, from the most basic reports of staff relationship breakdowns, resulting in women and their families exposed to unacceptable situations, to an embedded culture of not responding to the needs of vulnerable women”.
The report went on to say of one woman that
“in one incident it is clear that the failure of the team to identify her increasing deterioration and hypoxia attributed her behaviour to mental health issues. Failure to respond to deterioration over a period of days resulted in her death from catastrophic haemorrhage.”
That means that, according to internal sources, the situation was actually worse than had been thought.
The report continued:
“A further example of staff attitude and culture has been experienced recently when a woman gave birth to her baby just before the legal age of viability (22 weeks and 6 days)…whilst no resuscitation would be offered to an infant of this gestation, compassionate care is essential. However, when the baby was born alive and went on to live for almost two hours, the staff members involved in the care did not find a quiet place to sit with her to nurse her as she died but instead placed her in a Moses basket and left her in the sluice room to die alone.”
That is inhuman treatment.
These failings are the failings of individuals, of management, who failed to sort things out, and of the structure of the Pennine trust itself. I could list a whole series of other cases. In fact, late last night I was contacted by constituents I know about another case. I do not know the details of that case, but my constituents wanted me to take it up, as they strongly believed that a misdiagnosis meant that proper therapeutic care had not been provided. So problems in the Pennine trust continue.
My hon. Friend is making a very powerful speech and I share his absolute horror at some of the reports of the standard of care that some patients have received. Like me, he was at a meeting with staff last month, who also expressed their concerns about the quality of care being provided.
I am trying to understand something. Is my hon. Friend saying that this poor care, as set out in the CQC report and other reports, is endemic and is found right across the Pennine Acute Hospitals NHS Trust? Also, does he recognise that the new leadership is playing an important role and that the site leadership teams will have an important role in turning this situation around?
What I am saying is that there have been failures from the very beginning of this trust, in that it has four hospitals that were jealous of each other. That caused administrative problems, which means the trust has never worked well, and there is also a structural problem. Secondly, there have been failures of management to deal with those issues of individual failure to care.
I have enormous confidence in Sir David Dalton and the team who are taking over the Pennine trust. Sir David’s record of developing Salford Royal hospital is exemplary, and I hope that he can do the same with North Manchester general hospital and the other hospitals within Pennine.
As my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) said, along with my hon. Friend the Member for Heywood and Middleton (Liz McInnes) we met the trade unions in Pennine just before Christmas and, like the vast majority of the staff, they were committed to improving healthcare in the trust. Like my hon. Friend the Member for Oldham East and Saddleworth, I made the point that one has to acknowledge failures to ensure that there is improvement. One cannot just say that, just because so many staff are committed, that is good enough for the future. One also has to recognise the failure of the local clinical commissioning groups to deal with the problems, the fact that the board of the trust seems to have been paralysed and the fact that NHS Improvement has not dealt with the trust’s problems.
I have listed some of the cases that have caused public concern. One cannot put a financial cost on those cases, but if one reads the internal report on maternity care, one sees that the amount of money spent on compensation in the year 2014-15 was £58 million. I repeat— £58 million. Nearly £20 million went on three cases, which means that just over £6 million was spent on each one. In those cases, the people involved took legal action and at the end of the process were awarded that sum to look after severely handicapped patients.
There is no question but that, as I just said to my hon. Friend the Member for Oldham East and Saddleworth, Sir David Dalton has put in place a team who are committed to taking North Manchester general hospital out of Pennine and putting right what was a structural mistake.
It is worth reflecting on another point that was made in the Westminster Hall debate about 10 years ago, which is about why the Pennine trust was created. It was not created for good medical reasons. There was a public reason, which was given at the time by Billy Egerton, the then chair of the North Manchester health trust—I think that was what it was called. He said that he thought that if North Manchester general hospital had remained separate from the trust, it would have been prey to the predatory instincts of Manchester Royal infirmary and the major central hospitals in Manchester. First, I do not think that was a good idea—there could have been co-operation—and secondly, there were a number of chief executives in the trust who were retiring, which meant that three chief executives could be paid off and one chief executive found. Those three chief executives who were paid off came back and did consultancy work for the NHS. Unfortunately, that is the way that the NHS has dealt with problems. It has spent money, and wasted money.
The proposals for devolution will help to deal with the problem. The national structures have not worked. Having the combined authority, encompassing the 10 local authorities, taking decisions and examining these issues, with North Manchester general hospital being within the Manchester hospital schemes, is not a guarantee of success, but I generally believe that when decisions are taken closer to what is happening on the ground, they are more likely to be correct decisions than if they are left to a national body, which has clearly failed in this situation.
I congratulate my hon. Friend on securing this incredibly important debate and on his years of attempting to highlight the dreadful failure of leadership—not of frontline staff, who do a remarkable job—in the trust. We have to hope that the future is better, but being dependent on the leadership of one individual in the long term is not always the best way to turn around an organisation.
In the light of my hon. Friend’s comments about local decision making, does he believe that at a time when accident and emergency at North Manchester general is under such tremendous pressure, it makes sense for Bury CCG to press ahead with its proposal to close the Prestwich walk-in centre? At a time when patients are being told not to go to accident and emergency services, it seems absolutely bonkers to close a walk-in centre that is so well used.
Order. Interventions should be brief.
I agree with my hon. Friend about the closure of walk-in centres. There has always been a conflict of interest between GPs getting patients through their surgeries and walk-in centres. At a time when there is stress across the whole Greater Manchester NHS—indeed, across the NHS in the whole country—to increase that pressure by closing walk-in centres seems—my hon. Friend says “bonkers”, but I would use slightly tamer language—perverse.
I will finish with some questions for the Minister. Part of the plans that Sir David Dalton and his team have in place, which involve separate management teams for the three major hospitals—putting Rochdale in with Bury—will require investment in the short term in 24 new beds for intermediate care and hopefully, in the medium term, the demolition of more than half of North Manchester general, which is a 19th-century workhouse, to turn it into a completely modern hospital. What will help staff morale most is a commitment to the future of the hospital on that site, dealing with a community with some of the country’s worst mortality and morbidity statistics. The Minister might not be briefed on this because it happened relatively recently, but the paediatric audiology unit has failed its accreditation assessment. If he does not know about that—I would not necessarily expect him to—will he write to tell me what the response will be and whether paediatric audiology will continue on the site?
On 13 December 2016, in a statement on the NHS deaths review, the Secretary of State, while recognising the difficulty in doing so, committed to trying to understand which of the highlighted cases were avoidable deaths and which were not. It is important for both the families and the public to know which of them could have been avoided and which were, unfortunately, the kind of unavoidable hospital death that takes place when someone is very sick. Was it a mistake to remove 31 medical beds from the hospital just over 12 months ago? As a result, the number of people being admitted into North Manchester general is lower, because there simply are not enough beds. What is happening to the people who otherwise would have been admitted?
Those are the detailed questions. The real question for the future is whether the Minister will give a long-term commitment to the hospital and to its moving into the Manchester hospital system. Given the statistics showing that men from north Manchester are likely to have lives that are six years shorter than those of men in the rest of the country, and that women’s lives are likely to be about 4.4 years shorter, is there a commitment to quality care and investment in the hospital for the future, to ensure that those rather damning statistics are changed?
Order. The winding-up speeches will begin no later than 10.40 am and four colleagues wish to catch my eye, so the maths does itself.
It is a pleasure to have you take charge of our proceedings, Mr Streeter. It is also a pleasure to follow the hon. Member for Blackley and Broughton (Graham Stringer). He was right about our membership of the European Union and he has been proved right again about the Pennine Acute Hospitals NHS Trust. I particularly appreciate the very considered and proportionate way in which he has approached what is clearly a difficult subject.
Deciding on the best and most efficient way to organise our national health service is a problem that has long occupied the intellect of many able minds. I think it is fair to say that both the Conservative party and the Labour party have struggled over the years with how best to manage such an enormous organisation. That is not a political point; it is a matter of fact that there are different ways to organise huge bodies and everyone wants to do it in the best way possible to deliver the best possible service for all our constituents. I want the NHS to be organised in any way that delivers the best service for my constituents in Bury, Ramsbottom and Tottington. They rely on our NHS. They rely on Bury CCG and on the Pennine acute. Frankly, they are not too bothered about precisely where a management committee sits or meets, but they are bothered about whether they can get their appointments on time and, crucially, whether, when they have to use NHS services, they are safe.
Will the hon. Gentleman give way?
I will give certainly way to my neighbour, the hon. Member for Bury South.
The hon. Gentleman and I have always sought to work together in the interests of Bury and to put party political differences to one side. Does he agree that the decision being pressed ahead with, to close the walk-in centres in Prestwich and Bury, is perverse—or bonkers, depending on how one wants to look at it? Will he join me in ensuring that, when the formal consultation begins, we fight that decision? Given the pressures on the existing accident and emergency departments at North Manchester and Fairfield general hospitals, that decision would make the situation far worse.
I am grateful to the hon. Gentleman for raising walk-in centres. I was going to mention them later, but I will deal with the issue now. I met with representatives from the Bury CCG some months ago, before all this was announced, and they took me through what they were planning. They convinced me that it was in the best interests of my constituents. It would be easy for me to say the popular thing, which is, “I think we should oppose it.” I entirely appreciate why the good folk of Prestwich do not want their walk-in centre to be closed. I can see that there is a likelihood that it would increase pressure on the A&E. That highlights the point I was making, which is that there are good arguments to be made on both sides of the debate as to whether to have walk-in centres or a more community-based approach to delivering services. That is where Bury CCG was coming from.
Following the devolution of healthcare in Greater Manchester, since last April, we have been in an entirely new situation. We have an opportunity to make a reality of the joining up of health and social care, which has long been argued for.
I want to make three points this morning. First, I do not accept that the problems that have been identified at Pennine acute are all down to a lack of funding. To be fair, I think the hon. Member for Blackley and Broughton accepted that the questions went much wider than funding. It is an easy get-out to simply blame a lack of funding.
Does the hon. Gentleman accept that the NHS estimates a shortfall of £1 billion for the Greater Manchester health economy by 2020 under the devolution deal? Does he also accept the differences between the consolidation of different sites into specialist units and the huge shortfall that has meant that Pennine acute has not been able to recruit staff?
There are two separate points there. On the first, I have been involved in politics for getting on for the best part of 40 years, and I have never come across a time when it has been claimed that the NHS is not short of money. I cannot remember a time when the parties have all agreed that the NHS was getting all the money it needed. In every general election that I have ever been involved in, there has always been this claim that the Conservative party is about to privatise the NHS and the NHS is short of money. We are not very good at it—if we had been, we would have privatised it years ago, were that the Conservative party’s intention. The fact of the matter is that Pennine acute alone is a huge organisation, with a budget of more than half a billion pounds. Even with our small part of the NHS, such sums of money are difficult to comprehend, never mind the totality of it.
We can all argue that our particular part of the NHS should be given more funding, but in reality the NHS will always be competing with all the other calls on the public purse. If we are to stick with the current funding model, we will only ever be able to increase spending on the NHS significantly if we have a strong and growing economy. I do not want to get bogged down in the broader questions about our NHS, however, because the specific issue this morning is the future of Pennine Acute Hospitals NHS Trust.
The CQC report identified major problems with the leadership of the organisation. Like the hon. Member for Blackley and Broughton, I have every confidence that Sir David Dalton and his new team will bring a fresh approach and outlook to the trust. The one worry I have is that we are perhaps expecting too much of that gentleman. He is clearly a very talented man, but we are all limited by the fact, no matter what our particular talents may be, that there are only 24 hours in the day. I have heard anecdotal stories that he is pulled from pillar to post because he has so many demands on his time. That is understandable; it is not in any way a criticism. It is just a fact of life that he is being asked to do an awful lot. I wish him every success in the world. I hope he can deliver, and I am confident that he will but, if I have one concern, it is that he is perhaps being asked to do too much. I understand that he is focusing on trying to have a more decentralised approach to management to bring management closer to those the trust seeks to manage, and I hope that that will improve matters.
My second point is the issue of maternity services. The removal of children’s services and the closure of the maternity department and the special care baby unit at Fairfield occupied much of my time for years when I first moved to the Bury North constituency. Almost everyone thought that the services at Fairfield were excellent. At the time, my constituents and I were told that things would be even better—even safer—if services were closed at Fairfield and moved to North Manchester and Bolton hospitals. I made it clear that I had doubts about that, as did my constituents. I do not want to quote again from the CQC report, but I want to put on the record this particular quote from it:
“We found poor leadership and oversight in a number of services, notably maternity services, urgent care (particularly at North Manchester Hospital) the HDU at Royal Oldham hospital and in services for children and young people.
In all of these services leaders had not led and managed required service improvements robustly or effectively.”
My constituents could be forgiven for saying, “We told you so.” They can understandably feel vindicated on the stance they took. Incidentally, I understand from a councillor who serves on the Pennine acute scrutiny committee that it was told that the trust was liaising with Newcastle hospitals to learn best practice for maternity services. However, some little time later, when the scrutiny committee asked how that was going and followed up on that idea, it was told, “Sorry, it never went ahead. We are not proceeding with that now.” That little anecdote perhaps gives some idea as to why the CQC discovered problems.
In conclusion, I will make a quick third point. I believe that what Pennine acute would benefit from most in the months and years ahead is a period of stability. It seems to me that part of the problem at Pennine is the constant chopping and changing of leadership. No sooner does one team settle in than they move on and someone else takes over. The difficulty is the resultant lack of accountability. When things go wrong, it can always be blamed on someone else, whether that is to do with a lack of funding or decisions made by a previous management. My constituents and I need to see an end to the changes; we need to see some continuity. My constituents want Pennine acute to be a success. Other NHS trusts are successful, so there is no reason why, with the right leadership in place, Pennine acute cannot be as successful.
It is a pleasure to serve under your chairmanship, Mr Streeter. I am an ex-employee of Pennine acute. I worked for Pennine acute and its predecessor trust from 1987 for 27 years before I was elected to this place. I come to this debate very much from the Pennine acute staff point of view and our experiences of working there.
We have always worked against a background of change. Ever since I started work in the NHS, I cannot remember a time when there was not a new scheme coming up. It was always couched in the same language and everything was going to be different under the latest proposals. That has been my experience of working for the NHS in a 33-year career. There was always a new scheme on the horizon that promised the earth. We would try to give it a go and work with the new system, but systems were never given time to bed in. Just as we were getting used to a different way of working, a new system would come along promising the earth and everything was going to be wonderful under the new system. We all wondered what was so wrong with the old system that we had been told would be so good and solve all our problems. That, in a nutshell, is my experience as a member of staff working in the NHS.
Listening to the views of my hon. Friend the Member for Blackley and Broughton (Graham Stringer) and the hon. Member for Bury North (Mr Nuttall) was very interesting. They have been MPs in the area for a long time. My hon. Friend the Member for Blackley and Broughton said that Pennine acute was formed from four trusts that were jealous of each other, but I feel that is a misinterpretation. He was partially right in quoting Bill Egerton: the trust was formed because North Manchester general was worried about being swallowed up by Central Manchester. That was a fear shared by the staff as well, because none of the four hospitals that form the Pennine Acute Hospitals NHS Trust are teaching hospitals. There was a real concern among the staff that North Manchester general, a local hospital, might be swallowed up by teaching hospitals in central Manchester and disappear. Patients were also concerned that their local hospital would disappear. The trust treats a disadvantaged area, as has already been highlighted. The fact that life expectancy is low in that region is more to do with the quality of life rather than the standard of hospital care there.
Pennine acute was formed in 2002 from a merger of four existing trusts that I think merged to support each other. It was very much a banding together of four non-teaching hospitals that wanted to work together and make a success of Pennine acute. Obviously, any change is difficult, and the merger was a major change, but when Pennine was formed there was a real spirit to make it work. It was one of the biggest trusts in the country with 10,000 staff.
I am glad my hon. Friend agrees with me about the reason for the formation. Does she recall that within three years of the formation of the trust the consultants and the unions had an unprecedented vote of no confidence in the management? All the different hospital sites believed they were going to be closed at the expense of another site. Within three years the formation was not working.
I was coming to that point because my hon. Friend referred to the chief executive leaving. I inferred from his speech that that was as a result of a debate my hon. Friend had held in Parliament, but the chief executive left because the doctors had a vote of no confidence. The trade unions similarly expressed concern about the way in which the trust was being managed, but, as I recall, the trade unions did not have a vote of no confidence. Unless my memory is not serving me well, I do not recall the trade unions voting on that. I was heavily involved in the trade unions and I have no recollection of our having a vote of no confidence. That came purely from the doctors, who were concerned about the direction the trust was going in. It was as a result of that vote that Chris Appleby resigned from the trust. I was heavily involved in trade union activities as I was a workplace rep for Unite the union while I worked at the trust.
I want to highlight the issues involved in constant reorganisation and relocation. With the single hospital service proposal and with Healthier Together, we have two proposals running concurrently now, both of which seem to have different aims with different groups of hospitals working together. Healthier Together relies on the four Pennine acute hospitals working together and the single hospital service review, commissioned last year, proposes that North Manchester general should now work with Central Manchester and South Manchester. To add to the background of the constant confusion of reorganisations, we now have two different schemes that do not seek the same outcomes. I am sure everybody can understand how confusing and worrying such uncertainty is for the staff.
During the formation of Pennine acute, as a union rep I dealt with many staff who struggled with suddenly being told that their job was moving to another site and that they would be expected to relocate. Very little attention seemed to be paid to staff’s caring responsibilities. I dealt with several staff with disabilities, who had real issues about suddenly being told their job at North Manchester general no longer existed and that they were now expected to get themselves to Oldham at the same time in the morning, even though they had an extra six or seven miles to travel. There were real issues in dealing with staff and relocation in a sensitive manner. Such issues lead to uncertainty for staff and also make Pennine acute look an unattractive place to work.
In the meeting that we had with staff, they were very concerned about the maternity report that had been reported in the Manchester Evening News and the detrimental effect that it would have on staff who wanted to work there. At the meeting we heard from a representative from the Royal College of Midwives that a scheme had been put in place for improvements. The scheme is ongoing and midwives are now being recruited. There was an anomaly with the grade on which midwives were employed. They were being employed one band lower than they should have been, but that has been remedied. So there is an improvement plan in place and we need to be careful about extrapolating from dreadful incidents and saying that the whole of the trust is failing. I caution against that.
I have spoken about Healthier Together and the single hospital service running simultaneously, but seemingly both requiring different outcomes. The staff at Pennine are concerned about the single hospital service and the proposal that Central Manchester, South Manchester and Pennine acute should begin working together. Unfortunately, a lot of staff have been through it all before. They have been through the assurances that their jobs will be safe and that they will not have to move, but they have seen those promises eroded over time. Many are concerned about the prospect of having to journey right across central Manchester to go to work at Wythenshawe. That will be a lot of commuting for staff and they are very concerned about the proposal. The single hospital service review makes a virtue of staff being transferable—that is quoted in the document—and yet, at the moment, staff are being assured that they will not have to move.
On maternity care, the hon. Member for Bury North said that it is not a funding issue, but the appalling report on maternity services highlighted the lack of funding. In the past, there was a proposal to improve maternity services, called “Making It Better.” That was based on an annual birth rate of 3,500. The trust is now dealing with 10,000 births per year on the amount of funding that was settled on 3,500 births, so the funding issue obviously needs to be addressed.
The building stock at North Manchester is a real issue, as my hon. Friend the Member for Blackley and Broughton already mentioned. In my understanding, it was never a workhouse and has always been a hospital, but it was built to serve the workhouse that was built next door. The state of the building stock was always the reason that Pennine acute could not get foundation trust status.
It is a pleasure to serve under your chairmanship, Mr Streeter, and I congratulate my hon. Friend the Member for Blackley and Broughton (Graham Stringer) on securing this important debate. This subject has been the source of much stress for members of the community and staff who live in the area.
My approach is usually to be supportive of local institutions, particularly because my first proper job was as an apprentice at North Manchester general hospital, or Crumpsall as we call it locally. It is where I was born. The Royal Oldham hospital is where my eldest son and my partner were born; Fairfield is where my youngest son was born. We are very much part of the community infrastructure, so naturally I feel protective of it—it is like a family—and that is right and proper, but it does not mean that we defend the indefensible. Things have taken place that have affected people’s lives. Deaths that could have been avoided have occurred. Family members who have tried to get answers have been frustrated and have been met with a culture of closing down and restricting information. Usually, people just want to get answers to help the grieving process and to find out what has taken place.
