Tuesday 11 July 2017
[Joan Ryan in the Chair]
Balancing the Public Finances
I beg to move,
That this House has considered the matter of balancing the public finances.
It is a great pleasure to serve under your chairmanship in this new Parliament, Ms Ryan. This is the first time I have secured a Westminster Hall debate since the general election. If you will forgive the indulgence, it is also a great pleasure to see the Financial Secretary to the Treasury, my right hon. Friend the Member for Central Devon (Mel Stride), in his place. He served with tremendous distinction in the Whips Office, which I had the pleasure of leading after the 2015 general election, and I am pleased to see him in his current role. I look forward to him responding to the debate.
I am conscious that a large number of Members wish to speak, so I will speak for a little less time than I had originally intended. The first thing worth drawing to the attention of the Chamber, however, is how few Opposition Members are present, which I find astounding. To draw some conclusions from the attendance, we can see that the Conservative party and our allies in the Democratic Unionist party believe in balancing the public finances and making the difficult decisions necessary to ensure that we can grow the economy and create jobs. Judging by the turnout on the Opposition Benches, or rather the lack of turnout, the Labour party is clearly not interested in balancing the public finances or making sensible decisions; all that it is interested in is spending other people’s money until it runs out. Whereas, so many Conservatives are here that they are having to move right around the Chamber and take over the other side.
I will probably have to draw my remarks to a close sooner than I had expected, in order to allow other Members to speak, so let me do a quick précis of my argument. We have come a long way since 2010: we have cut the deficit by three quarters; we have had faster economic growth than almost any country in the G7 largest countries; and we have cut unemployment to levels not seen since I was at primary school in 1975. That is incredibly important, because those are not just statistics; they represent real people getting the opportunities to succeed and thrive.
There are things that we should be proud of, and we could and should have talked about them more during the election campaign. I was very pleased to hear the Chancellor’s outstanding speech in the debate on the Queen’s Speech, in which he set out our economic record and our plans for the future. My central message at the conclusion of my speech today will be that although we face difficult decisions and many pressing needs for spending public money, we need to raise that money while keeping taxes low and economic growth moving along. Those are difficult decisions. The Chancellor is the man who must make those decisions, and he must make them in a balanced way, taking into account all the factors, including economic growth. He needs to make those decisions at the Budget in the autumn, and Conservative colleagues should give him our support in doing so.
I congratulate my right hon. Friend on his excellent speech. Is it not the case that Britain has become addicted to public sector debt? The truth is that since 2002 Governments of both colours have been spending more each year than we have been collecting in taxes. If are to stop doing that in future, it will be a bit like a drug addict coming off drugs.
My hon. Friend sets out clearly what has happened in the past, and I want to spend a little time on the challenges facing us in the future, but it is worth looking at the economic record. We did not make the decisions and get the success we have had easily; they were contested, and our political opponents challenged us every step of the way. But we have been successful, which gives us the credibility to talk about facing the challenges of the future.
When we came to power in 2010, the budget deficit was the equivalent of just under 10% of the size of the economy, at £150 billion a year. According to the most recent set of actual figures, we have reduced the cash deficit to £46 billion—down by 70%—and the deficit as a proportion of the size of the economy is down by 75% to 2.5%. That is a significant achievement, and it means that in this Parliament the size of our stock of national debt as a proportion of the size of the economy will start to fall. That is incredibly important for the future.
I congratulate my right hon. Friend on securing this incredibly important debate. The impact is not simply one of taxes and of borrowing and spending, but of Government spending on personal finances, which has a massive impact because of interest rates and personal interest rates. If we let borrowing get out of control, interest rates in the real economy would rise. That is when we have repossessions, and that then is when we have a depression.
My hon. Friend is absolutely right. If we let the public finances get out of control, interest rates would rise and hard-pressed families who are having to make difficult decisions would see the cost of their mortgages and other debts go up, which would not make their lives any easier at all.
Let us consider the impact of controlling the public finances on the real economy. If we look at growth, at how fast the economy has grown over the past seven years, we see that our economic performance among the G7 largest countries in the world has been second only to that of the United States. Interestingly, we have grown our economy at almost double the rate of our nearest neighbour, France. In 2014 and 2016 we were the fastest growing G7 country, and the joint fastest in 2015. That is an impressive record. I mention that because our political opponents often pretend that balancing the public finances has not worked, but in generating economic growth it absolutely has worked.
I, too, congratulate my right hon. Friend on securing this debate. Will he join me in welcoming the fact that the reduction in corporation tax to 19% has brought in the highest yields ever, bringing another £11 billion into the economy? Does he have any thoughts on what increasing the rate to, say, 26% would have on jobs and, importantly, our ability to reduce the deficit?
My hon. Friend, who makes a good point, tempts me to leap forward to the end of my remarks, but I will say only this about taxes: there is a big difference between rates of tax and how much money is raised. As Conservatives, we believe that the purpose of taxes is to raise money to pay for our public services. The Chancellor made it clear in the debate on the Queen’s Speech that by reducing the tax rate, thereby encouraging businesses to locate here and be more successful, we raised more money to pay for those public finances—I think the Chancellor said £18 billion more.
Looking at that performance, it seems to me likely that if we were to raise corporation tax two things would happen: first, we probably would not raise the money, so although we might pat ourselves on the back and pretend that we were raising taxes, we would not raise the money to pay for public services; and secondly, it is fairly obvious to everyone, or to everyone on the Government side of the House, that those taxes do not fall on businesses at all. When we raise taxes on business, there is no mystical “business” to pay them; those taxes fall either on workers, who will receive smaller pay rises, or on customers, who will see higher prices. Taxes all feed through, so everyone in the economy would pay the price of any corporation tax rises, which probably would not raise any more money to pay for our public services, so we would be shooting ourselves in the foot. My hon. Friend the Member for North Warwickshire (Craig Tracey) makes exactly the right point.
I also want to mention our record on jobs, which is what I am proudest of: 3 million more people are now in work than were when we first came into office. Let me give the specific example—I think this will be heartening—of the impact on young people. In 2010 the unemployment rate among young people in this country was about 20%, which is comparable with that of our neighbours in the European Union