I very much share the view of my hon. Friend the Member for Heywood and Middleton (Liz McInnes) on the Healthier Together programme, which runs on one stream, and a separate desire, with different drivers, to take the North Manchester hospital away from the Pennine trust. There are different forces at play in the background. The clinician approach, Healthier Together, is about making sure the infrastructure in place meets the demands of the community. Then there is a power game at play, which is about taking North Manchester hospital out and making an enlarged Manchester trust that covers the city boundaries. I am yet to be convinced that that is being done with patients in mind, rather than other things—although, of course, I want to be convinced, because those patients are my constituents, my family members and my friends too, so it is important.
When I speak to staff, I see an organisation where people are working hard, trying to make a difference—people who came into public service because they wanted to be good public servants—but who feel that they are waiting for the next criticism. They are waiting to be named and shamed in the local paper; they are waiting for the next inspection to take place that says they are not doing what they need to do. The vast majority of the 9,000 staff are doing a good job. They came into public service in the NHS because they wanted to be good public servants and we need to bear that in mind—we owe most of those people a debt of gratitude. People have been let down, but lives have also been saved—there are people who would not be here today if not for the work that the hospitals have done and babies who have been born into the world who perhaps would not be here if not for the people who work in that place—but there is no doubt that there are issues of culture, leadership and resources.
The culture needs to be more open and transparent. It needs to be more of a learning trust that is open about when mistakes are made and learns from them, rather than being defensive and withholding information, which is my experience from supporting constituents.
Leadership needs to be visible and proactive. It needs to give people a sense that the future is better than the past. If all people see is a constant cycle of criticism, downgrading and talking down, that will not create the conditions to improve the hospital, which is not good for anybody. I welcome the appointment of Sir David Dalton, who has a good track record, but building the capacity and support in the organisation to make sure that it can improve in the way that it needs to goes beyond him. There is a body of staff—our constituents, our family members and our friends—who really want to see that place turned round, but capacity and resources are really important.
I am not saying that all of the issues in the trust are about money, because they run far deeper than that, but resources are important. There is a reason why the trust has an over-reliance on agency staff, why it struggles to recruit and retain high-quality clinicians and staff and why it is not able to get the surety that it needs in the longer term—it is resourcing, and it is also the estate.
A transformation plan has been submitted to Government—we know that there will be a plan in place to improve leadership and culture, but in places, the estate, particularly at the Royal Oldham hospital, is not fit for purpose. Some of it dates back to its opening in 1870 as a workhouse hospital. There have been improvements since then, but in some places the estate, as a place to manage and organise, is just not fit for purpose. It requires cash investment and I plead with the Minister to make sure that money is made available to ensure that the hospital can be all it can be.
My final plea, which chimes with the points made by my hon. Friend the Member for Heywood and Middleton, is that we all have a duty to be part of the solution to turn the trust round and to make sure that each of the hospitals performs to the best of its ability. We will not do that if all we do is focus on the past. The past is important for context, and in order to get answers for people who have had bad treatment and need those answers, but it is not a foundation for positive progress, which is what the hospitals need. We need to work across parties on this issue—it is beyond party politics—to make sure that resourcing is right and the proper challenge and leadership is in place. That is an open offer, from my point of view, and from that of other Members here today, and I hope it is taken up.
It is a pleasure to serve under your chairmanship, Mr Streeter. I thank my hon. Friend the Member for Blackley and Broughton (Graham Stringer) for securing this very important debate. In many respects it is overdue, but it is also timely, not least because of the recent Manchester Evening News exposé of the trust, and particularly of the maternity units. I put on record the excellent journalism that Jennifer Williams carried out at the Manchester Evening News, which shone a light on the issue and held power to account. That is what journalism should be about.
We have all seen the crisis in the national health service and the suffering that has been caused, the lack of funding and the cuts to social care, but as colleagues have pointed out, this debate is not about funding. It is about leadership, or a lack of leadership, within the trust, which has gone on for quite some time. As others have said, it is about not the leadership of Sir David Dalton, who has just taken up some responsibilities for the trust, but the poor leadership of people such as Gillian Fairfield and indeed John Saxby, her predecessor. They failed to lead the organisation effectively and properly.
We have all read the reports of diverted ambulance services, chronic understaffing and serious incidents going unreported, but as colleagues have pointed out, as MPs, we have also seen behind the headlines. With people coming into our surgeries, we see on a regular basis the real upset and worry that is caused by the failure within the trust.
Last year, I was contacted by Mr Hall, the brother of my constituent Mrs Doreen Malone, who passed away on 22 July. Doreen had diabetes and suffered from kidney disease, and as a result was completely dependent on the local health service. When she fell ill on 20 July, the care she received from Royal Oldham hospital A&E and the North West Ambulance Service was quite simply appalling. I was told by Doreen’s brother that her ambulance was diverted and collected her only after a two or three-hour delay. I was also told that she waited for four hours in A&E, and that she returned home just before midnight without having been seen. Pennine acute’s own assessment acknowledges that
“it was approximately three hours between her arrival and a doctor being available.”
“a longer time than expected for a patient with a priority 3 triage.”
Normally, such cases should be seen within one hour.
Doreen was frustrated with waiting, and had eaten only a sandwich in the space of 12 hours, which is obviously highly problematic for a diabetic. She called her brother to let him know that she was going to visit the infirmary in the morning, and she went home without having been seen. The following day, three police cars, a fire engine and a passenger ambulance turned up at Doreen’s house, because she had been found to be in a critical condition. An ambulance was called at 11 o’clock. Once again, Doreen was left waiting. At 12.15 pm, the ambulance eventually arrived, and she was taken to Fairfield hospital, where she sadly died the following day. Pennine acute attributed the delays to the high number of patients arriving at accident and emergency. This was not during the winter crisis; it was the middle of July. It is no surprise that none of what Pennine acute had to say was of any comfort to Doreen’s family. That tragedy could have been avoided, not least because lessons should have been learned much earlier.
I would appreciate it if the Minister could outline what steps are being taken to hold failing senior managers at Pennine acute to account. What assurances can he give that such people are not able to get jobs elsewhere in the national health service?
It is a pleasure to serve under your chairmanship, Mr Streeter. I congratulate my hon. Friend the Member for Blackley and Broughton (Graham Stringer) on securing this extremely important debate and on the knowledgeable way in which he introduced the subject. He set out the history of the concerns, which stretch back as far as the establishment of the trust. He made a powerful case about the need to give the people we represent in north Manchester the excellent health service they deserve.
My hon. Friend made the key point, which we should all reflect on, that life expectancy in that part of the world is much lower than in other parts of the country. We all want to see that improve. He said, and I agree, that there is a delicate balance between getting to the bottom of what has gone wrong and creating a credible plan for the trust’s future. I agree that the vast majority of clinicians at Pennine acute are highly committed and professional. He told us that he led a debate on the subject a decade ago. I have read extracts of the Hansard report of that debate, and many of the points that he raised then have been raised again today. We should all reflect on that. It is a completely unacceptable situation.
The hon. Member for Bury North (Mr Nuttall) said that the problems at Pennine acute are not all down to money, and that some of them date back to a time when the NHS was receiving record levels of investment, but I think that some of the staffing shortfalls are finance-driven—the Care Quality Commission report refers to the financial pressures. I agree that leadership is very much an issue, and that a period of stability is required.
My hon. Friend the Member for Heywood and Middleton (Liz McInnes) also spoke about having a period of stability, with great knowledge and experience from her long history of working in the NHS. She said with great eloquence that there seems to be a constant rollercoaster of change. She also pointed out that the trust is undergoing two initiatives, which seem to be pulling it and the staff in slightly different directions. She highlighted very well the anxiety that the staff feel about their future, and said that we need a period of stability. She also highlighted the maternity services’ funding issues, and said that they are dealing with about three times as many births as they receive funding for. If correct, that is an unsustainable situation.
My hon. Friend the Member for Oldham West and Royton (Jim McMahon) also has significant connections with the trust. He described it as a family, but he was right to say that that should not mean that we cannot ask difficult questions about what has gone on. He conveyed how demoralising it is for the staff who work there. He said that leadership is a key issue, as did the hon. Member for Rochdale (Simon Danczuk), who also said it is about capacity and resources. I think we all agree that leadership was lacking in the past, but most Members who spoke were positive about the new leadership.
I, too, pay tribute to everyone working at Pennine Acute Hospitals NHS Trust. As Members said, it is not an easy time for them. It is not an easy time for anyone working in the NHS, let alone for those who work in a trust that has been the subject of such negative coverage. We should be mindful of the fact that the crisis currently engulfing the whole of the NHS would be so much worse if it were not for the good will of the staff who go above and beyond the call of duty every day. As my hon. Friend the Member for Oldham West and Royton said, we should be extremely grateful for the contribution they make. I recognise how difficult it must be to work in a trust such as Pennine acute. As he said, it has sadly been in the headlines all too often for the wrong reasons. It is worth pointing out that the most recent CQC report into the trust rated the leadership inadequate, but rated the care good. Although we are deeply concerned about the reports about the trust, we recognise that the vast majority of staff are extremely dedicated and caring.
No one can read the CQC report or the other reviews that have been published without feeling deeply uncomfortable about what has gone on at Pennine acute. The report should be a wake-up call for the wider health service. It talks about low morale, severe staff shortages and, worryingly, a feeling among staff that until recently the culture focused on financial matters and operational delivery, rather than quality. We hear such concerns across the whole of the health service. I am not for a minute suggesting that the most concerning incidents at Pennine acute will be repeated, but we should recognise that the pressures that we hear about in Pennine acute can be found in many other trusts up and down the country. The history of this matter should act as a warning to us that such problems cannot be ignored and will not be resolved without effective interventions and leadership.
The CQC report made it clear that the issues it outlined are not new. To paraphrase it, they appear to be part of the culture at Pennine acute. As my hon. Friend the Member for Blackley and Broughton said, there is a strong resemblance between the CQC report and a 2005 report by Sir George Alberti, which was very critical of the trust. The only real difference between those reports is that the severity of the criticism has grown. During that decade, there was inaction, patients and staff were let down, and there was a lack of leadership. Although there are concerns about a number of services, the most serious issues appear to be with maternity services, where the CQC said it found
“a poor culture with deeply entrenched attitudes where some staff accepted sub optimal care as the norm…and specific needs were not appropriately considered or met.”
As we have said several times already, this is about leadership. Although it is not right to point a finger at individuals on this occasion, it seems that there have been repeated failures over many years and at many levels, and a failure to drive the changes needed to improve outcomes for patients. I was particularly concerned by the statement that not all reportable incidents were reported on the system because
“there was often no managerial response or feedback.”
The CQC report also says:
“Incidents and risks were not escalated in a timely way or at times not escalated at all; consequently they did not gain robust executive scrutiny or the required response from managers and the senior team.”
Although the report says that only some departments failed to respond correctly, it is deeply troubling that it happened at all. We can see why some of those incidents happened: there was a culture in which reports were not acted upon.
There were other warnings. Between 2010 and 2015, the trust paid the highest number of compensation claims of any trust within the NHS Litigation Authority. As my hon. Friend the Member for Blackley and Broughton said, in one year the compensation totalled £58 million. Compensation levels in maternity claims obviously tend to be extremely high, but no one could claim that those figures did not require further investigation and more action. However, only after the CQC inspection of February 2016 was decisive action taken.
In July last year the Manchester Evening News learned from a whistleblower that an internal review had been carried out into maternity services at North Manchester general and Royal Oldham hospitals. Unfortunately, the newspaper’s requests for a copy of the review were repeatedly sidestepped, until eventually, in August, the trust stated that the review did not exist. It was handed over only after further requests to the trust and the intervention of the Information Commissioner. What does denial of the report’s existence say about the trust’s defensiveness, secrecy and unwillingness to learn from mistakes?
As we have heard from Members today, the report painted a deeply concerning picture of a chronically understaffed service unable to provide patients with the level of care that they deserve. We have heard of incidents such as a mother dying of a catastrophic haemorrhage after her symptoms were attributed to mental illness; a baby who died because staff failed to identify the mother’s rare blood type; and a patient who was left with a colostomy because her condition was missed three times.
My hon. Friend the Member for Blackley and Broughton read out the most distressing of those reports, which was the case of a premature baby. It is incredibly difficult for us to comprehend just how distressing that must have been. I agree with him that that incident was inhuman. We cannot undo that terrible event, but we can do our best to prevent it from being repeated and to ask the pertinent question of why the warning signs, which occurred over a number of years, did not bring about more effective change. Only after the CQC got involved did change begin.
It is also deeply concerning that only the diligence of a single journalist at the Manchester Evening News pushed the issue of the internal review into maternity services. When the Minister responds, will he agree that steps should be taken to unearth the full extent of what happened at the trust, so that we may learn the right lessons for the future?
Members who have spoken in the debate have recognised that the leadership of Sir David Dalton since April has been received positively. The CQC has recognised the improvements made since his appointment. As the hon. Member for Bury North said, even an individual of Sir David’s ability, however, cannot be expected to lead two trusts, as large as they are, as well as carrying out his other responsibilities. I will welcome any comments the Minister might have about the long-term leadership at the trust.
The CCG has, I understand, been able to invest an extra £9 million, but the Government have not allocated any additional funds to the trust, as would usually be the case with a turnaround effort of that nature. The Secretary of State acknowledged that improving Pennine acute would be “incredibly difficult”, but suggested that it was possible after citing the example of the Frimley Health Foundation Trust. According to the Health Service Journal, however, Frimley Health will receive £90 million in revenue support, as well as £130 million of capital funding. Is the Minister therefore satisfied that the trust has the resources not only to maintain services in an incredibly challenging climate, but to drive through the improvements that are clearly needed?
Over the years, many opportunities to turn the trust around have been missed. I hope that the Minister will be able to satisfy us that this is a turning point and that we will not be back here in 10 years’ time with another set of patients and staff who have been let down badly.
It is a pleasure, Mr Streeter, to serve under your chairmanship in such a well-attended debate. I congratulate the hon. Member for Blackley and Broughton (Graham Stringer) on securing the debate and on encouraging so many of his neighbours, who clearly have an interest in healthcare in the area served by the Pennine trust, to attend and to make such powerful contributions. Everyone has spoken from the heart and with true sensitivity.
As the hon. Gentleman said at the start of the debate, it is difficult to strike the right balance between drawing attention to trusts’ obvious failings, which need to be brought into the public domain and dealt with, and not seeking to lay blame on individuals. We all recognise that the individuals who work in the trust, as we heard so powerfully from the hon. Member for Heywood and Middleton (Liz McInnes), who worked at the trust for many years, give of their best and wish to provide the best possible care for their patients. Often the systems and structures around the individuals can inhibit that good intent.
I applaud the hon. Member for Blackley and Broughton for highlighting some dreadful examples of very poor care in the trust over many years, but especially those that came to light last year. As he well knows, the problems at Pennine go back many years. The trust is 16 years old, as other Members have said. Within three years of its creation, consultants at the trust had passed a vote of no confidence in its then management, as the hon. Member for Heywood and Middleton reminded us.
The hon. Member for Ellesmere Port and Neston (Justin Madders) pointed out that, in the days before the CQC, Sir George Alberti was asked to report on what was happening. Much of last year’s CQC report, however, echoes the findings of the 2005 Alberti report, as the hon. Gentleman said in his constructive contribution. We must try therefore not only to learn the lessons, but to implement them; they clearly have not been in the past few years. I will touch on some key findings of the CQC report before I develop my remarks on what we are doing to respond to the findings and shortcomings.
The CQC report was based on an inspection in February and March last year, which rated the Pennine Acute Hospitals NHS Trust overall as inadequate. In particular, the trust was rated inadequate for safety and leadership. As the hon. Gentleman pointed out, however, it was rated good for care, which is a visible tribute to the quality of care provided by the dedicated staff in the main.
The report found other problems: shortages in nursing, midwifery and medical staff, which have been touched on by other hon. Members; a lack of understanding of key risks at departmental, divisional or board level; problems in services, including in A&E, maternity, and children’s and critical care; key risks were not recognised, escalated or mitigated effectively; and there was inconsistent performance reporting and concern about the quality of data to support performance reporting.
In addition, the CQC identified low morale in a number of services, in particular maternity, and described a poor culture with deeply entrenched attitudes. Regrettably, some staff accepted suboptimal care as the norm, and patients’ individual and specific needs were neither appropriately considered nor met.
Those were the CQC findings. In contrast to what has happened following previous problems and subsequent actions, the new CQC regime is introducing beneficial change—which I hope is recognised by the hon. Member for Heywood and Middleton—and improvement. An inadequate rating by the CQC would normally result in the trust being put into special measures, but in this case a different remedy is being used to turn the trust around and, in particular, to address the obvious challenge of leadership, which almost every contributor to the debate has identified as an historical failing at the trust.
In April last year, the management team of the neighbouring Salford Royal, led by Sir David Dalton and Jim Potter, took over the chief executive and chair roles at Pennine acute on an interim basis. That team is in the process of guiding a management contract for the long term to continue providing the strong leadership needed to drive the improvements that we all recognise. The new management team at the Pennine trust got to work immediately. In July last year, the Salford team completed a diagnostic assessment of the issues facing Pennine and developed a short and long-term improvement programme based on patient safety, governance, workforce, leadership and operational performance.
Given the Pennine trust’s current position and the staff shortfalls that the Minister has also mentioned, what additional funding support can he offer Pennine acute?
I will not be drawn too far down that route at this point, because I would like to develop my overall response. This is not all about funding, as many hon. Members have said. Staff shortages are not necessarily driven by funding either; they are often driven by a trust’s difficulties making it an unattractive place to work. I do not have in my head the number of applicants for vacancies, or the number of vacancies, but I will tell the hon. Lady in a moment how many staff have joined the trust—what increase there has been—under its new leadership.
I am afraid, unless the hon. Lady can give me some figures on vacancies that will help my understanding—
Maintained vacancies have caused significant pressure on, for example, middle-grade clinicians in the A&E department. Vacancies have been maintained to try to save money, and that has been a real issue.
I am grateful to the hon. Lady for her intervention. I will come on to staff issues in a few moments.
As several hon. Members have said, local political leaders have broadly welcomed Sir David Dalton’s appointment as the chief executive of the Salford Royal trust, which is one of the finest trusts in the country and was one of the first to be rated outstanding by the CQC. He is listening to staff and, where appropriate, deploying Salford’s systems and experience to help to support staff in Bury, Rochdale, Oldham and North Manchester to deliver the high standards of service that we all want. I welcome the support that has been expressed for Sir David’s efforts by everyone who has spoken in this debate, in particular the hon. Member for Blackley and Broughton.
Sir David believes that all the evidence shows that staff are best placed to know what needs to be improved in their ward or department. He has introduced a system—tried and tested in Salford—that involves staff and supports them to test their ideas for improvement. Ideas that are shown to work will be replicated across the whole hospital. That approach turns on its head the idea that people in senior management positions always know what is best for patients on a ward, and instead recognises that frontline staff have expertise in spades and supports them. It will help to develop the culture change that was called for in particular by the hon. Member for Oldham West and Royton (Jim McMahon), who rightly identified that as a fundamental problem in the Pennine acute trust.
As my hon. Friend the Member for Bury North (Mr Nuttall) called for, Sir David Dalton at the beginning of this month introduced new site-based leadership teams in each of the four hospitals. For the first time since the creation of the trust 15 years ago, each hospital site and place-based team will consist of a medical director, a nursing director and a managing director, each dedicated to the daily oversight of that hospital. Together, they will manage the services of a care organisation. That site-based arrangement will give leadership teams a clearer focus and enable them to offer staff better support and engagement and take operational decisions for each site. Those leaders will also have the benefit of being in post on site to strengthen local relationships and promote joint working with other partners in the health economy, including local authorities and commissioners.
The hon. Member for Blackley and Broughton and my hon. Friend the Member for Bury North highlighted poor maternity care. The newly appointed director for women’s and children’s services led an internal review of maternity services under the new management arrangements. That review dug deeper and revealed even more than the CQC was able to. Some of the instances of poor care that were revealed are truly shocking, and I express my sincere regret to everyone affected by those tragic incidents, some of which the hon. Member for Blackley and Broughton highlighted. As an immediate result of those reviews, an improvement plan and a new management team for maternity services have been put in place at North Manchester general hospital. Central Manchester University Hospitals NHS Foundation Trust maternity staff are working alongside Pennine staff to develop a clinical leadership and staffing support programme.
The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) asked about staffing. I am advised that between March 2016, when the new management team came into place, and December 2016, the number of people employed on a full-time or part-time basis by the trust increased by more than 300. I think that is 300 more full-time equivalents. That includes seven doctors, 133 registered nurses and 58 midwives and is a net addition to the trust.
The A&E departments remain under pressure, not least given the winter pressures that have been common across the NHS in the past couple of weeks. That is particularly true at North Manchester, but that department has been stabilised and measures have been put in place to support staff, including direct GP and primary care input into the A&E department from Manchester GPs. Those GPs are supporting the department seven days a week and seeing around 30 patients a day, taking pressure off the service and ensuring that patients see the right professionals and receive the right care. Similarly, the local NHS in Oldham is piloting embedding enhanced primary care support in the A&E and urgent care system. Two GPs a day work between 11 am and 11 pm to support that system.
Measures have also been taken to stabilise children’s services; there has been a temporary reduction in beds at the Royal Oldham and North Manchester hospitals to reflect the workload that staff, given their current numbers, can deal with safely. Those measures are having an impact on turning around the performance of the hospitals in the trust. Additionally—the hon. Member for Ellesmere Port and Neston asked about funding—extra financial support of £9.2 million was secured in year to enable the trust to put in place immediate and short-term measures to stabilise services.
The hon. Members for Blackley and Broughton and for Oldham West and Royton asked about avoidable deaths and the culture of silence when problems arose. The new management have been determined to change that culture. Since April 2016, the trust has investigated and closed down 489 serious incident cases, and the average investigation time has been reduced from 156 days to 90 days. Considerable progress has been made on changing the culture of how problems and complaints are dealt with.
Hon. Members talked about the future and expressed concern, particularly from a staff perspective, about yet another change happening. As all Members are aware, NHS England is in the midst of implementing sustainability and transformation proposals and turning those into plans for 44 areas across the country. Greater Manchester’s five-year plan, “Taking charge of our Health and Social Care”, predates the request for STPs, but NHS England has agreed that that plan meets the STP requirements and they are now effectively one and the same thing. There is, therefore, a real opportunity for healthcare in Manchester, with devolution of control to the council and opportunities for the local authority to work with the NHS to improve services for all the people of Manchester, to become a model for the rest of the country.
The NHS in Manchester has been looking at how acute services can best be organised to deliver benefits, including operational financial efficiency, for quality of care, patient experience and the workforce. As has been said, the proposal is to create a single acute provider for Manchester, with the Wythenshawe hospital and the North Manchester general hospital joining the Central Manchester foundation trust. That is an ambitious proposal, and the organisational change it requires is complex, but we believe that the potential benefits are considerable and offer a real chance for care to be standardised across the city. I know that hon. Members will be concerned about what that means for the Pennine trust. If that proposal proceeds, services at North Manchester general hospital will be combined with those at the other hospitals in Manchester, but the intention is for the remaining hospitals in the Pennine acute trust to continue to work with Salford Royal in a new relationship, which is under active consideration.
Hon. Members mentioned resources for estates. Like any trust, the Pennine acute trust needs better-quality, flexible and fit-for-purpose buildings. I have little time in which to outline what is happening but, as some hon. Members will be aware, construction has begun of a brand new, purpose-built 24-bed community intermediate care unit on the grounds of North Manchester hospital. That unit will cost £5 billion and will take 12 months to build. The Royal Oldham hospital, which includes the old workhouse, is being developed into a high acuity centre to serve the population of north-east Manchester.
Motion lapsed (Standing Order No. 10(6)).
School Funding Formula and Northern Schools
Colleagues, we move on to our next debate, which is also about an important matter: the school funding formula, which the Government have introduced and we are all very excited about.
I beg to move,
That this House has considered the school funding formula and Northern schools.
It is a pleasure to serve under your chairmanship, Mr Streeter—it is a first for me. The circumstances of the debate are strange in so far as I originally put in for a one-hour or 90-minute debate, knowing that many parliamentary colleagues were exercised about this topic. I did not win the lottery for an Adjournment debate, but a half-hour slot became available and Mr Speaker offered it to me, so I thought I would go ahead and try to condense this important subject into half an hour. However, I do apologise, Mr Streeter, because you could have had a range of eloquent speakers addressing the subject but unfortunately you will have to listen simply to me droning on. I am sure this will be the first of many such debates for the Minister, because the national funding formula will be contentious in many places, not only in the north, and I dare say he will have an opportunity to rehearse some well-tried Department for Education lines in defence of it.
The Government set themselves a laudable task: to close the north-south gap in educational attainment. I am a little sceptical about the gap because “the north” is often seen from London as an undifferentiated mass. I was brought up on BBC weather forecasts in which the presenters went into great detail about the weather on the south coast and in London, and then they would glibly say, “but in the north it will be” and use that blanket label for the entire area anywhere north of Watford. The tendency is to see the north as a homogenous culture, possibly peopled by men in flat caps with whippets and living with constant drizzle. However, I looked further into what the Government meant by the educational gap—I had to address what the evidence showed—and, if we control for factors such as income and deprivation and exclude pockets of genuine excellence, we see that outcomes for northern secondary schools are inferior to those found in London and the south-east. Primary schools show less evidence of a northern problem.
I am not sure whether the difference we see would be so stark if we excluded those areas that have benefited from schemes such as the London challenge, which has been a successful concentration of money and resources. I met recently with Anne Longfield, the Children’s Commissioner, whom the Government charged with testing some of the assumptions underlying the project. The principal one seems to be the belief that if we have an educational problem, it is capable of an educational fix. The commission has suggested that other things could be taken into account: for example, parents in the north could be a bit pushier.
In a report for the previous Chancellor, Sir Nick Weller, who works for an academy chain, suggested unsurprisingly that the north could do better with more academy chains—and, incidentally, better teaching. Proponents of grammar schools have not been slow to suggest that what we need in the north is more grammar schools. The Minister will be aware of the study done by ResPublica in Knowsley, which suggested that grammar schools might be a panacea. However, to my certain knowledge, Knowsley has had grammar schools since 1544—I was once a pupil at Prescot grammar school.
The harsh reality is that, in order to change aspiration in the north, we need to do more than change school structures, because the reality that dawns on adolescents in the north is that opportunities are more limited compared with those they might face in the south, regardless of the education they receive. That is why so many young people gravitate to the south, particularly after their degrees; why there are more start-ups in the south; why the south is a magnet; and why the south has critical mass. Young people’s aspirations are simply less when there is less around them to aspire to—it is a chicken and egg dilemma. If we factor in limited parental optimism based on a degree of experience in the north and the limited opportunities available to those who are industrious but not especially talented, is it surprising that the optimism of childhood dwindles as schooling progresses and aspiration and attainment falls? I suggest that correcting that is beyond the scope of the school system alone; it involves regeneration of the whole community to which the child belongs.
That said, we all recognise that education plays a key part in regeneration. It is worth funding, and it is worth funding properly. I am far from believing that good funding is a sufficient condition of educational progress. Were that so, many schemes in the past would have worked far better than they have done. If we think about the money spent over the years in places such as Knowsley to provoke better educational outcomes, we would expect far superior outcomes to those we got. I do, though, note that, according to the Institute for Public Policy Research, £900 less is spent per primary school pupil in the north and at secondary schools that figure goes up to £1,300. That could go part of the way to explaining the significant difference in outcome. However, it is probably fairer to regard good funding as a necessary rather than a sufficient condition. In that respect, the Government’s revision of the school funding formula leaves a little to be desired. Indeed, its effects in some places will probably be catastrophic.
I recognise that no one will oppose a national school formula in principle because it sounds fair on paper, given that we have the effective nationalisation of school funding anyway through the dedicated schools grant. The current situation looks unfair and anomalous partly because of national decisions, but also because of the history of local decisions. We must look at that and see where that has led us.
When local education authorities were important—I do not suggest that they are not important at the moment—some bravely took decisions to sustain or increase budgets while others, less concerned about education, cut school funding to appease ratepayers and council tax payers. A feature of the new system is that that degree of discretion has simply gone, and councils charged with regeneration have lost all real leverage over the educational system. That is regretted by councils now, and clearly it will be also be regretted later on by city region cabinets and by Mayors as they get their hands on the levers of power, because they will want to prompt regeneration but they will lack some of the active levers that would enable them to do that.
I was a council leader in Sefton borough, and during tough years in the 1990s and so on we put money into school funding, sometimes at the cost of other services, because we regarded that as a high priority, and schools were therefore well funded—in fact, they were so well funded that sometimes the council dealt with its financial problems by borrowing from the schools’ balances. However, that was something we could do locally; it was a way in which we could emphasise our commitment to education in the area.
However a new formula is dealt with, it will obviously not please everyone. There will be winners and losers; but the background to the present situation is somewhat unpromising. The cost pressures on schools, such as national insurance, pension increases and school-based inflation, significantly outweigh the projected funding settlement for the sector. The Minister knows—and I think that we will all get to know—that the National Audit Office has vividly set that out. Its report will be investigated in greater detail at a hearing of the Public Accounts Committee, probably next week. To give the House a flavour of it, the NAO concludes that despite modest real-terms increases, the cost pressures on schools and increases in pupil numbers will result in a real-terms reduction of something like 8%. That is the NAO’s figure, not mine or that of a think tank or political party.
I am grateful to the hon. Gentleman for bringing this important debate to the Chamber. It is not just the NAO’s figure. I have had letters from headteachers of schools in my constituency who say they appear to be facing an 8% cut in real terms, and that that will lead to schools either going into deficit or having to make devastating cuts, having already made many efficiency savings.
Yes; they are mandated to make further efficiency savings.
Interestingly, on page 14 of the document, the NAO states that schools
“have not experienced this level of reduction in spending power since the mid 1990s.”
It may be pure coincidence, Mr Streeter, that there was a Conservative majority Government in the mid-1990s, but I draw your attention to that. Impacts will be worse on secondary schools; the NAO said that the number spending above income has increased from 33% to 59%. Not only has the number gone up but the size of the deficits that are being handled has gone up. If we add to that the disappearance of the education services grant, the fact that—as the hon. Member for Heywood and Middleton (Liz McInnes) mentioned—schools are expected to find £3 billion of efficiency savings, and the cost of implementing endless Government initiatives, we have what most of us would describe as a perfect storm, and an absence of financial sustainability.
What is most interesting in the NAO report is what schools appear to be doing to respond to the looming crisis that they can see all too clearly, as the hon. Member for Heywood and Middleton suggested. According to the NAO, they are, generally, increasing class sizes, adjusting teacher contact time, reducing supply cover, replacing experienced staff with less qualified temporary staff, and hiring more bureaucrats to manage the finances as heads become not school leaders but accountants. An odd feature of the situation is that schools are spending less in percentage terms on teaching staff than they were. They are shoring up balances to cope with anticipated deficits and potential redundancies. If they are really unlucky, they must also deal with increasing PFI payments, which are the endowment of a Labour Government.
None of that is conducive, most of us would agree, to educational progress. Some areas of the north are already in fairly dire straits. Cumbria is one example. The NAO report was complete before the Government’s new national funding formula went out to consultation, but it has already altered people’s take on the consequences of the new national formula. The realisation is dawning that the formula is not universally good news and that it will do little to offset a particularly bleak outlook.
We must accept that the redistribution of diminishing resources will always have a predictable outcome. In the north the consequences are severe—certainly in the mid to long term. After inner London, the north-west of England benefits least from the general distribution away from London. However, within that regional profile there are significant losers—for no obviously good reason. The worst affected include Manchester, Kirklees, Wigan, Cheshire, Liverpool and Sefton, whether or not we make allowances for floors and ceilings or the 1.5%. Those areas are key components of the northern powerhouse.
When we drill down to the consequences for particular schools, the position is even more frightening. Christ the King school in Sefton in my constituency—the school that my children went to—is scheduled to lose £426,000, or £441 per pupil. Greenbank high school is scheduled to lose £527,000, or £558 per pupil. Down the road in Sefton Central, Formby high school and Range high school are scheduled to lose similar amounts.
I find it ironic that the situation I am now lamenting as an MP is one that I sought assiduously to forfend and prevent as a council leader. Had we in Sefton not, on a cross-party basis, sought to protect the education budget over many years and given schools both enormous financial independence and active support, the shock and the comedown of the national formula would not have been so severe. Paradoxically, a great strength of Sefton has been its tight network of primary schools. A perverse consequence of that is that, under the new formula, handing children on to secondary schools with good prior attainment de facto damages the budgetary position of the secondary schools, and their ability to sustain progress. That is the particular way in which the formula is rejigged. I think the Minister will understand the point I am endeavouring to make.
I hope that the Minister is taking account of what I am saying. I want to put it in a constructive fashion and put my sentiments across in a helpful rather than a wholly negative way. However, the Department for Education is not famous for its listening skills. I speak to many people to whom the Minister and the Department also speak, and I do not hear a constant refrain about the Department being particularly good in that area. At times it has shown an active contempt for those who have brought it messages it did not want to hear, but it is not malicious—I give it credit for that. It wants to help. It offers financial health checks and warnings from school commissioners. It even makes videos to be helpful, because it is genuinely ambitious for schools and genuinely keen on across-the-board improvements in the north.
However, I can see from my analysis no obvious reason why schooling in the north would change for the better in the present circumstances. Many of the ingredients for improvement that were seen in the London challenge are missing. The London challenge had sufficient predictable funding, although unfortunately that will go under the new formula, I think, and there will be rather less funding. Another thing it had going for it was collaboration, but the school system is now more fragmented than ever, with schools that are financially and academically weaker fearing takeover. The London challenge had clear, effective leadership, but heads are now stressing over finances and personnel management rather than the main issue, and local authorities are withering away.
The demise of the local authority has acute effects. Its statutory functions are barely affordable at the moment, given the pressure on council budgets, but following the phasing out of the ESG, its other strategic functions will be dependent on funding from schools that cannot afford to meet their own costs, let alone to pay back and hire local authority services. Ironically, back-office services, which are growing in individual schools, are one area in which schools can get good money from a local authority, from collaboration through the sharing of services. We need only look at the increased problem that primary academies are having with meeting back-office costs to realise that.
I have not come here simply to present the Minister with problems to which there are no obvious solutions. The solution is to recognise that we have a problem and to engage in a debate with headteachers, who have no particular political axe to grind but are now looking at a worrying landscape. That headteachers in the north are looking at that worrying landscape should give us no confidence that any attempt, by commissioners or whomever, to raise educational standards in the north and to deal with long-standing problems will be properly and sustainably addressed. With that plea and that degree of pessimism, I will sit down.
It is a pleasure to serve under your chairmanship as always, Mr Streeter. I start by congratulating the hon. Member for Southport (John Pugh) on securing this important debate. He is right—this is one of a number of debates we will undoubtedly have as we consider the second stage of the consultation on our national funding formula. We will debate funding in Devon tomorrow, and I am looking forward to that debate as I much as I have looked forward to this one. This is part of a process of consultation on the second phase, in the same way as we consulted on the first.
The Government are committed to improving educational outcomes in the north, and reforming the funding system is essential to underpinning that ambition. Although I represent a southern constituency, I spent many years of my childhood living in Leeds and Wakefield in the 1970s, and I do not recognise some of the hon. Gentleman’s comments on the opportunities available for people in the north. The hon. Gentleman spoke of cost pressures on schools in general, and in the north in particular. Through our careful management of the economy, we have been able to protect the core schools budget in real terms, which means that schools are receiving more funding than ever before for children’s education—more than £40 billion.
We of course recognise the cost pressures facing schools, and we will therefore continue to provide advice and support to help schools use their funding in cost-effective ways and improve the way in which they buy goods and services, so that they get the best possible value for their pupils. We have published a wide range of tools and support on gov.uk, including support for schools to review their level of efficiency, to investigate expenditure levels of similar schools and to take action to improve efficiency in practice. We are also launching a schools buying strategy that will support schools to save more than £1 billion a year by 2019-20 on non-staff expenditure. It will help all schools to improve how they buy goods and services, allowing them to invest more in high-quality education for their pupils.
As well as helping schools make the best use of their resources, we urgently need to reform the unfair system that currently distributes funding across the country. The Government are committed to creating a country that works for everyone no matter where they live, whether in the north or south, in a city or the countryside. Whatever their background, ability or need, children should have access to an excellent education. We want all children to reach their full potential and to succeed in adult life. We know that the current schools and high needs funding system does not support that aspiration—it is unfair, untransparent and out of date. Similar schools and local areas receive different levels of funding with little or no justification.
For example, secondary schools in Darlington receive an additional £40 for each pupil with low prior attainment—pupils who did not reach the expected standard at primary school—but secondary schools in Richmond upon Thames receive £3,229 for such pupils, which is a difference of more than £3,000. We do not only see such differences by comparing the two ends of the country; sometimes it can be a matter of a few miles down the road. For example, a 13-year-old pupil from a deprived background for whom English is an additional language would attract £5,150 to their school if they lived in Redcar and Cleveland; next door in Stockton-on-Tees, that same pupil would attract £8,242 to their school, which is an addition of more than £3,000.
The huge differences in funding that similar areas receive to educate similar pupils are clearly not sustainable. Underfunded schools do not have access to the same opportunities to do the best for their children. It is harder for them to attract the best teachers and to afford the right support, which is why introducing fair funding was a key manifesto commitment for the Government. We need to introduce fair funding so that the same child with the same needs will attract the same funding, regardless of where they happen to live. That is the only way that parents can be sure that there is level playing field.
We launched the first stage of the consultation on reforming the schools and high needs funding systems in March 2016. That consultation set out our principles of reform and our proposals for the design of the schools and high needs funding system. I am grateful to the more than 6,000 teachers, headteachers, governors, local authority representatives and others who took the time to respond to that consultation, and I am pleased that our proposals received wide support.
In the light of that, we are now consulting on the detailed proposals for the design of the schools and high needs funding formula. We have also published illustrative allocations data, so that every school and local authority can see the impact of the proposals. The second stage of the consultation will run until 22 March, and we are keen to hear from as many schools, governors, local authorities and parents as possible. I welcome this debate as a valuable addition to that consultation.
Our proposed formula would result in more than 10,000 schools throughout the country—54% of all schools— gaining funding, with a quarter of all schools gaining more than 5.5%. Those that are due to see gains will see them quickly, with increases of up to 3% in per-pupil funding in 2018-19, and up to a further 2.5% in 2019. Our formula will target money towards pupils who face entrenched barriers to their success, particularly those who are deprived and those who live in areas of deprivation but who are not necessarily eligible for free school meals—those whose families are just about managing. We are putting more money towards supporting pupils who have fallen behind their peers, in both primary and secondary school, to ensure that they get the support that they need to catch up.
Our proposed national funding formula will see gains for schools right across the north. In the north-east, schools will see an average 1% increase, while schools in Yorkshire and the Humber will see a 1.5% average increase. I acknowledge that the outcome will be more mixed in the north-west, but schools there will also be small gainers on average under our proposals. I recognise that our proposals would result in budget reductions for schools in the constituency of the hon. Member for Southport, but I nevertheless believe that our proposed formula strikes the correct balance between the core schools budget, which every pupil attracts, and the extra funding needed to target those with additional needs.
I probably made my point quite imperfectly. Can the Minister assure me that if a secondary school—those are the worst-affected schools in this respect—is in an area in which primary schools have made good progress, and the children who are handed on to them are therefore attaining the expected level and do not enter the secondary school with poor prior attainment, that secondary school will not lose out simply because it has good feeder schools? That scenario would discourage the kind of collaboration between secondary schools and feeder primary schools that the Minister wants to see, because it would almost be in the vested interest of the secondary schools to have incompetent feeder primary schools—from a financial point of view, if not an academic one.
I do not accept that argument. It is important to ensure that schools—primary or secondary—are well funded for pupils who start school academically behind their peers. I do not believe that any professional I have ever met would deliberately not collaborate with another school to improve pupils’ attainment simply to attract an element of the funding formula. Of course, the biggest element of it depends on deprivation, whether measured by receipt of free school meals or by children in one of the lower IDACI—income deprivation affecting children index—bands. That is important to ensure that children from those areas are properly supported.
The hon. Gentleman managed to mention Manchester, Kirklees, Liverpool and Sefton. However, he forgot to mention areas that will receive an increase in funding under the proposed funding formula, including 1.7% in Durham and Gateshead; more than 2% in Newcastle; nearly 3% in south Tyneside; nearly 2% in Sunderland; 3.4% in Blackpool; 4.3% in Bury; 4.9% in Knowsley; and 4.3% in Leeds. Schools in northern urban areas will continue to be highly funded; even areas that will see a small reduction under the proposed national funding formula will still be some of the highest-funded in the country, including Manchester and Liverpool, which the hon. Gentleman mentioned. That is right, as those areas have higher levels of socioeconomic deprivation and children with additional needs. Matching funding to need will see schools in those areas funded higher than those elsewhere in the country. A secondary school pupil with significant additional needs could attract more than £10,000 to their school through the proposed national funding formula and the pupil premium.
While introducing these significant reforms to the funding system, we are also delivering stability. We have listened to those who have highlighted the risks of major budget changes.
Motion lapsed (Standing Order No. 10(6)).
Leaving the EU: Infrastructure in Wales
[Robert Flello in the Chair]
I beg to move,
That this House has considered the effect of the UK leaving the EU on infrastructure in Wales.
It is a pleasure to serve under your chairmanship for the first time, Mr Flello. It is also a pleasure to see so many colleagues from across Wales here today and, of course, the Minister, with whom we have debated these issues on many occasions. I am sure that he will enjoy listening to the contributions today.
We have heard the Prime Minister’s speech this morning. It is a great pity to me that she chose to make the speech outside, to the media and ambassadors, and not to this House. As I just said in the Chamber, that would not have happened under Churchill or Thatcher, but this lady does not seem to be for turning up to this place when it comes to this issue.
I have read what the Prime Minister and the Secretary of State for Exiting the European Union had to say today. The Prime Minister did talk about the devolved Administrations and nations, which of course is to be welcomed. The Secretary of State has just said:
“We will aim to strengthen the Union between our four nations. We will continue to engage”—
whatever that means—
“with the devolved Administrations, and we will ensure that as powers are returned from Brussels to the UK, the right powers come to Westminster and the right powers are passed to Edinburgh, Cardiff and Belfast.”
I note that there was no clarity on devolved administrations in London and other places across the UK, but we are here to talk about Wales.
The Secretary of State listed the 12 principles of the plan. We are told that those are the totality of the plan promised to Parliament; he just confirmed that to me. There will be no White Paper. There will be no further plan. This is it: 12 principles. Among those, I do not see anything about regional funding or funding for infrastructure. There are some vague commitments on boosting science and innovation and making our exit smooth and orderly. However, when it comes to the fundamentals that affect the viability of the Welsh economy—the infrastructure we have to drive jobs and to allow business and trade, and all these things we are told will happen—we have absolutely nothing.
I am grateful to my hon. Friend and neighbour for giving way. Does he agree that, if Wales is to understand what the Prime Minister’s statement means in relation to Welsh infrastructure, a White Paper really must be published, so that we can debate it and there can be a wider public debate on the implications of the model she has put forward today?
I absolutely agree. That is pretty fundamental when it comes to relationships with the devolved Administrations and legislatures. It is all very well to say “engage” in this vague way, but what does that mean? Is it simply window dressing? Are we in the devolved Administrations just to accept whatever the UK Government come up with, without any question or scrutiny? That is even harder to do without a White Paper.
There was much in it I disagreed with and contested, but the Scottish Government before their independence referendum published a very detailed White Paper. We simply do not have that. We are told that these 12 principles and this speech today are all we have before we enter one of the most fundamental changes to impact Wales and this country for generations to come.
The hon. Gentleman mentioned the Scottish Government. They produced a Brexit White Paper. The Welsh Government are about to publish their own Brexit White Paper. Is it not bizarre that the one Government responsible for delivering Brexit are not going to publish their own White Paper?
We do not always agree on everything, but I absolutely agree with the hon. Gentleman on that—particularly when we see very different visions emerging from members of the Cabinet as to what a post-Brexit UK and Wales might look like. We heard the Chancellor of the Exchequer suggest in Germany that the UK is going to have a race to the bottom and be a completely deregulated tax haven on the fringes of Europe. That is not what I believe the people of Wales voted for. They voted for a strong economy with strong rights. They might have had different views on immigration or the democratic deficit there has been in parts of the EU, but they did not vote for a race to the bottom or for us turning into some sort of Gibraltar or one of our overseas territories on the fringes of Europe.
Leaving the EU will have a significant impact on the funding and development of infrastructure in Wales. We all know of examples in our constituencies of where European funding has delivered results, whether that is in community facilities in Butetown in my constituency, road infrastructure or science and innovation in our universities. We have no clear answers as to what will happen to that infrastructure support for Wales post-2020 and what will replace it. Businesses and investors need certainty about the infrastructure and environment that will support their long-term decisions, so it is vital that we have greater clarity. We need clarity in particular on issues such as loans made by the European Investment Bank, which I will come on to, and the specific assessment criteria that will be used to guarantee funding for projects signed after the autumn statement but while we remain a member of the EU.
I am sure that many hon. Members will mention individual projects. I will give some examples. EU funding in recent years has supported many infrastructure projects—for example, through £40 million towards Swansea University’s new Bay campus; nearly £4 million towards the development of the Wales coastal path; £9 million towards Rhyl harbour; and the dualling of the A465, the “heads of the valleys road”. Many prospective infrastructure projects are yet to be properly finalised, such as the Swansea Bay city deal, the North Wales growth deal, the tidal lagoons and the South Wales metro, which I raised in a previous debate and is of great concern to my constituents in Cardiff South and Penarth. Of course, the uncertainty around those projects has not only been caused by the referendum result; there are other factors at play, but that is a crucial part of whether those projects go forward.
It is a pleasure to serve under your chairmanship, Mr Flello. My hon. Friend talks about specific projects. I particularly have in mind the £106 million that is earmarked from the European regional development fund for phase 2 of the South Wales metro. Does he agree that, for projects such as that, it is all about certainty, and that it is in the hands of the UK Government to provide that certainty?
I absolutely agree. It is about not only certainty of the funding for projects but managing the growth of rapidly growing areas in south Wales. In my own city of Cardiff in particular, we need to know that we are going to have the transport infrastructure to cope with the anticipated demand. The South Wales metro is crucial to that.
I have two brief points. One is about a specific project. My hon. Friend will be aware that, in Sarn in my constituency, significant transport investment brought a McArthurGlen designer outlet, ensuring that jobs and services were created. We can see real examples of where transport infrastructure works. In terms of planning and Government giving some reassurance, this situation places local authorities and the Welsh Government in extreme difficulty. Does he agree that it is all good and well the Welsh Government putting in processes for local development plans around highway infrastructure investment but, if we do not know what the funding is beyond 2019, it is virtually impossible for local government in Wales to deliver large-scale transport infrastructure projects?
My hon. Friend makes an important point. It is about long-term certainty for not only businesses but residents and local authorities. He mentioned McArthurGlen, which I am sure many of us have used. Many people do not know that the transport infrastructure and hub there were supported by European funding, which made a huge difference to access to the lower part of his constituency and, indeed, to the M4 corridor.
Could we add to the comprehensive list of threatened infrastructure projects in Wales the Dŵr Uisce scheme—those are the Welsh and Irish words for water—between Ireland and Wales, which is very exciting? It uses water technology in a very effective, environmentally clean way. That will be in a special category, because if Brexit goes ahead, half of the scheme will be in the EU and half of it will be outside it. Does my hon. Friend foresee the chaos and the serious threat to that valuable scheme that would result?
Indeed. It is about the detail of these types of project. I was not aware of that particular one, but it is a very good example. Many of us in Wales have personal family connections to Ireland. We certainly have connections in our constituencies. More importantly, there are crucial connections between our economies, services and infrastructure; my hon. Friend makes a valid point.
The EU’s structural funds over the past 30 years have been vital in supporting regional development and the growth of the Welsh economy. They have supported people into work and training, youth employment, research and innovation, business competitiveness, renewable energy and energy efficiency, connectivity and urban development. The central aim of the current structural funds programmes is to create an environment that will support economic growth and jobs. Obviously, there are huge implications if we are not part of that.
Under the current round of structural funds, which runs from 2014 to 2020, Wales has been allocated almost £2 billion, with £1.6 billion going to west Wales and the valleys and more than £325 million going to east Wales. In total, along with match funding, the current round of structural funds is expected to support total investment in Wales of approximately £3 billion. Indeed, research undertaken by Cardiff University’s Wales Governance Centre prior to the referendum concluded that the £658 million of EU funding for Wales from the common agricultural policy and the European structural funds made Wales a net beneficiary of EU funding. In 2014, the estimated net benefit from the EU for Wales was around £245 million. That is equal to about 0.4% of Welsh GDP—it equates to around £79 per head—in 2014.
I talked about the history of these investments. That is the third time that west Wales and the valleys have qualified for the highest level of structural fund support, which is available to regions in the EU that qualify with GDP per head that is less than 75% of the EU average. I have long supported that principle and am yet to be clear, in any way, what the UK Government’s plan is for replacing those structural funds to reduce some of the inequalities that are built into some of our post-industrial economies in particular and rural areas. The spending has been aimed at supporting projects intended to transform the prospects of the most marginalised and vulnerable, to lead to increases in productivity and growth and to invest in the future of our young people in Wales.
Following the vote to leave the European Union, investment in infrastructure in Wales has already experienced some setbacks, with postponements of some asset sales and a downsizing of some projects, according to ratings agency Standard & Poor’s. In a broader note to clients in September, Standard & Poor’s stated that the biggest risks for infrastructure companies could be a likely reduction in capital investment—both domestic and foreign direct investment.
I want to mention the South Wales metro again. It would be useful to know whether the Minister can add any clarity on this. The metro is crucial to my own constituency and the First Minister, Carwyn Jones, has described it as “a catalyst for transforming” the Welsh economy. He made that clear when he met the Commission in December to seek assurances that it will continue to support the project and that it will not be affected by the Brexit negotiations.
The metro is absolutely crucial for connectivity and economic development in my constituency, too. Does my hon. Friend agree that it would be particularly helpful today if the Minister could be crystal clear that any shortfall is guaranteed by the UK Government, including beyond 2020?
Absolutely. We need that sort of clarity, which is clearly absent from the so-called plan that has been put before us today by the Prime Minister and the Brexit Secretary. I emphasise that the metro is far more than just a transport scheme—it is a vehicle for transforming the economic and social prospects of many of our communities. It will deliver jobs and connectivity as well as those faster journey times and more frequent services that we all want to see.
It is also of note that, in addition to the funds I have mentioned, at present both public and private organisations in Wales can bid directly to the European Commission for funding from other programmes such as the Connecting Europe Facility and Horizon 2020, which supports many of our academic research projects. Those can also provide funding for infrastructure projects. The House of Commons Library suggested that it is difficult to quantify the funding from each of the direct funding programmes but, to give an idea of the scale, the CEF fund is worth €30.4 billion in total over the period 2014 to 2020. That covers areas such as transport, energy, and telecoms. CEF projects currently funded in Wales include the South Wales railway electrification studies that were conducted around the electrification programme. The Welsh Government and Welsh ports are also in discussions—here, again, are the links with Ireland—with the Irish Government and Irish ports on access to the “motorways of the sea” funding, which can be used to invest in crucial port infrastructure and hinterland connections to ports.
The Horizon 2020 programme has awarded €40 million of grants to organisations in Wales, as of 23 February 2016, and the predecessor to Horizon 2020—the seventh framework programme—allocated €145 million to organisations in Wales. We absolutely need that certainty. I have spoken to many academics locally who are deeply concerned about their ability to participate in these cross-European infrastructure projects based in the academic sector. The issue is not just what that valuable research and co-operation can engender in terms of knowledge and understanding of crucial issues, but the link to products and the frontline economy. Many businesses in my community, particularly in some of the business parks, have strong links with the high tech and biotech industries that have developed around universities such as Cardiff University.
I mentioned the European Investment Bank. I hope that the Minister can provide some clarity about what Wales’s relationship could be post-2020. The European Investment Bank is a significant source of finance for UK infrastructure projects. In 2015 the lending to the UK amounted to €7.7 billion, of which two thirds was provided for infrastructure. Programmes in Wales included €340 million for Welsh Water to make improvements to water supply and wastewater collection, and €174 million for Wales & West Utilities to upgrade and expand gas distribution networks. This funding is integral not only to those high-profile road junctions and road projects and things such as the South Wales metro, but to the utilities that ensure the functioning of our communities.
It is a pleasure to serve under your chairmanship, Mr Flello. After last week’s review from Charles Hendry on tidal lagoons, I was very proud that he noted the enthusiasm and confidence that the city has had in the tidal bay project. That enthusiasm overflows into the city bay region. In these uncertain times, is now not the time for the Government to commit the important resources in order to take forward these exciting plans, which could see Wales develop as a world-renowned “first” in so many of the fields in respect of tidal power?
My hon. Friend makes a powerful point. She knows that I have long supported the principle of tidal power coming from the Severn estuary. There have been concerns about some of the projects proposed, but I am interested in and support the proposals for tidal lagoons—obviously each needs to be judged on its own merits—and particularly the Swansea one. So much work has gone into that and it is crucial that we now provide certainty on delivery and funding to enable it to go ahead.
Briefly, the chief of the EIB, Werner Hoyer, stated in October:
“Even if we find a way to continue lending in the UK, I am absolutely sure that the enormous volumes we have achieved over the last couple of years cannot be maintained”.
What clarity can the Minister offer on that issue in particular?
In his conference speech, the Chancellor of the Exchequer announced that beyond the autumn statement the Treasury would offer a guarantee to bidders whose projects
“meet UK priorities and value for money criteria”.
It is absolutely crucial that the Government outline what to
“meet UK priorities and value for money”
mean and whether that will cover projects currently funded by the EU. I hope that we will have some clarification on that, too. With today’s announcement of a hard Brexit package, in an attempt to appease certain elements in the Prime Minister’s party—as I said earlier, her Chancellor appears intent on pursuing some sort of trade war or commercial war with our European partners—it has become clearer and clearer that those who may suffer will be the ordinary people, the ordinary businesses and the ordinary working people the length and breadth of Wales.
I am grateful, again, to my hon. Friend for giving way. He makes some important points about new infrastructure. Are there not also serious implications for existing infrastructure, including our industrial base—for example, the Ford motor plant in Bridgend—if we are seriously saying that we are not interested in staying in the single market? Should the Minister not be telling us how he is going to ensure that plants such as Ford’s have a future in relation to the integrated way in which motor cars are made across Europe?
Absolutely. The same could apply to the steel industry. Companies such as Celsa, in my own constituency, that are part of a European operation have plants in many places.
Before my hon. Friend moves off this point—Airbus is probably the best example. If a wing is not finished, the workers will follow the wing, whether to Bremen or France, to make sure that that is done. Are we really saying that they will have to fill out forms, do all sorts of things and wait God knows how many weeks for that to happen? The problem is that we live in a very uncertain climate at the moment.
I absolutely agree. Airbus is always an excellent example and is a crucial player in the Welsh economy, not only in the manufacturing of the wings and aircraft components, but in its defence and space business, which is in the constituency of my hon. Friend the Member for Newport West (Paul Flynn) but employs many people from my own constituency. Let us not forget that this is about not just the infrastructure funding that has come from outside, from European funds, but the infrastructure funding decisions that major companies make themselves and whether those will be put at risk when companies are not sure about the future.
It is also about giving Welsh workers confidence. Taking up the point made by my hon. Friend the Member for Cardiff West (Kevin Brennan) about Ford, there is great anxiety in the plant about the future and security of their jobs. These are highly skilled and highly paid jobs. If workers do not know that they can be assured of long-term employment, they are not going to invest and spend, and we need that to keep the Welsh economy turning.
My hon. Friend makes a crucial point. I am delighted that the top focus of the First Minister, Carwyn Jones, and the Cabinet Secretary for Economy and Infrastructure, Ken Skates, and others, has been on ensuring that the Welsh Government have continued to provide certainty where they can, whether that is to industry, infrastructure or building projects. Clearly, we need to keep investing—whether that is in schools and hospitals, as is happening in my constituency, in supporting businesses or in the work being done to support the steel industry—and that can help to provide confidence. However, without clarity on these very large sums of money and on the UK Government’s intentions in that regard, we can only go so far in terms of what Wales is able to do.
I hope that the Minister can give us clarity today. We need guarantees that funding will continue for Welsh infrastructure following any deal to leave the European Union. Wales voted to leave the EU—although not in my constituency—but it did not vote to see investment in Wales cut by a UK Government, and we need those assurances urgently.
Things may work out for us in the long term. Undoubtedly our country, Wales—and this country, Britain—have a history of coming together in difficult circumstances and of finding a way forward for our people when they are faced with difficult challenges. However, the plan may turn out to be reckless, with huge consequences for our economy, jobs and the unity of our country. The Prime Minister should have been here today to account for the plan. I am glad that the Minister is here, and I hope to hear answers to the questions that I and other colleagues raise today.
I am delighted to be called to speak so early in the debate, Mr Flello.
We listened to the dribble of nothing from the Prime Minister in one of her typical speeches, which are heroically adjectival but ultimately vacuous, and her love of soundbites and meaningless phrases is clear. She talked about having a red, white and blue Brexit, but in Wales we want a red, white and green Brexit. We want one that is tailor-made for Wales, because our situation is unique in almost every way in the British Isles.
We are talking about infrastructure today. Gerald Holtham—a very accurate observer of these matters—has pointed out that although the amounts of money we get from Europe are not a huge percentage of Welsh GDP, they are 20% of our infrastructure funding. A huge amount of money is being provided for all the schemes that my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) listed in introducing the debate. In my intervention I mentioned the Dŵr Uisce scheme, which is a unique example; it does not affect England in the same way. That exciting project is being run by Trinity College Dublin and Bangor University. It has cutting-edge technology, using small turbines in an ecologically sound way to produce energy. The scheme could have marvellous repercussions and pay huge dividends in future, but it will be in a very strange position, because half the scheme will be outside the European Union and half will be inside it. That is one of many complications that will arise from the hell of Brexit that we are facing.
Remember the reason why Brexit is happening and why the Prime Minister made that speech today: it is all about solving internal problems in the Conservative party. That explains how we got into it and how we are now proceeding. At the moment, the Conservative party is a pressure cooker likely to explode in three directions—there are the hard Brexiteers, the soft Brexiteers and the anti-Brexiteers—and all that we have heard today from the Prime Minister is an attempt to soothe future problems with a honeycomb of sweet words that ultimately mean little.
The Chancellor of the Exchequer has talked about bumps in the road, but I fear that there will be a giant sinkhole in the road into which the economy could slip in freefall. Very dangerous years could be ahead of us economically. There was talk today of us turning into some kind of banana republic on the world stage, and not being one of the great economies. Standards are going to fall down to the bottom. They will not be brought up to the top, and we will not continue down the stable path that we were on in the past. Brexit is a great gamble, and it is right to look at it from a Welsh point of view.
Important issues in Wales come up again and again, as they did when the Select Committee on Welsh Affairs went out of Parliament to meet the people, having asked for their response. I took part in two such events. Someone who came to Aberystwyth said that he worked for a company that was about to expand in Ceredigion. However, post-Brexit, the company has taken the decision to expand in Ireland. Someone else came to the meeting in Prestatyn to talk about the tidal scheme off Anglesey. That interesting scheme uses tidal flow and is very different from what is happening in Swansea. We know that hydropower and tidal power are Wales’s North sea oil. They are a huge resource and their prospects for the future are marvellous, because of the nature of the tidal flows that go around our coast. A huge cliff of water moves around the coasts of Wales, providing great pulses of electricity throughout the 24-hour cycle. All the calculations are based on using tidal power alone, and they have not taken into account the ideal solution, which would be combining tidal power with pumped storage schemes such as the Dinorwig power station. That would make tidal power entirely demand-responsive. The pulses of electricity that arrive in the early hours of the morning could be used to pump the water up the hills, and then the value of the electricity could be multiplied threefold or fourfold by pumping it down when electricity is in high demand. That will be the future of clean, renewable electricity for Wales.
Another issue that comes up at all these sessions, because farmers are a very well-organised group, is farming in Wales, which is again unique in the British Isles. We have a cultural imperative for supporting the farming industry, because it is the last redoubt of Welsh language and culture. It is at its finest and purest in the farming communities and has gone, sadly, from the anthracite coal areas where it used to be. If we want to invest in the culture in Wales and in our precious, unique heritage, we have to invest in it as a cultural treasure that we all feel is of immense value.
However, the main reason for supporting the farming industry is what it does in Wales as a resource and a source of occupations. It is very different from England. If we are going to have our red, white and green solution, we need an entirely new policy on farming.
As usual we have heard the platitudes—the Brexit-denial language—that we are used to from the hon. Gentleman, but to get back to the subject of the debate, does he not agree that many parts of Wales have not benefited from European funding? In fact, the European funding source has been very unfair to certain parts of Wales, and a new post-Brexit scheme may be much fairer for the whole of Wales.
The hon. Gentleman has not said which parts of Wales he has in mind, but it was noticeable that the parts of Wales that had the greatest amount of infrastructure investment were the least enthusiastic, sadly, for staying in the European Union. If we are looking for a policy, it must be a new one. If Brexit goes ahead, we must take advantage of it to get a Welsh solution for Welsh problems. Take agriculture, for instance: we do not have farmers getting subsidies of £2.5 million. They do not get £750,000—not that I know of anyway—but the Mormon Church gets that. The royal family get subsidies of £500,000, but in Wales the average subsidy is about £13,000, and we have a preponderance of small farmers.
Let us start again and have a scheme with a cap on it so that we do not give huge subsidies to billionaire and millionaire farmers. We must concentrate subsidies on what are necessary in Wales: the small farmers. We should look at Brexit as an opportunity to have a scheme that is fairer and will help the environment. There should be a strongly environmental imperative in all the subsidies that are given, and we should put a cap on them, as we put a cap on other things such as welfare payments. I cannot see why anyone should have a subsidy of £94,000, as one farmer in Wales gets regularly, even though he does not appear to be in need of subsidies. We should look at how income support is paid out. To make the farm industry stand on its own feet and be self-supporting, as happened in 1985 in New Zealand, we have to change the pattern of subsidies, and Brexit is the opportunity to do so.
Many of us bitterly regret what happened in the referendum. During the campaign, I said the victors would be the ones who told the most convincing lies, which turned out to be right. Both sides presented a case that was false. We are certainly not going to get our £350 million for the health service every week, as was written on the side of the red bus, and we did not have the economic collapse that was threatened by the other side. The votes that were taken—a snapshot on one single day—were based very much on public relations spin. The same people who directed the leave campaign are the same people who directed the entirely dishonest alternative vote campaign a few years ago and who ran the campaign about devolution in the north of England. We are handing over the power of decision to the PR specialists and snake oil salesmen, and public opinion is manipulated and persuaded by the PR industry and the tabloid press.
Without question I respect the hon. Gentleman’s years in this House, but do you honestly believe you are helping the Brexit cause by using such language and continuing the route you are now on? Looking at your hon. Friends’ faces as you speak, it does not look to me as though you are helping them in this debate, never mind the cause that you are trying to put forward. We are all Brexiteers now and we need to move forward, not backward.
Order. Before the hon. Gentleman takes his seat, I remind him that “you” refers to the Chair in debates.
I think the hon. Gentleman was referring to the hon. Member for Newport West. Mr Flynn, may I suggest we come back to the subject of the debate and not make it too wide-ranging?
We face the inevitability of Brexit. The House will almost certainly agree to go ahead with article 50, and perhaps in two years’ time, when the breach has to be made, an informed view will be taken of what has resulted from that decision. We are the elected representatives of public opinion in Wales. We were not elected on one day. Many of us have been elected on many days. My first election was in 1973—it is not a single decision that is taken on a single day. We have a duty in this House. When it comes to finally deciding whether we break away, we must remind ourselves that we will then know the economic consequences, and we should remember that second thoughts are always better than first thoughts.
May I start by saying how inadequate I feel in following my hon. Friend the Member for Newport West (Paul Flynn)? I can assure him that on my face there was the great grin of delighted satisfaction that I always feel when I listen to him speak. There was certainly no grim look on my face; there was a broad grin.
The story of European funding in Wales is a little like the scene in “The Life of Brian” when someone asks “What have the Romans ever done for us?” The answer is nothing—apart from the aqueducts, the education, the clean water, the peace, the stability. What have the Europeans ever done for us? I must thank my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) for securing this debate. It has been long needed and it is right for our constituents to know what they are about to lose.
I went to the offices of Bridgend County Borough Council and asked what funding had been coming into my constituency. Since about 2000, we have received more than £40 million, which is pretty stunning in its own right, and that was only for education, infrastructure and development programmes. The funding is an absolutely vital resource for Bridgend County Borough Council and its strategic partners, enabling the delivery of major infrastructure developments. We have seen, for example, £3 million to develop three strategic employment sites, allowing small and medium-sized enterprises to develop and grow in Bridgend. Bridgend is slap bang in the middle between Cardiff and Swansea. People do not know what comes out of Bridgend, but the number of niche unique firms in the county borough of Bridgend that provide critical employment to highly qualified individuals is absolutely amazing.
Nearly £3 million from the European regional development fund has been invested in Bridgend town centre, which has been radically changed. It is a different, vibrant economy. My hon. Friend the Member for Ogmore (Chris Elmore) mentioned the junction 36 development, which is critical for both Ogmore and Bridgend. The bottom half of the site is occupied by McArthurGlen, which is in the Ogmore constituency. At the top half of the site is my large Sainsbury’s store. In between them are three huge car parks for people who come from my hon. Friends’ constituencies to shop in the county borough of Bridgend. It pulls in people from the whole of the south Wales corridor and even from over the bridge. People come into Bridgend for shopping who would not have come if we had not had that development.
Between 2000 and 2013, we had £12 million ERDF funding to deliver work programmes, including further regeneration work in Bridgend town centre, a tourism development with a watersports centre of excellence in Porthcawl, and coastal path, cycle path and footpath developments across the county borough, which are good for tourism and also good for the health and wellbeing of the people of the county borough.
The rural development programme brought in £5.5 million for micro-enterprise hubs at several venues. For the period 2014 to 2020, we are looking for £12 million for further infrastructure schemes in Bridgend town centre and Porthcawl and to develop SME premises across the county borough. There are also £1 million-worth of Welsh Government-led projects funded by the ERDF to undertake rural development for private sector employers.
So European funding has been instrumental in supporting projects to deliver skills, training and employment in my constituency and in that of my hon. Friend the Member for Ogmore. We have had £10 million to support young people at risk of disengaging from education and training. We have had money to support the long-term unemployed and economically inactive back into employment. Those are all key Government projects, yet that money may no longer be there. There has been £3 million for Inspire 2 Work, Bridges into Work 2 and Communities 4 Work. It is vital that the UK Government deliver on the guarantee provided by the Chancellor on 3 October at the Tory party conference. He said:
“The Treasury will offer a guarantee to bidders whose projects meet UK priorities and value for money criteria…that if they secure multi-year EU funding before we exit…we will guarantee those payments after Britain has left the EU.”
Great—but I want to know what happens after that. Can I guarantee that after we leave the European Union there will be, over a 20-year period, another £40 million coming into the Bridgend constituency? Bridgend voters voted to leave, but they did not vote for reduced infrastructure development, worse or fewer jobs, reduced education or employment skills, decreased development capacity or slow tourism growth. Certainly, there will be an impact on Welsh youngsters, who did not have their vote, and that will affect whether they consider coming back to Wales to work or look further afield. We need to keep young people’s skills in Wales, and keep a range of viable employment opportunities for them.
My constituency is between Cardiff University and Swansea University, and many university lecturers go from Bridgend to lecture at those universities. I cannot tell hon. Members how many people have expressed concern to me about the funding of science projects in Wales, and about dramatic changes to the health and wellbeing of the UK.
Finally, my hon. Friend the Member for Cardiff West (Kevin Brennan) spoke about Ford. Can the Minister finally give me an assurance that whatever deal was done for Nissan is coming to Ford? The last thing I need is for the Ford engineers in my constituency to decide that they cannot take a risk, and to move out to other jobs. I need that factory and the jobs to be viable. I need the assurance and I should like it today.
It is a pleasure to serve under your chairmanship for the first time, Mr Flello. I congratulate my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) not only on securing the debate but on his comprehensive and thoughtful setting out of the issues. It is always a pleasure to follow my hon. Friend the Member for Bridgend (Mrs Moon); and I am sure that all Members from south Wales would give testament to the fine shopping at McArthurGlen.
Absolutely. It is also a pleasure to follow my hon. Friend the Member for Newport West (Paul Flynn). Whenever my hon. Friend speaks we learn something new; I am sure we are all very grateful for that. As to the hon. Member for Brecon and Radnorshire (Chris Davies), I am slightly worried about the way he reads facial expressions. He may end up getting his enemies and friends the wrong way round in future.
I totally accept the result of last year’s referendum. The Torfaen local authority area had a 59.8% leave vote, and the Torfaen parliamentary constituency makes up the substantial part of that local authority. It is crucial that the result should be respected; but whether people voted remain or leave, they deserve—in Torfaen and across Wales—a Government determined to deliver economic prosperity and to have a clear, coherent negotiating strategy to that end. Before I entered the House I was, among other things, a barrister and a mediator. I know only too well that no one should reveal the fine detail of their negotiating strategy before they begin; but that is not what the Government are being asked to do. We have heard from the Prime Minister today, but what concerns me is that not once has she given a coherent vision of post-Brexit Britain. As my hon. Friend the Member for Cardiff South and Penarth pointed out, we are left with a nightmare scenario of being an island, almost like a giant tax haven, off the end of the EU, instead of a place where inward investment and the floor of workers’ rights established by the EU will continue post-Brexit. We are also left with the impression that the Prime Minister is far more interested in the internal politics of the Conservative party than in the national interest.
Today’s debate is specifically about infrastructure. Wales has benefited tremendously from EU structural funding. When we talk about infrastructure, we must think about it in different senses. We have, of course, physical infrastructure, which my hon. Friend the Member for Cardiff South and Penarth talked about. I have already mentioned the south Wales metro project, which is one of many on which I hope the Minister will give far firmer guarantees. However, there is also the question of digital infrastructure. I commend the Welsh Government for their aim of every household in Wales having access to superfast broadband, and the great progress that has been made. Clearly, there is more progress to be made. I suggest that digital infrastructure will be vital to Wales’s future. There has been an increase in flexible working and the number of people working from home, and a substantial number of people are self-employed throughout the United Kingdom now; all of them will be reliant on the broadband speed available to them at their business premises and at home. That infrastructure, too, must be funded. The Government must have a coherent vision so that, without the European structural funds coming down the line, such things can be realised.
The Minister and the Secretary of State for Wales can play a crucial part in what happens, but they must be the voices of Wales in the Government, standing up for funding. They cannot become, in the years to come, the Government’s voice in Wales. The referendum has of course gone, and we have to concentrate on how Wales is to have a substantial number of highly skilled jobs, such as those in Bridgend that we heard about, and others mentioned by my hon. Friends. That is the vision of Wales that we must deliver, and I hope that the Government will put aside their internal divisions to take it seriously.
It is a pleasure to serve under your chairmanship for the first time, Mr Flello. I commend my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) for securing this important debate and setting out the issues in his usual elegant style. I associate myself with many of the comments made by my hon. Friend the Member for Bridgend (Mrs Moon). I was a Bridgend councillor before I became an MP, and she was my MP. It is always a pleasure to follow my hon. Friend the Member for Torfaen (Nick Thomas-Symonds).
Infrastructure is important in all parts of the UK, but in Wales, the region most affected by deindustrialisation, which is still reeling from neglect of public spending in the 1980s—a place which has mountains and valleys in abundance—the need for investment in all forms of infrastructure has never been greater. The uncertainties of leaving the European Union remain fraught with danger. Beyond the loss of environmental protections, trade agreements and workers’ rights, the impact on the economy is still unknown. However, in Wales the threat to structural funds remains a primary concern, and one that will define the Brexit negotiations and the Government’s ability to respond.
A reduction in the amount of funding available for infrastructure projects in Wales, should the UK Government not commit to fully replacing it, will be catastrophic. It is widely accepted that Wales has been a net beneficiary of the European Union, benefiting from billions of pounds of investment. The referendum results across Wales suggest that that message did not permeate communities, but that is astonishing, given the facts that surround the argument. The annual average allocation of EU funding in Wales is €65 per person, compared with €13 across the UK. Wales receives over six times more European structural and investment funding than England. That is not only astounding and depressing, given the qualifying criteria, but concerning given our potential reliance on the funding, and on the UK Government’s commitment to underwriting it after we leave the EU. To put things into context, the European regional development fund, the only European structural and investment funding directly concerned with infrastructure, committed €106 million to Wales during the 2014 to 2020 programme, under the theme of network infrastructures in transport and energy.
Allow me to highlight some real-life examples of the difference that those vast figures make to infrastructure projects in Wales. The superfast broadband business exploitation project, which seeks to increase the take-up of fibre and ICT infrastructure by small and medium-sized enterprises, has secured €6.3 million in the regional development fund. The tourism attractor destinations project, which aims to increase employment through investments in prioritised local or regional infrastructure, has received £27.7 million in ERDF investment.
Closer to home, I can speak of three projects that would not have happened without ERDF funding. The Neath Port Talbot integrated transport hub will use upwards of £5 million in European investment to create a transport modal interchange facility to promote public transport across the area. SPECIFIC, an academic and industrial consortium led by Swansea University to address the challenge of low-carbon electricity and heat by enabling buildings to generate, store and release their own energy, has secured nearly £15 million in ERDF funding and almost certainly would not exist without it. Lastly, the world-class Swansea University bay campus, which I have mentioned, is a multi-partner investment of £450 million, including almost £40 million in European regional development fund money. Those examples do not highlight the value and impact of directly funded European Commission programmes such as the Connecting Europe Facility and Horizon 2020, which are far more difficult to quantify but just as important as those funded via the UK or Welsh Governments; Horizon 2020 alone has awarded grants worth €40 million to organisations in Wales.
Post-Brexit guarantees are worryingly sparse on detail. Although the Chancellor has given a number of promises relating to any lost EU funding, those promises extend only to structural and investment fund projects signed before last year’s autumn statement. For projects signed after that, the commitment is far vaguer. In his conference speech last year, the Chancellor suggested that he would offer guarantees to projects that
“meet UK priorities and value for money criteria”,
but he has repeatedly failed to set out what those priorities and criteria will be. Surely the Chancellor of the Exchequer of Her Majesty’s Government has a responsibility to instil confidence in Welsh businesses and investments, not undermine it.
Another effect on infrastructure in Wales of the UK leaving the EU will be that the Welsh Government and local authorities have fewer sources from which to seek funding or sustainable loans. The European Investment Bank’s lending to the UK in 2015 amounted to €7.7 billion, of which two thirds, or €5.5 billion, went to infrastructure. Those figures are staggering. The thought of losing that funding leaves me cold. The Swansea University bay campus secured not only substantial ERDF funding but an EIB loan to the value of £60 million. That funding is sustainable, vital and irreplaceable.
Finally, I am concerned about a post-Brexit Wales where UK goals and priorities may be different from the EU priorities on which Wales and its Government have established plans and strategies. What will happen to the electrification of the Great Western line, the South Wales metro and the city deals?
Does my hon. Friend agree that the Government need to confirm that our transport infrastructure investment needs will be secured for the future? Our valley lines have been a great success, but much improvement is still needed, and electrification in particular must be delivered. For that to happen, funding must be guaranteed for phase 2 of the metro system. The project will help jobs in our south-eastern valleys. The Minister must confirm that that will happen.
I agree completely with my hon. Friend’s valuable point. I hope that is confirmed in the near future.
What will happen to the electrification of the great western line, the South Wales metro, the city deals and Swansea Bay tidal lagoon should they not be priorities for the UK Government once we have exited the European Union? The Government’s support to date for some of those projects has been questionable, as my hon. Friend the Member for Swansea East (Carolyn Harris) said, without the pressure of committing to replace any funding lost post-Brexit. They must rise to the challenge and put in place the necessary guarantees to instil confidence in our businesses, universities and investors. They must commit to replacing any funding lost by projects currently in development but not yet signed, and demonstrate to the people of Wales that we have a Government who work for everyone.
It is a pleasure to serve under your chairmanship, Mr Flello. I congratulate my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) on securing this debate and on outlining a powerful case. He made the point that it is important that powers returning to the UK are devolved to Wales to help the Welsh Government to drive forward the regeneration of Wales. He also mentioned the current programme of EU funding, which involves some £3 billion in investment across Wales. In 2014 alone, the net benefit to Wales was £245 million, which demonstrates exactly how much benefit Wales gets from the European Union. He was right to point out that we heard vague commitments from the Prime Minister today, but nothing to give certainty on the regeneration infrastructure that Wales needs to continue. He was also right to point out that Wales did not vote for cuts to regeneration infrastructure projects. That is developing from the chaos unfolding before us.
Hon. Members have made significant points clarifying what risks our exit from the European Union will bring to infrastructure in their constituencies and across Wales. We heard from my hon. Friends the Members for Alyn and Deeside (Mark Tami), for Cardiff West (Kevin Brennan) and for Cardiff South and Penarth about Airbus, Ford, Celsa and many other firms that develop their products across Europe, and the major and problematic impact that a hard Brexit would have on those businesses and many others.
We heard from my hon. Friends the Members for Newport East (Jessica Morden), for Swansea East (Carolyn Harris) and for Blaenau Gwent (Nick Smith) about infrastructure projects such as the metro, electrification of the valley lines and the Swansea Bay tidal lagoon. My hon. Friend the Member for Newport West (Paul Flynn) outlined the unique issues facing Wales from our exit from the EU, and the need for a red, white and green project to develop policies that take account of our unique heritage. We also heard from my hon. Friend the Member for Ogmore (Chris Elmore), who discussed the impact that uncertainty will have on local government’s ability to deliver larger-scale projects. My hon. Friend the Member for Torfaen (Nick Thomas-Symonds) stated that, although he respects the result of the referendum, whether we are leave or remain, we need a clear vision. As he pointed out, that is sadly lacking in this Prime Minister, who seems fixated on internal factions within the Tory party.
My hon. Friend the Member for Bridgend (Mrs Moon) highlighted the impact that European funding has had on her constituency, including a total of £40 million within the Bridgend County Borough Council area since 2000 for educational and infrastructure projects. As in many constituencies across Wales, the strategic development sites have supported small and medium-sized enterprises. There have also been town centre enhancements, which again are common in lots of constituencies across south Wales. My hon. Friend the Member for Neath (Christina Rees) talked about the fact that Wales is affected by deindustrialisation and a lack of investment that dates back to the ’80s and ’90s. She said that Wales still has a significant need for structural funds and spoke about projects such as the integrated transport hubs, which again are regeneration projects that have happened in constituencies across south Wales.
In our last debate in this Chamber just before Christmas, I asked the Minister a number of questions, which unfortunately he did not answer. I say to him today that I approach this debate with a genuine desire to have a response from the Minister on the record. I expect him to tell me that he has already answered some of my questions, so, with the greatest of respect, I hope that he will have no problem repeating and clarifying that information and putting it on the record today.
I have no desire to use this debate for gamesmanship or to score cheap political points. The impact of the exit from the European Union on our constituencies and on Wales as a whole is far too important for that. But we need answers. Leaving the European Union will have a significant impact on the funding and development of infrastructure across Wales. That is in absolutely no doubt.
Wales has received more than £2 billion of capital investment in social housing, transport, energy, water and education through the European Investment Bank in the past decade. As my hon. Friend the Member for Cardiff South and Penarth outlined, between 2014 and 2020, £1.9 billion of European structural funds will have driven total investment of almost £3 billion across Wales.
The benefits of that European investment have been seen in major projects, such as the Cardiff University Brain Research Imaging Centre, the Menai Science Park, the Swansea University Bay Campus in the Neath-Port Talbot area, and the Deep Green marine energy technology. In my constituency, we have seen the dualling of the A465, the heads of the valleys road, which historically has had a poor safety record and links west Wales, across the top of the south Wales valleys, to the midlands, so it is a key route for business. We have also seen the investment in jobs created in our communities and various funding streams for social programmes to support the most marginalised and vulnerable in our society.
As those facts demonstrate and as we have heard from hon. Members today, Wales has done incredibly well from European funds and support. So there are now serious and vital questions that the Government need to answer about what will happen to infrastructure support for Wales post-2020 and about what will replace EU funding.
My hon. Friend is making a strong speech and summarising many of the key challenges, specifically the challenges about infrastructure funding. However, does he share my worry that there is a wider challenge? In the Chancellor’s comments the other day, translated I believe from German, he said that
“we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do.”
Does my hon. Friend worry that we may be moving away from a programme of investment to reduce inequality and to focus on jobs, to one of a race to the bottom on tax, regulation and all those issues, which would damage the prospects for Welsh workers and businesses?
I do indeed; that is a very real concern. My hon. Friend highlights some of the chaos in the Government’s thinking on this matter. I hope that we will hear more from the Government in the near future to end the uncertainty and to provide some clarity about exactly what they intend to do.
During the referendum, we were assured by leave campaigners, including a number of senior Tory Ministers, that the UK and Wales would not lose out as a result of our exiting the EU. It is now time for the Government to deliver on the assurances that were given. Businesses and investors need certainty about the infrastructure and environment that will support their long-term decisions, so it is vital that the Government now make it clear how they will offset the negative consequences of EU exit for infrastructure in Wales. I hope that the Minister can give some clarity on what funding streams he envisages will replace EU funding post-2020, and outline his Department’s assessment of how much funding there will be.
Furthermore, even before we reach 2020, we need clarity on the guarantee made by the Chancellor, which was mentioned by the Minister and the Secretary of State for Wales in the media. To be fair, the Chancellor has announced that the Treasury will guarantee all multi-year EU business funding agreed before our exit. However, the detail appears to be a little more complex. For what it is worth, the Treasury said that it will
“put in place arrangements for assessing whether to guarantee funding for specific structural and investment fund projects that might be signed after the  Autumn Statement but while we remain a member of the EU. Further details will be provided ahead of the Autumn Statement.”
However, as my hon. Friend the Member for Neath commented, the specific assessment criteria mentioned in the Treasury’s statement were not provided ahead of the autumn statement and they have not been formally put on the record or disclosed in specific terms.
The Minister and the Secretary of State for Wales have repeated the claim that all projects before we leave the EU are secure, but can the Minister now say—purely for clarity and to have it on the record—what the assessment criteria will be to guarantee funding for specific projects that are signed between now and when we leave the EU? Can he also be clear exactly what will be used to assess that and which projects, if any, he expects not to pass that assessment?
Can the Minister also pledge today to guarantee loans made by the EIB to projects in Wales before we leave the EU? When my hon. Friend the Member for Cardiff Central (Jo Stevens), who is the shadow Secretary of State for Wales, raised that issue at the last Welsh questions, the Secretary of State for Wales said only:
“Our negotiations with the EIB will run in parallel with our negotiations with the European Commission. The hon. Lady has a responsibility to try to instil confidence in investment in Wales, not to undermine it.”—[Official Report, 30 November 2016; Vol. 617, c. 1505.]
To accuse the Opposition of undermining investor confidence in Wales simply by scrutinising the Government and asking them to reveal to Members, investors and the Welsh public what their plans are is, clearly, remarkable.
Consequently, in a spirit of openness and constructive dialogue on this most crucial of issues, will the Minister tell us whether the Government plan to guarantee loans made by the EIB to projects in Wales before we leave the EU? If not, what assessment has been made of the projects that will not be underwritten, the potential cost of that to the Welsh economy and what jobs may be at risk as a result?
Time is marching on and the longer the uncertainty goes on, the more detriment will be caused to projects, businesses and communities across Wales. I hope that the Minister will provide some answers this afternoon to allay the genuine and growing fears that we now hear almost daily. Will he also take this opportunity specifically to address the issue of the funding received from the European Territorial Cooperation programmes, which provide opportunities for regions in the EU to work together to address common social, economic and environmental challenges? Wales has benefited hugely from that. Examples of other such projects include the Ireland Wales programme, the Atlantic Area programme, the North West Europe programme, Interreg Europe, the European Spatial Planning Observation Network and Interact, which are worth billions of pounds to Wales. Will the Minister clarify what discussions the Government have had about whether the UK, outside the EU, would be eligible for any of those programmes? If it is not eligible and if Wales is no longer able to secure funding through those EU initiatives, what plans do the Government have to replace the funding?
Long-term infrastructure investment in Wales is vital for the future of our economy, jobs, investment and growth. The Government have a responsibility to ensure that we get the best possible deal from Brexit. It is not good enough just to say that we will get the best deal, whatever that means. Our constituents, businesses and investors need details of what funding will be available, what infrastructure projects will go ahead and what criteria other projects will have to meet before they can go ahead.
The Minister needs to get away from the rhetoric of our previous debates and earnestly give some answers today. I hope that he will take this opportunity to provide us with some answers. I hope that he appreciates how important these decisions and this debate is.
It is a pleasure to serve under your chairmanship this afternoon, Mr Flello. I, too, congratulate the hon. Member for Cardiff South and Penarth (Stephen Doughty) on securing the debate and, indeed, on the fact that today turned out to be an opportune moment to be discussing EU funding and the effect of leaving the European Union on infrastructure investment in Wales.
It is fair to say that there has been a contribution from EU funding into infrastructure investment in Wales. No one who represents any part of Wales would argue that that is not the case, but it is important to place that investment in context, in relation to the south Wales metro, for example, which is a fantastic project that will make a huge difference to south-east Wales and to which the Wales Office and the UK Government are fully committed. The UK Government’s investment in the scheme is £500 million, while that from European funding is £106 million. That £106 million is crucial, but it is important at the outset to clarify one point once again. I regret that, having made this point on numerous occasions, I have to make it again. I must be speaking very improperly if Opposition Members have not understood thus far. The guarantee is in relation to any EU-funded project that is put in place and secured prior to our leaving the European Union.
The decision as to whether a European project in Wales is in accordance with the UK Government’s priorities is based, in effect, on whether the Welsh Government are in favour of the project. European-funded projects in Wales are signed off by the Welsh Government. If the south Wales metro scheme is under way and there is a commitment of £106 million of European funding for the project, that £106 million will be underwritten by the Treasury. I hope that that is clear—it is as clear as I can make it. The Welsh Government make decisions regarding EU funding in Wales, and that might have been part of the problem in the past because, I would argue, the money has not been spent as well as it should have, but it is crucial to understand that if the Welsh Government are in favour of a project and it is signed off before we exit the European Union, that guarantee is in place.
I apologise, Chair, for not being here for most of the debate. I have been in the Chamber trying to catch the eye of the Speaker on this very issue. The Minister is right that many of the infrastructure schemes are projects initiated by the Welsh Government, but Interreg, which has been important to west Wales and links to Ireland, may now be under different criteria. Will the UK Government, as signatories to the European Union, guarantee those projects in future? With today’s announcement of a common travel area, does the Minister envisage special status for west Wales ports?
As the announcement was made only today, it would be incorrect of me to respond immediately to the question of special status for west Wales ports. The hon. Gentleman is perfectly right that decisions relating to Interreg funding will remain with the British Government but, on EU structural funds in a Welsh context, I hope that I have offered the clarity that the hon. Member for Cardiff South and Penarth requested.
It is crucial to understand that the investment in the south Wales metro is part and parcel of the electrification of the Great Western main line, because unless that line is electrified the metro system will not work as we envisage. Across the divide in this debate, we should at least recognise that the investment being made in rail infrastructure in Wales, both north and south, is both to be welcomed and crucial.
The point that my hon. Friend the Member for Ynys Môn (Albert Owen) made is absolutely crucial, and it raises a wider question about what the suggestion of engagement, with both the Welsh Government and the Welsh Assembly, means. It is not clear, is it, whether if we did not like parts of the deal—solutions, for example, regarding the common British-Irish travel area—we could dispute, veto or change them in some way? Or is it a like-it-or-lump-it strategy?
I sincerely hope it would not be a like-it-or-lump-it strategy, because that would not be proper engagement. Proper engagement means listening to the arguments being made by the devolved authorities and taking their views into account. It is clear that a decision will have to be made on a UK basis. I suspect that the hon. Gentleman is not arguing that we should have different settlements for different parts of the UK in relation to exiting the European Union.
We entered the European Union as a United Kingdom and I suspect we will leave as a United Kingdom, but it is imperative in that debate that we take on board the arguments being made by the devolved Administrations. It is important to highlight that we, as a Government, have set up Joint Ministerial Committees to ensure that those discussions happen on a Minister-to-Minister basis. I have been part of those discussions, as a representative of the Wales Office. So this is not a case of attempting a Westminster fix that ignores the views of the devolved Administrations; it is a genuine attempt to take on board the concerns of those Administrations, to ensure that we come up with an approach that reflects the complexities of the United Kingdom.
Does the Minister seriously believe that the problems post-Brexit in the home countries will be the same as the problems in England? A red, white and blue Brexit is an England-centric one. The problems in Wales and Scotland, and certainly in Northern Ireland, are unique to those countries and we need Brexit solutions that are tailor-made for the four home countries.
I am somewhat surprised by the hon. Gentleman’s comments, because I do not think he would argue that every single part of England has the same issues. The issues in Cornwall are very different to those in London; indeed, there is a devolved administration in London. Also, we are seeing a devolution process in the north of England and the issues facing the north of England will be very different from those in the midlands. I suspect that the Government have a responsibility to listen to arguments being made by all parts of the country. We are a Government who are listening on this issue.
I go back to the structures that have been put in place. Those structures are working. I have attended meetings with Ministers from Wales, Scotland and Northern Ireland. Unfortunately, such meetings are not currently possible, and that is a regret, but they have been constructive and for a purpose. I can assure hon. Members that views about the priorities are expressed very strongly in all parts of the United Kingdom.
The hon. Member for Cardiff South and Penarth asked whether the engagement is serious, and I argue that it is. Certainly the meetings I have attended have been robust but very worth while.
Will the Minister give way?
I will of course give way to my former colleague on the Public Accounts Committee.
I acknowledge that the electrification of Paddington to Cardiff is being seen through, and I hope it will be a great success. However, as the Minister knows, that project has cost a lot of money and has seen significant delays which, I think, have led to the delay in the delivery of the Cardiff to Swansea electrification. I think that the Minister will find that hard to deny. What I want from him today is a guarantee that he will ensure that the UK Government will support the Welsh Government to deliver the electrification of the valleys lines so that that is not shunted off into the middle distance and not delivered.
The assurance I can give is that my Department and this Government are committed to the south Wales metro scheme, which includes the need to electrify the south Wales valleys lines. The excitement that is felt about that project is not confined to south-east Wales; as a north Walian, I see it as a coherent strategy to revitalise the valleys. Cardiff is a huge success story, with jobs being created, and the south Wales metro scheme will make it so much easier to ensure that people in the valleys can be part of that. Listening to this debate will perhaps make people forget that we have success stories in Wales. I understand and fully support the view that the project is dependent on the electrification of the Great Western main line, but although there have been delays with that work, that does not prevent this investment.
The £500 million coming from Westminster for the south Wales metro scheme is on top of the settlement for the Welsh Government, and it is important to state that the investment we are seeing in infrastructure such as the railways is complemented by a significant increase in the capital funding of the Welsh Government, which has come through as a result of budget announcements, and which I hope all hon. Members welcome.
In addition, there has been significant discussion about and development of the possibility of a city deal for Swansea and the west Wales region, which is imperative, and work is being undertaken on a north Wales growth deal. What is exciting about the development of a city deal in the north Wales context is the constructive engagement between Westminster, the Welsh Government and partners on both sides of the north Wales border. There is an understanding that a growth deal, and infrastructure investment as part of that, is dependent on co-operation between the north-west of England and north Wales, and between the Welsh and UK Governments. I stress again that the relationships that are being developed as a result of the work on the city region deal in Cardiff, the Swansea city region deal and the north Wales growth deal are building confidence between the Welsh and UK Governments.
At the inception of the north Wales growth deal, it was envisaged that it would include European money, because it was linking England, Wales and the Republic of Ireland. Is the Minister suggesting that there will be a bid to Europe before we exit the European Union? If that is not the case, does he envisage the UK Government working with the Irish Government and the Welsh Government to get that funding?
The hon. Gentleman is well aware that the north Wales growth deal, in partnership with the Mersey Dee Alliance and so on, is dependent on a bottom-up approach. The answer to his question is that if the scheme and a deal are in place in good time to make an application for EU funding, it might be possible, but it depends on the timing. We are not a Government who say, “We know best in Westminster.” We are certainly not a Government who think Cardiff knows best. The city deals are based on growth from the bottom up. They are successful, and I hope they are proving their worth. It is a new way of working, and hon. Members should take it on board.
On investment in infrastructure and the co-operation between the Welsh Government and Westminster, the hon. Member for Torfaen (Nick Thomas-Symonds) highlighted an important point about investment in our digital infrastructure. We should at least willing be to concede that more than 11% of the entire funding at the UK level for broadband connectivity was allocated to Wales. I openly congratulate the Welsh Government on match-funding that investment with European funding. We know that great strides have been made on broadband connectivity in Wales, but more should be done. That is why I was absolutely delighted to be involved in a conference in Cardiff last week—it was attended by the Welsh Government Minister—on how we could further improve broadband connectivity and, more important, ensure that we have adequate mobile communications in Wales. We also need to look at how we ensure that those areas of Wales that will perhaps not be reached by broadband connectivity will be able to access broadband via 4G and, in the future, 5G services.
Money is part of that issue, and there is a need for investment, but there is also a need to look again at planning issues, which are the responsibility of the Welsh Government. A very positive outcome of the meeting was that the Welsh Minister highlighted that the Welsh Government would have a meeting this week with stakeholders in Wales to look at whether the planning infrastructure needs to be changed to make it easier to provide mobile infrastructure.
The key point is that there have been changes to the planning infrastructure in England to allow taller masts without the need for planning permission, but the approach taken by the Scottish Government has been very different, and that is perfectly fine. As we have devolved Administrations within the UK, there is nothing wrong with having a response in Wales that looks at Welsh needs, a response in England to the situation in England and a response in Scotland to the Scottish situation. The key point I stress is that co-operation on the issue between Westminster and the Welsh Government is of vital importance for communities in all parts of Wales and for the economic prosperity of Wales.
I totally agree with what the Minister is saying about different views from different parts of the devolved Administrations in Wales, but funding for car manufacturers in the UK is a central Government decision and has nothing to do with the Welsh Assembly. Can I have the assurance that, whatever agreement was made with Nissan, there will be a comparable agreement for Ford and that assurances can be given that Brexit will not impact on the capacity of the Ford plant in Bridgend?
I assure the hon. Lady that on the third page of my notes of questions to respond to is the question on Ford in Bridgend. It is not just about Ford in Bridgend; we also have Toyota in north Wales, which is a crucial part of the north-east Welsh economy. I can only repeat what was said to the Cabinet Secretary for Economy and Infrastructure in Wales, Ken Skates, in a meeting that I attended with Lord Price, the Minister of State for International Trade: nothing that was offered to Nissan is not on the table for Ford and Toyota.
I want to correct the hon. Lady, because some of the possible support for Ford and Toyota is a matter for the Welsh Government. Economic development is to a large extent a devolved matter. I fully accept the argument that, although the support might be coming from the Welsh Government, the reassurance has to be at the UK Government-level. I am delighted to say that we were able to say categorically that the deal offered to Nissan is on the table for Ford and Toyota when we were sitting in the office of the Welsh Government Economy Minister. Such businesses are crucial for the hon. Lady’s constituency in the same way that they are for north-east Wales, and we would not want to lose them under any future trading arrangements that we have with the European Union. Those commitments have been made and relayed to the Welsh Government.
Responding to the question that the hon. Member for Cardiff South and Penarth asked about engagement, there is nothing better than taking the trade Minister to see the Welsh Government economy Minister and giving those reassurances in person within a week of the decision being made about Nissan. That decision was welcomed by Opposition Members and by Government Members, because it was a vote of confidence in the workforce of the Nissan plant. That vote of confidence should be given for Ford and Toyota, too.
Just to be clear on that point, is the Minister confirming today that the Government have offered absolutely the same deal to Ford as was offered to Nissan?
The hon. Gentleman is clearly attempting to distort my words. The assurances given to Nissan are available to Ford and Toyota in the same way. A meeting has been offered. The Welsh Government Economy Minister is aware that that offer has been made. The hon. Member for Bridgend (Mrs Moon) asked for assurances, and I hope I have offered them in as open a manner as I can.
On infrastructure, we have seen significant infrastructure in north Wales with the super-prison in Berwyn. That was another investment into north Wales by the UK Government over and above any settlement with the Welsh Government. The importance of infrastructure investment as a means of boosting the economy is highlighted by the fact that that prison development has resulted in a significant contract being won by a consortium that included Coleg Cambria, which is based in north-east Wales. We should welcome that success story.
I am running out of time so I will try to respond quickly to the specific questions asked by Members. The hon. Member for Swansea East (Carolyn Harris) is looking at me in anticipation of a comment on tidal lagoons. Those of us who support the concept of tidal lagoons undoubtedly welcome the Hendry report, which was published last Thursday. News broke of Charles Hendry’s positive comments while I was at the mobile infrastructure summit in Cardiff Bay. The report was positive, but it was complex, too, and it needs to be looked at in depth. I sincerely hope that the Government will be able to respond in due course from a financial point of view to the issues with the cost of the tidal lagoon and the impact on the taxpayer and the electricity consumer. There is no doubt that the report was positive and needs to be taken seriously within Government. When the report was commissioned, many people said that the issue was being kicked into the long grass, but if they were looking for a negative report, that was not what they received. We are looking at the matter carefully, but there are no doubt issues still to be addressed over the next few months.
On the European Investment Bank, it is difficult to offer guarantees that the loans in question would be supported, but it is worth highlighting that the Chancellor has announced a £23 billion investment into the national productivity investment fund. We are putting in place alternative options for local authorities and stakeholders in Wales to bid into. Life after Brexit will not be the same as it is now, but that reflects that things will be changing.
I need to draw my comments to a conclusion. I apologise to Members if I have not been able to respond to specific points they have made, but I have certainly attempted to do so. The key point is that the decisions on leaving the European Union will be made on the basis of in-depth, proper consultation with partner local authorities throughout England and with the devolved Administrations in Cardiff, Edinburgh and Belfast. The key thing is that we must do the right thing for the people of the United Kingdom, whether they voted to remain or to leave.
Stephen Doughty, you have about 10 seconds.
Thank you, Mr Flello. I am conscious of the time. I thank the Minister for his comments. He has provided some helpful clarifications, but what is clear from all the comments today is that there are real-world impacts on jobs and businesses in our communities in all parts of Wales. The suggestion that we have had the totality of the plan we will receive is simply not good enough. We need more clarity. The Minister has provided some today, but not enough in some areas. That is why we need a Government White Paper so that we can all understand the future for Wales in the Brexit process.
Question put and agreed to.
That this House has considered the effect of the UK leaving the EU on infrastructure in Wales.
Murder of UK Nationals Abroad
[Steve McCabe in the Chair]
I beg to move,
That this House has considered police force support for investigations of murder of UK nationals abroad.
It is a pleasure to speak under your chairmanship, Mr McCabe—I think it is the first time I have spoken under your stewardship. I also thank the Minister for taking the time to respond.
I wish to raise a specific local case as an illustration of the wider plight of British families whose loved ones are murdered overseas. I want to understand what has gone wrong in my local case, which concerns Ollie Gobat, a young businessman murdered in St Lucia, whose parents are my constituents. On their behalf, my aim is to try to secure some sense of justice for a truly distraught family and, in the process, to glean a wider sense of what British policing support other families in this appalling situation can and should reasonably expect in pursuit of the perpetrators of these heinous crimes.
Ollie Gobat was shot and killed, and his body and car set alight, on 25 April 2014. It was a cowardly and heinous crime, and the St Lucia police force immediately confirmed that it was an execution-style murder carried out by organised criminals. Ollie was a much loved family man and a successful real estate executive, working in St Lucia at the time of his murder. The crime has appalled both the St Lucian population and the large expat community living there. That sense of disgust and frustration has been aggravated, over time, by the lack of progress in solving the murder. The dramatic nature of Ollie’s murder and the delays and obstacles to bringing those responsible to justice has generated a lot of media interest there and some media reports back home in the UK.
As St Lucia is a relatively small island, there are relatively few organised criminal groups present, active and operating on the island. Yet the St Lucian police force made no early progress in the case, which started to raise serious questions over the force’s conduct in the investigation. The Gobat family—UK residents and British nationals—swiftly reached out to the relevant UK authorities for help. Ollie was a British citizen, raised in Surrey. The request for UK support was made with the encouragement and blessing of the St Lucian Prime Minister, with whom the family had and maintain a strong relationship. At the same time, the family engaged the private services of a former UK police detective. That resulted in some clear lines of inquiry, which have yet to be properly followed up. Some relate to UK persons of interest, including at least one individual believed to be on UK soil.
As anticipated, the St Lucian Prime Minister formally contacted the UK Government requesting mutual legal assistance in the case. That request was complicated by various legal and bureaucratic obstacles. I was hugely relieved and grateful that in June 2015, the then Home Secretary accepted the request, pledging full assistance, subject to UK police being able to operate properly and safely.
Following the relevant protocol, Surrey police force was tasked with providing the requisite assistance. I recognise that Ministers and officials worked very hard to secure that authorisation, and I think it is reasonable to say that we all hoped it would mark a turning point in the case. Regrettably, there has been no progress and no proactive engagement or assistance provided by Surrey police. Worse still, the family are now also receiving death threats as a result of their private investigation.
I want to recognize that Surrey police met me and the family in February last year, and in fairness, following that meeting, they have provided some reactive responses to the St Lucian requests for assistance, but it is crystal clear that what is really needed is more proactive support, which the family had reasonably understood would be forthcoming. With that in mind, I understand that the St Lucian Prime Minister Allen Chastanet intends to request, or is in the process of requesting, a further elevation of UK assistance in keeping with the previous assurances provided by the Home Office.
Of course, any assistance needs to take into account St Lucia’s background. It is a former British colony, a member of the Commonwealth and an island much loved by hundreds of thousands of British visitors every year. It is public knowledge that St Lucia has a serious policing challenge, which is demonstrated by the commissioning by the Caribbean Community of a report on serious police corruption and extra-judicial killings in St Lucia.
I have gotten to know the Gobat family rather well since June 2014. Today as then, they just want what any family in their position would want: some measure of justice and accountability for their much loved and sorely missed son and brother. Although they recognise the complex nature of the case, they feel completely let down, not just by the lack of progress but by the failure of UK police to deliver the kind of support envisaged after the Home Office approval. I recognise the pressure of an investigation of this nature, and how complicated it must be—it would put a strain on any single force’s budget—and we can understand some of what may be holding it back, but surely justice for mourning British families is not entirely dependent on a postcode lottery. Is there no additional centralised support that can be provided in such a highly serious case?
The Gobat family recognise that the perpetrators may never be brought to justice, but that only reinforces their desire, and indeed mine, to see the unstinting pursuit of a proper investigation to get some answers. In their situation, I think we would all want the same. In particular, the family now want to see the level of UK assistance escalated and elevated to a more proactive role and the case moved from Surrey police to the Metropolitan police, which has greater expertise and manpower and might reasonably be expected, given its centralised role in counter-terrorism and organised crime, to take up some of the slack.
I know that there is a limit on the extent to which the Minister will be able to be drawn on the specifics of any operational matters in a pending criminal investigation, but it is entirely reasonable to ask some questions and expect some clearer answers. First, what level of support should the family of a British citizen murdered by an organised criminal gang abroad reasonably expect, through UK police supplementing or supporting the local criminal investigation overseas?
In the case of Ollie Gobat, having secured agreement for UK police to support the St Lucian investigation in June 2015, the Home Office envisaged that full assistance would follow. Why has that not happened, and what should happen next to make sure the lapsing of time does not render any subsequent investigation meaningless?
Are the Home Office and the Minister satisfied that Surrey police has the capacity and resources to engage properly with the St Lucian investigation, given the expectation of full assistance? How can that vital policing support be transferred to the Metropolitan police, in keeping with the family’s wishes, to make sure the required UK support has the expertise and capacity to make a real difference in St Lucia? Finally, what can the Minister say to reassure the family that any further request that comes from the Government of St Lucia with the Prime Minister’s blessing will be fully, properly and swiftly actioned?
The Gobat family feel abandoned. They expected concerted and material UK support to the St Lucian investigation, but there has been no real action on the ground. That comes on top of the terrible grief that they continue to endure. That cannot be right. On behalf of them and the other British families who find themselves in similarly tragic circumstances, I would be very grateful if the Minister could answer the questions I have laid out and above all assure us that we will see some serious movement in the UK police involvement in the investigation before it is too late for justice in their very tragic case.
It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate my hon. Friend the Member for Esher and Walton (Mr Raab) on securing this debate and on the concise and clear way in which he outlined the issues relating to the tragic events of 2014. Such issues affect a number of British families in similar situations. I am only too aware of the devastating impact that such cases can have on families and communities. I was recently touched by the death of my constituent Hannah Witheridge, who died alongside David Miller in tragic and awful circumstances in Thailand in 2014, so I have seen the impact that such cases have. The Norfolk police did a fantastic job with the family liaison officers in working with the families and giving support to the community.
I am sure my hon. Friend understands that it would be inappropriate for me to comment on the detail of specific cases. As he said, to do so could prejudice any current or future investigations. However, I recognise the concerns that he raised about the support available to bereaved families, and I hope to respond to those points, even if I use more general terms.
It is always a tragedy when a family member dies. I cannot begin to imagine the heartache that families feel when it happens away from home. I saw that for myself in the tragic case of Hannah in my constituency. It is particularly devastating when there are suspicious circumstances that are hard to get to the bottom of, and when the family believes that they have not been investigated as thoroughly as they could have been.
Our police are among the finest in the world and rightly have an enviable reputation for professionalism, so it is entirely understandable that families want UK police officers to investigate the circumstances of their loved one’s death overseas. Although UK police support is provided in a number of cases, including consular support provided by the Foreign and Commonwealth Office and police liaison support, I am sure my hon. Friend appreciates that it is not always possible to provide it due to circumstances that can be outside our and those agencies’ control. It is important to recognise that UK police officers can assist in a foreign state’s investigation of crimes committed overseas only with the express invitation of the host Government, and for a number of reasons invitations are not always forthcoming. I understand that that must be extremely frustrating for families seeking justice for deceased relatives, but it is simply not possible to support investigations in another country without its permission.
There will also be circumstances when support is requested by a host Government, but it does not meet the expectations of bereaved families or does not go far enough to address their concerns. Again, we are limited by the scope of the request and cannot independently provide investigative assistance unless explicitly asked to do so by the host country.
Requests for support are considered carefully by Home Office Ministers to ensure that any assistance requested is consistent with our international obligations and will not potentially lead to any human rights abuses. It is then for the police, who are operationally independent of the Government, to consider what support they may be able to provide to an investigation overseas. Inevitably, there will be occasions when the police in that locality judge that there is little value that can be added to an investigation, or that support would be impractical. Those are rightly operational decisions for the police to make, and it would be inappropriate for the Government to seek to influence them.
That is not to say that the police do not support overseas investigations. As I said, it would be inappropriate for me to comment on specific cases, but I can confirm that the Home Office frequently authorises support to overseas law enforcement agencies. In each of those cases, a request will have been made by a foreign law enforcement agency. The request will have been authorised by Ministers, and the police will have confirmed that they are in a position to provide assistance.
Mutual legal assistance, which my hon. Friend mentioned, is distinct from law enforcement or police-to-police co-operation. It is a formal method of judicial co-operation between states to obtain assistance in the investigation or prosecution of criminal offences. Such requests are considered carefully by Home Office Ministers, and the UK provides assistance wherever we can. Again, it must be in line with our international obligations.
As such cases are sensitive, family members are often unfortunately but necessarily not aware that support has been requested or is being provided. Although I completely understand that it must be extremely difficult for a family member who is desperate for answers, it is absolutely critical that nothing is done to jeopardise any ongoing investigations, as that may ultimately result in the failed prosecution of any suspects who are identified.
In addition to the support provided to specific investigations, it is also worth mentioning that police officers do excellent work in undertaking to improve the capabilities and professionalism of foreign police services. That can include the routine deployment of officers to carry out training in areas such as leadership, forensics, intelligence and other activities, sharing the best practice that our police have and building relationships to improve policing at home and abroad. By enhancing the capability and capacity of foreign police services to conduct thorough, evidence-based investigations, we increase not only the likelihood of successful prosecutions but compliance with human rights obligations. That in turn can remove some of the barriers to co-operation on individual cases that come up.
My hon. Friend spoke primarily about the particular case of his constituents, but this issue has implications for people more widely. I thank him for securing the debate and for raising the profile of the challenge of being able to work in other countries, which affects both families and the police. I understand that it is an emotive issue for the people involved. I want to take the opportunity to commend the police across the country for the vital role they play in what can often be very challenging circumstances. I assure my hon. Friend that the Government will continue to support requests for assistance where the circumstances allow. I will certainly make sure I keep him and, through him, the family apprised of the situation where we can.
Question put and agreed to.
Digital Equipment Ltd: Pension Scheme
I beg to move,
That this House has considered Digital Equipment Ltd’s pension scheme.
It is a pleasure to serve under your chairmanship, Mr McCabe, and to move this motion on behalf of my constituents. I am grateful to those Members who are here to take part in the debate. I am sure that they share my belief that this is an important topic.
Digital Equipment Ltd started in Massachusetts in the 1950s, in the days when computers were so big that they filled whole rooms. Its story is one of a dramatic rise and fall. From humble beginnings, it became a leading vendor of computer systems, including computers and software. By 1977, when Digital came to Ayr, it had grown into an entrepreneurial computer company boasting $1.5 billion in annual sales. In the ’70s and ’80s, computer technology changed rapidly, and Digital was at the forefront of that change. It quickly became a major employer not just in my constituency but across Scotland and the UK. At its peak, it employed around 1,500 people in Ayr.
Unfortunately, the company failed to adapt successfully after the rise of the personal computer eroded its minicomputer market, and it was acquired in June 1998 by Compaq, which merged with Hewlett Packard in 2002. Some parts of Digital were sold to Intel, but the plant in Ayr met its end. From the accounts given to me by my constituents, Digital was considered a good place to work, and it is remembered locally with fondness. It seems that its approach to technology—it was at the forefront of networking computers as peers—was mirrored in its corporate approach, with management structures that treated its people as equals.
The pension scheme was open to all employees and started paying pension from the age of 60 for both men and women. Although pension indexation was not guaranteed and Digital was not legally bound to award increases, the company made it its practice to do so. Staff were reassured that that custom would continue when Compaq acquired Digital in 1998, and Compaq continued to pay discretionary increases to pensioners. That trend was broken only following Hewlett Packard’s acquisition in 2002. In October 2006, the assets and liabilities of the Digital plan were transferred to the Digital section of Hewlett Packard’s retirement benefits plan, which provides for increases of pre-1997 pension rights at the discretion of the principal employer.
Since 2002, Digital pensioners in the UK have seen only two increases to their pre-1997 pensions, each amounting to 1%. In the past 14 years, the value of those pensions has stagnated. Those pensioners’ buying power has diminished and continues to shrink year on year, in contrast with their former colleagues in Europe. Pensioners in Hewlett Packard’s European subsidiaries have received regular cost of living increases, because only the UK Government have set an exclusion for pre-1997 contributions. The former staff of Digital in the UK do not feel quite so equal now.
I appreciate that HP is a huge multinational company that operates in around 150 countries and pays its pensioners in full accordance with the law in each of those countries, and I did not secure this debate to beat it about the head with a stick for not fulfilling its obligations to my constituents. However, I have great sympathy with those Digital employees who trusted their employer and paid into what they saw at the time as a great pension scheme, but have found that it does not support them in their old age and rely on Government support to get by. Many of my constituents paid into their Digital pensions for more than 20 years, and the bulk of their contributions were paid before 1997. Those who have not reached pensionable age do not yet know how little their pensions will be worth to them.
When this issue was first brought to my attention, I wrote to the Pensions Minister on behalf of my constituents to find out how the Government intended to resolve some of the issues with defined-benefit pension schemes such as the Digital scheme. I am grateful to him for his prompt response, in which he stated that
“the Government has no plans to force schemes to pay any increases to the pre-1997 pensions—beyond those that are already required by scheme rules”
and outlined that Government interference would be wrong and liability increases for which an employer had not planned or could not provide could lead to widespread scheme closures and risks. But I have a host of constituents who had planned for their retirement but have found that their pension scheme does not support them.
The Government have made it clear that, if the demands of the Hewlett Packard Pension Association, which has campaigned about this issue, were met, the additional liability on employers would mean that they would need to find extra money, and the Government do not plan to make them do that. I understand their position on that point. However, according to the Office for National Statistics occupational pension schemes survey, in 2015, there were around 5.2 million defined-benefit schemes in payment in the UK with rights accrued before 1997, of which more than 90% paid an increase. Just 8% of schemes like Digital’s used their discretion to deny any cost of living increase to their pensioners. Despite the fact that indexation is not mandatory for rights accrued before 1997, it appears that many schemes voluntarily apply some form of inflation protection to pensions in payment, and many apply limited price indexation retrospectively to service before 1997.
The hon. Lady is making an excellent case on behalf of her constituents. Does she agree that not only Digital or Hewlett Packard employees but those of other companies are affected? She mentioned that only 10% of defined-benefit pension schemes do not pay indexation. Campaigners are asking not for indexation to be backdated but for this issue to be corrected going forward. Does she also welcome the fact that the Pensions Minister has agreed to meet some of my constituents? I welcome the way that he is engaging with this debate.
The right hon. Lady makes a valid point that campaigners are not asking for indexation to be backdated, which would cause considerable difficulties for the companies involved. I will come to that point later.
I empathise with Hewlett Packard and other businesses that inherited defined-benefit schemes through expanding their operations during the boom years. They are all experiencing a global turnaround and an extremely challenging marketplace. Difficult decisions have to be made, and looking after the former employees of businesses that have long since been subsumed has to be balanced with current business concerns and the welfare of current workforces. Hewlett Packard is breaking no laws, and I understand that it fully appreciates the impact of its decision on its pensioner population and that is taken into account during annual reviews. However, I have greater sympathy for the concerns of the pensioners who have pensions with HP that will be frozen due to not being covered by legislation, and I would like the UK Government to take action to address the problems with defined-benefit schemes.
The Hewlett Packard Pension Association claims that withheld cost of living increases have so far cost pensioners an average of £24,000 compared with their colleagues whose contributions were made post-1997. That has led to severe financial hardship for many of those pensioners and has resulted in them being unable to afford an ordinary living pattern, being on the verge of poverty and requiring Government subsidies in the form of income support benefits.
I speak because one of my constituents has been in contact with me. I have explained that I cannot stay for the whole debate. Is the hon. Lady essentially saying that it is the older, poorer pensioners who do not get increases, and the younger ones, who earn more, who do?
I thank the hon. Gentleman for his intervention. The people who have paid in for the longest are getting the least benefit back from the scheme, although I recognise that pension schemes have changed.
I would like to hear from the Government what options, if any, are open to scheme members. The Pensions Minister has stated that defined-benefit schemes will be looked at early this year and he intends to consider what the Government can do to tweak the environment of those schemes. Is indexation increases for all defined-benefit pension schemes one of the tweaks that he will look at? The change that HPPA is seeking is for the discrimination between pre-1997 and post-1997 contributions to be removed from legislation, and the minimum permissible increases for all defined-benefit pensions in payment in future to be indexed in line with increases in the retail prices index. Will the Government look at that in their forthcoming Green Paper?
The Scottish National party is committed to ensuring dignity in retirement for all pensioners in Scotland, and although many recent debates have focused on reducing the statutory minimum requirements rather than increasing them, it is important that we examine closely what will bring about fairness and sustainability and deliver that dignity. Those are the issues I want to address in opening the debate. I know that other hon. Members wish to participate, so I will draw to a close by appealing to the Minister to take into account the situation that, as we heard earlier, people—not just Digital pensioners—find themselves in.
Pension plans are made over decades. They are long-term investments in our future to ensure that we can survive when we are no longer working and to ensure that we are not a burden on the state or our families. However, it appears that plans that seemed sound at the time have turned out to be considerably less appealing 20, 30 or 40 years later. Too often, people pay into pension pots—whether private company pensions or indeed state pensions—all their lives but find that, when they retire, the goalposts have been moved. To paraphrase our national bard, the best laid schemes have indeed gang a-gley. I look to the Government and the forthcoming Green Paper to start addressing some of those issues on behalf of my constituents, and so that future generations can plan for their retirement.
This is a particular issue for Ayrshire. As my hon. Friend the Member for Ayr, Carrick and Cumnock (Corri Wilson) pointed out, a large Digital site there got taken over by Compaq and then by Hewlett Packard. The problem is that this is not like the BHS scenario—it is not that the company has ceased to exist. The company does exist, but it is choosing not to upgrade these people’s pensions. As was mentioned, under HP, in 15 years, those people have had a miserly two upgrades of their pre-1997 contributions. The problem with that is that their buying power is almost cut in half—as was mentioned, they have lost £24,000 each.
Currently, the guidance basically says that pensionable contributions after 1997 get the consumer prices index rate or 5%, whichever is lower, and those after 2005 get CPI or 2.5%, whichever is lower. All those people want is to change that bit of wording so that everything before 2005 qualifies for 5% or CPI, with 2.5% for everything after. They are talking about CPI, not even RPI, and, as was mentioned, they are not asking for it to be backdated. Their pensions are withering on the vine and, as they get older, they will continue to wither. As the hon. Member for Worthing West (Sir Peter Bottomley) said, it is indeed the older pensioner who will have a larger chunk of pre-1997 pension and therefore find that it does not give them the return they counted on.
HP is not skint. HP is a big company, making a lot of money. It sells a lot of IT in the UK and it accounts for 25% of public IT contracts. Along with other FTSE 100 companies, it pays much more out in dividends to shareholders than to correct its deficits—five times, it is estimated, what it puts in to cover deficits. Perhaps the Government should be looking at that. We hear that defined-benefit pension schemes are struggling because the companies cannot afford to put the money in. If they would be willing to pay 20% into correcting deficits and 80% to shareholders, that seems to me already a pretty generous solution, rather than leaving the pensioners to struggle.
That brings us back to situations we have debated multiple times in the Chamber, such as Equitable Life, the Women Against State Pension Inequality Campaign and BHS. People at the start of their working lives are investing, whether in state or private pensions, and they do so on trust that, when they reach whatever the retirement age is, they will be able to live in dignity. They have taken the trouble to open a pension. We are now making people enrol. What will happen in 20, 30 or 40 years’ time? Will we be discussing auto-enrolment pensions that people were forced into that still do not give a return? It is our role as legislators to ensure that the goalposts are set and dependable so that people who sign up to pensions know what they will get.
To call for pre-1997 contributions to be treated the same as those between 1997 and 2005, without backdating, is a reasonable request from the pensioners. I call on the Minister to respond.
I apologise in advance: I will not be here at the end because I will be in a meeting with Equitable Life, which was just mentioned by the hon. Member for Central Ayrshire (Dr Whitford). May I make one positive suggestion, almost as an intervention, open to those pension funds, trade union funds and insurance companies that hold our money and own Hewlett Packard shares? They should ask HP whether it thinks it is socially responsible to discriminate between the different groups of UK employees it has taken over by acquisition. It seems that it should be asked to say to its shareholders—whether or not at the annual general meeting—whether it thinks the savings it is making are justified and whether it would like to illustrate what the pension arrangements are for their top executives and what those are for those who were in businesses in Ayrshire and other parts of the United Kingdom when it made its decisions. Is it lawfully open to putting the pensioners in the situation suggested by the hon. Members for Ayr, Carrick and Cumnock (Corri Wilson) and for Central Ayrshire? If so, it should do that without delay.
I will now call the Front Benchers. You will have noticed that we have more time than we might have expected, which means we can allow about 10 minutes—probably no more—for the SNP and Labour Front Benchers and about 20 minutes for the Minister. You are not obliged to take that time, and make sure you leave at least three or four minutes for the mover of the motion to wind up.
Thank you, Mr McCabe. It is a pleasure to serve under your chairmanship.
I commend my hon. Friend the Member for Ayr, Carrick and Cumnock (Corri Wilson) for securing this important debate, and the HP Pension Association for its work and all it has done to highlight the issue, particularly the indexation of pre-1997 defined-benefit schemes. I am here on behalf of my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford), our pensions spokesperson, who unfortunately is in the Chamber and unable to attend. Hon. Members will have to forgive me if I do a bit more reading normal.
On defined-benefit and defined-contribution schemes, my hon. Friend the Member for Central Ayrshire (Dr Whitford) covered the issue of trust nicely. If we expect members of the public to be opted into those schemes, they should expect a reasonable return, and they should have trust that their pension scheme will pay out what it said it would. That is particularly true of young people coming into schemes, with the possibility that the state pension may not kick in at 65 or 67 in the future—it may be 70 by the time I get there. We do not know what the state pension age will be at that stage. We need to ensure that people pay into private pensions, so we need to keep up the level of trust in private pension schemes, which has been eroded in recent years.
The UK Government recognise that it is important that the state pension keeps up with inflation. That is why they have committed to the triple lock, and there has been support for that from throughout the House. However, it is not right that we have that for the state pension, but elsewhere there is effectively, if not an ability to dodge that, then almost a loophole. There is a gap, with a lack of legislation committing organisations to sticking to that, particularly in relation to the pre-1997 situation.
Inflation is important. If a pension scheme is not keeping up with inflation, things are less affordable, so pensioners cannot support their retirement in the ways they expected. It is therefore key that the term “inflation” is used, and that we look at that rather than at a certain defined percentage increase.
On the pre-1997 rights and the estimated 3,500 pensioners in the HP pension scheme, as has been said already, according to the HP Pension Association the buying power of their pensions has diminished by almost 50%. That has cost each pensioner an average of £24,000 in cost of living increases compared with those whose contributions were made post-1997.
The HP Pension Association estimates that the average pension paid to Digital pensioners in 2002 was £6,008 per year. If that had kept up with inflation it would now be £9,070 per year—a difference of £3,000 per annum. That is a significant amount of money that people do not have to spend, and it means that people do not have the retirement that they expected. If Brexit causes a period of rising inflation—the current situation has happened over a period of relatively low inflation—the problem will be compounded even further, and it will be even more difficult for people to survive and have the quality of life they expected from their pensions.
Data from the Office for National Statistics occupational pension schemes survey showed that 5.2 million pensioners were in receipt of pensions with pre-1997 rights, of whom 400,000 were not receiving inflationary increases. Some 40% of those with pre-1997 accrued rights received increases of 2% or more, which was down from 85% a year earlier. There has been a significant change, possibly because companies are seeing that they do not have to pay extra. I therefore think it would be sensible for the Government to consider looking at the issue. I understand that there is going to be a Green Paper, in which I hope the Government will touch on it.
Does my hon. Friend agree that it is also outrageous that Hewlett Packard pays cost of living rises to its pensioners in Europe but not those here? That shows that this is totally related to the loophole in the UK guidance.
That is a real discrepancy, and it shows that those payments are affordable. Hewlett Packard can afford to pay the increases if it is doing so in other places. The UK Government have a responsibility to consider that and see what changes they can make.
We are all aware of the widely reported challenges that defined-benefit schemes are facing, including from increased life expectancy—companies did not expect to have to pay out such amounts of money for such a long period of time—and the impact of declining yields, while the increase in many schemes’ deficits has been highlighted in the past. The UK Government and Parliament have discussed changes to the rules that govern those pension schemes and to uplifts, but we do not want a situation in which we are putting the schemes before the people. We need people’s rights to be protected and the schemes to continue to be affordable. It is important that we take the pensioners into account first.
My hon. Friend the Member for Ross, Skye and Lochaber tells me that the Government’s Green Paper will offer an opportunity to examine this issue. He asked me, on behalf of the Scottish National party, to commit to working constructively with the Minister, to see whether we could find an affordable way to offer protection to those with pensions with pre-1997 rights. We are keen to have that constructive conversation, and my hon. Friend, who is our pensions spokesperson, would be keen to go ahead on that basis.
As has been said, in the case of the Digital pensioners we are talking about the difference between pre-1997 and post-1997 contributions. The Government could specifically consider that in their Green Paper. Many recent debates have focused on reducing the statutory minimum contribution requirements, and as I have said, we need to make sure that do not further erode those requirements and that we put pensioners first.
This is the kind of issue that ought to be looked at by a pensions and savings commission. The SNP has called for that before and will continue to do so, because this issue will not go away. Pensions will be ever-increasing in importance, as both inflation and life expectancy increase and as possible future changes to the state pension come through. It is now time for a pensions and savings commission to go ahead. That would benefit not only the pensioners in the Digital scheme but pensioners in all schemes and in no scheme. I appreciate the Minister taking the time to listen to the debate, and I again thank my hon. Friend the Member for Ayr, Carrick and Cumnock for bringing the debate to the House.
It is an extra special pleasure to serve under your chairmanship, Mr McCabe—I prepared a seven-minute speech, you suggested I might get five minutes and I now have 10. That is so unusual in this place.
I congratulate the hon. Member for Ayr, Carrick and Cumnock (Corri Wilson) on bringing this matter to the House for us to debate. I am pleased she has the time do so, as she is doubtless preparing for a series of suppers over the next couple of weeks to mark the special day set aside for Robert Burns. Had he been alive today, he would, I believe, have been a constituent of hers.
Other hon. Members have explained the background to this issue. The pension plan changed hands from Compaq, which acquired Digital Equipment Ltd, to Hewlett Packard when it acquired Compaq in 2002. Hon. Members have also highlighted the legislation that determines that payments prior to 1997 are not entitled to increases in line with inflation. I welcome all the contributions that have been made.
I confess that, until Wednesday of last week, I was not aware of this particular failure, which has resulted in what appears to be the unfair and inconsistent treatment of thousands of pensioners who have a defined-benefit pension with Hewlett Packard. Despite legislation being in place that states that pension providers are under no legal obligation to increase the value of a pension in line with inflation, we are facing a situation, not unlike that facing the Women Against State Pension Inequality campaign, in which people find themselves at a disadvantage simply because they were born in a particular timeframe or had worked prior to particular legislation being introduced.
Through my research, I found that the average pension paid to Digital pensioners in 2002 was £6,008, which would now be worth £9,070 if it had kept in line with inflation—that is 50% more, and would go a long way in anybody’s home. As we have heard, when the pension plan was held by Digital Equipment Ltd and then Compaq, both companies made discretionary increases. However, once the plan was acquired by Hewlett Packard, it received only two token 1% rises, with no increases in the past 14 years. That is not good enough. The value of the pensioners’ money has decreased, the cost of living has increased and we once again face the crisis of vulnerable people facing increased difficulty and being on the verge of poverty in many cases.
The thought going through my mind is that, when I go back to my office, I find Parliament-supplied equipment made by Hewlett Packard. I also bought my own printers from Hewlett Packard. I am beginning to wonder whether I knew enough to regard it as a reputable firm that I should go on patronising.
I certainly wonder the same thing; I have something to say to the Minister specifically on that—not about my personal choices or the hon. Gentleman’s, but about the Government’s.
Hewlett Packard can hide behind the law, and has for years, but that does not mean that what it is doing is right. When we—a group of north-east England MPs—meet representatives from Hewlett Packard a week on Monday, I intend to challenge them specifically on the decision. Despite being a large company with a substantial UK turnover, it is clearly shirking its responsibility to ensure that people who worked for a company that it took over receive the same level of support as before. Another parallel between this case and the plight of the WASPI women is that there has been no real opportunity for the people affected to make up for the shortfall in the value of their pension.
How has Hewlett Packard dealt with other pensioners in its group? Much, much better. Pensioners in all of Hewlett Packard’s European subsidiaries, except in the UK, have received regular cost of living increases. This is a case not of a business being unable to increase pensions in line with the cost of living, but of a large international corporation using a loophole in UK legislation to give it a window to not fulfil what is a moral duty. I wonder what its problem is with treating its British pensioners the same as others.
As we have heard, Hewlett Packard is not a struggling business that cannot make ends meet. It is actually the Government's largest IT supplier, and makes sales of more than a £l billion a year to the Government alone. It is a company that, in 2015, had revenues of $139 billion—not million—and profits of $7 billion. The UK Government spent £1.2 billion with the company in 2014-15, which was 25% of Hewlett Packard’s British turnover. Its highest-paid UK director received £1.64 million in 2014 and £920,000 in 2015. It would cost that company about half the cash paid to that one UK director to pay a cost of living increase this year—half the cash that one person earned in wages last year.
The pensioners affected served their time working for HP and the companies it took over. They thought they were safe in the knowledge that they had a pension and were doing everything they were supposed to. I believe the Minister should put pressure on Hewlett Packard, as I will a week on Monday, to fulfil its moral responsibility, although not a legal one, to ensure that those workers are treated fairly in retirement.
Are the Government really content with doing more than £1 billion-worth of business a year with a company that has cocked a snook at this group of British pensioners? I hope the Minister will agree that even though companies are not legally required to pay annual cost of living increases in line with inflation for workers who made contributions prior to 1997, it is a scandal that there are thousands of pensioners in this country right now whose pensions’ value has dropped significantly, and who are probably now relying on social security benefits to get by.
As the hon. Gentleman has pointed out, this is not a legal failure of Hewlett Packard but a moral one. Does the responsibility not therefore lie in this place to ensure that the law and guidance are very clear? It is our job to protect the pensioners.
I certainly agree with that. Dealing with the situation retrospectively is extremely difficult, and I do not think that is possible, but we have various Green Papers coming through the system in the near future, and I hope the Minister is listening carefully about the problems we have seen. There are so many schemes out there, and we have schemes that are not operating effectively for the people who have paid into them, whether they are turkey sandwich makers or whoever.
As I said, some of the people affected may be relying on state social security. Why is the British taxpayer having to foot that social security bill, while the Government are handing out such lucrative contracts to a company that makes vast profits from them? Clearly we need to ensure that legislation will never again allow a company to shirk its responsibilities, and I would welcome the Minister’s view on that. I hope he will also take action to resolve this injustice by sending a direct message to Hewlett Packard that if it can afford to pay cost of living increases to pensioners in other European countries, it can pay the same increase to pensioners in the UK.
It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate the hon. Member for Ayr, Carrick and Cumnock (Corri Wilson) on securing this debate and am grateful for everybody’s contributions. I quite understand that the hon. Member for Ross, Skye and Lochaber (Ian Blackford), who is the SNP’s spokesman on this issue, is probably on Front-Bench duty in the Chamber at the moment. I always listen to him very carefully, as I did to the hon. Member for Aberdeen North (Kirsty Blackman), who eloquently stood in for him.
This debate is about making retrospective changes to pension legislation. Doing so, we contend, would have significant financial implications for the schemes involved. I read in preparing for this debate the information provided by the HPPA, which has been used by Opposition Members. It is a very well argued paper, but I must say that I picked up one inconsistency in it. The briefing paper says, as indeed Opposition Members who have spoken do, that the effects of making these changes retrospectively would be minimal. As far as I can see, a few schemes would fit into this, but I see no evidence from any of the figures that the effects would be minimal.
I intend to do some further work and would be grateful for further data, to assess what the actual cost would be. I have not seen anything in the information provided. That is not a criticism of the general information at all; these things are just very difficult to work out. Of course, expressions such as “minimal” or “a lot” can mean different things to different people. I am not trying any political tricks or pretending something is the case that is not, but I do not know, for example, what it would cost Hewlett Packard to make this change.
The Government have a broad principle in legislation, which I think is generally fair, of not imposing such retrospective changes, because of uncertainty. There is no doubt that this kind of change—this is not the only one we are lobbied about—will place unexpected and significant costs on employers. We all know that in the defined benefit world, schemes and businesses are at risk at all times because of pensions. It is part of our whole policy, and of the policy of Governments of any political party, to try to bring some stability to defined benefit schemes, which involves considering the interests of employees and pensioners and of the sponsoring employers. However, I accept that Hewlett Packard is a very substantial company—a point made clear by all speakers.
That is one of the points—Hewlett Packard could carry this on its shoulders an awful lot more easily than individual pensioners. Frankly, it is individual pensioners who are facing retrospective changes. They think they are signing up to and investing in a secure retirement, but when they get there, they find that it has disappeared.
I fully accept that point. However, what matters to individual pensioners is quite clearly the amount of money that matters to them, but as far as a company is concerned—be it Hewlett Packard, which I accept is very substantial, or a small company—it may be a very significant amount of money. If there were to be legislation, it would have to cover all of them, to be reasonable. No Government could select one company and not another one because it is one of the world’s biggest companies, but I take the hon. Lady’s point.
Normally it is not appropriate or right for Ministers to talk about individual companies’ schemes, so I will try to circumvent that as much as I can. I have listened carefully to what has been said. I listen very carefully to what the hon. Member for Stockton North (Alex Cunningham), Her Majesty’s loyal Opposition spokesman on pensions, says, as indeed I do to the SNP’s spokesperson. Like the hon. Member for Stockton North, I was not aware of this issue until it was brought to my attention quite recently. I therefore cannot say that I have considered this for weeks or months, but it is important. I will come on to the Green Paper in a moment.
I strongly believe, as I am sure hon. Members in this Parliament or indeed any others do, that employers should stand by their pension promises unless there is very good reason not to and that schemes should have to act within the law. It has been accepted in this debate that the legal position is clear: pensions accrued after 1997 have a level of inflation protection, and pensions accrued pre-1997 have indexation requirements only in relation to certain contracting-out arrangements, but not generally. In fact, the hon. Member for Ayr, Carrick and Cumnock confirmed that the company had broken no law.
The argument seems to be that the company has a moral responsibility, but that it is for Government to change the law if the company will not accept that. My hon. Friend the Member for Worthing West (Sir Peter Bottomley) is not in his place; he explained perfectly well why. As he said, it is very legitimate for institutional shareholders, which may include trade unions or pension funds—everything is very circular in pensions, with them owning a lot of shares in it—to use pressure on Hewlett Packard.
The hon. Member for Stockton North represents the former seat of Harold Macmillan. I just read his biography. I look forward to the day when Harold Macmillan’s successor one nation Conservatives take the constituency back, but the hon. Gentleman is doing an excellent job in the interregnum. He said that the fact that the Government spend significant amounts of money with Hewlett Packard could be used as a point of pressure. I cannot really comment on that. I do not have anything in my office, to the best of knowledge and belief, from Hewlett Packard, but I know that the Government have strict rules about things they can and cannot use as investment criteria.
Harold Macmillan was in fact the last Conservative to represent any part of my constituency, until he was sacked by the people of Stockton. He was a man who believed in playing fair, and that is what we want here: we want Hewlett Packard to play fair. What opportunities does the Minister have to contact the company and say, “Look, you can do it in Europe. Why can’t you do it in the UK as well?”?
I thank the hon. Gentleman for that intervention and his comments about Harold Macmillan. He asks what pressure the Government can put on Hewlett Packard. In preparing for this debate, I have not received Hewlett Packard’s position. There is no record of any information that I have had. I look forward to receiving a report from the meeting that hon. Members are having with Hewlett Packard. I would be happy for those who attend the meeting to come and discuss it with me as a result. I suspect that the people at the company will say, “Look, we comply with the law,” and in fairness to them, they do. To use a European comparison is really saying, “Well, in Europe they comply with the law.” I am sure that their policy is, “We comply with the law wherever we are in the world.” That is what any company of that magnitude would say.
Is that not, therefore, why this issue should go into the Green Paper and we should consider tightening up that loophole in our law? It is not just Hewlett Packard; it is 3M, Chevron, Unisys—it is other big multinational companies who know that here they do not have to do that for the pre-97. As we heard, 90% of them do, but there is obviously a cohort of companies that are just not bothering so we have to tighten it up.
I agree with the hon. Lady that the company’s obligation appears to be a moral obligation—that point has been made clearly. The Government’s obligation is to pass laws that have to take everybody’s views into consideration. As I have learnt, because it has dominated my life since last July, with pensions and defined-benefits schemes, particularly on the private side, there are the interests of employers and the interests of employees and pensioners. As Governments of all political complexions—all three, if we include the coalition—have done, the Government have had to find ways to take consideration in from the others. I will come to the Green Paper a bit later on.
I fear that we might end up going round in circles about whether or not it would be affordable for lots of companies to do this, without having the data. I appreciate the Minister’s commitment to look at obtaining more data about how this might work, or the potential costs, and would appreciate it if he would consider sharing those data once he has gathered them, so that we are all in a position to understand the costs.
I think that is very reasonable. As I said, I am not trying to hide any data—nobody is—because I am sure that the HPPA would have included them in its paper, had it known. I suppose that in the end, they can just be estimates because we do not actually know for the moment what companies fit into this category. From speaking to people since I became aware of this issue, I believe it is true that one of Hewlett Packard’s predecessors—I cannot remember if it was Digital or Compaq—did increase the pension rates most years to some criteria for inflation, although I do not know exactly what criteria.
As I said, I have not come across any views that Hewlett Packard has broken the law, but I will say that many things that companies do are beyond the law in many ways. They have policies on this and policies on that, and many of them have moral, socially responsible policies in many areas. That is the sort of thing that boards of companies decide. They do not just have to comply with the law—that is the minimum. Obviously everybody, individuals and corporates alike, has to comply with the law. In a way, that is why we are all here in this building.
I want to make progress, although Mr McCabe has kindly allowed ample time for interventions if there are any. We believe that the Government retrospectively changing the legislative requirements on indexation would be inappropriate and would have a significant impact on the schemes of employers involved. The legislation introduced in 1995, by Harold Macmillan’s successors in a Conservative Government, was introduced to provide a limited level of inflation protection. The then Government were conscious of this balance between protection against inflation and the ability of the schemes, and the employers who stand behind them, to afford such protection. Of course, the financial deficits in defined-benefit schemes are very much a topic of conversation in this House and in the press—particularly the trade press—and are something that will be discussed in the Green Paper.
I am not a great believer in providing people with straws to clutch on to. Many politicians across the House do so in politics, and probably the reason for my lack of progress, compared to certain people of my age in all political parties, is that I try to be as candid as possible. I do not want to give a straw to clutch on to, but I do think that hon. Members have to remember that costs of business are also a factor to consider. Hewlett Packard, Compaq and Digital before them have been regarded as good employers; they employ a lot of people in this country and help to generate the prosperity of this country.
I accept the point made by the Opposition spokesman, the hon. Member for Stockton North, that there are people in Hewlett Packard who earn big money—it is all relative—but that is also true about footballers and many other people. It is not the actual position—I know that it makes a good comparison in a speech, but the fact is that the quantum of pension fund commitments that Hewlett Packard took on amount to many, many millions of pounds. The company knew that when it was acquiring the business. I am sure that if it felt that was far too much, it would not have done so. It would have calculated the cost and taken it into account.
I had better make some progress now, Mr McCabe, because time is running out.
Will the Minister give way, very briefly?
I accept everything the Minister is saying, but will he, following this debate, write to the company telling it that we have had this debate and ask it to consider its position?
I am happy to meet the hon. Gentleman and other hon. Members here after their meeting with the company so that we can formulate some kind of opinion on it. This is not to take away from the standing of this debate, but rather than send a letter as a result of this debate, it would be more appropriate to meet after you have met with the company. I am sorry, I did not mean you, Mr McCabe; I meant the hon. Gentleman. I got carried away, such is the excitement of this issue.
The pensioners with a pre-1997 defined-benefit occupational pension that was contracted out of the additional state pension could be receiving some inflation protection on that pension from the state, because their pension entitlement includes a guaranteed minimum pension, or GMP. I understand from officials that that applies to many of the Digital Equipment pensioners. When the additional state pension was introduced in 1978, employers were allowed to contract their employees out of its provision in return for the employer and employee paying lower national insurance contributions. In order to contract out, the employer had to promise to pay a pension that was at least as good as the additional state pension that had been given up, in effect guaranteeing a pension payment that was as a minimum equal to the state pension—hence the name.
The state pension, through a complex calculation that I agree is difficult to understand, provides for some indexation of the GMP for those individuals who reached state pension age before April 2016. Those who reach state pension age from 6 April 2016 will benefit from transitional arrangements in the new state pension. The majority of people who were contracted out will do better over their lifetime than under the old arrangements. In short, although the members may not be receiving the full inflation protection as part of their scheme rules, as demanded by their representatives and Members here today, they are likely to receive some mitigation and protection due to GMP arrangements. As I said, my understanding is that that applies to some Digital Equipment pensioners.
I can only repeat that the Government have no plans to impose retrospective changes on pension schemes, but as the hon. Member for Stockton North and other hon. Members have stated, there will be a Green Paper shortly. I said that would happen in the spring; I hope that that will be in spring in the south of England rather than in parts of Scotland, based on my experience of very nice, if rather cold, spring holidays elsewhere. The Green Paper will look at many aspects of defined benefit schemes, including methods of valuation of schemes, index-linking criteria and the consolidation of pension schemes, among others.
I do not want Members to think that we have plans specifically to impose retrospective changes on pension schemes such as the one we are discussing, but many aspects of pension rules will be considered in the Green Paper, and I believe that will include several issues that are relevant to this matter. Obviously I cannot go into more detail because the Green Paper is an official document, but it will look generally at defined benefit schemes. There are a lot of different factors, some of which are genuine complaints and difficulties on behalf of employers, and some of which are fundamental things about protecting pensioners and prospective pensioners—people working and paying into schemes now. Obvious related examples include the rules of the pension regulator, which, although not relevant today, certainly are relevant to defined benefit schemes.
Today’s debate and the preparation work for it—the briefings and other things that I was provided with, including from the House of Commons Library and the Hewlett Packard Pension Association—have led to a lot of thinking on my behalf about this matter, and I thank hon. Members for raising it. I look forward to hearing Hewlett Packard’s response and I am very happy to meet with it, after that stage, to discuss the situation.
I thank hon. Members for coming along today and welcome their contributions. I am also pleased that the issue is now on the Minister’s radar. If the Government are encouraging people to save for the future, people need to know that the goalposts will not change. As has been mentioned, trust is key. When people enter their retirement years, the last thing they want is to discover that they do not have enough to live on and that their pension is not what they thought it was, with absolutely no time to do anything about it. A contract is a contract and it needs to be transparent. Going forward, including through the Green Paper, I hope that the Government will look at the wider issue of having pension legislation that protects employees and employers.
Question put and agreed to.
That this House has considered Digital Equipment Ltd’s pension scheme.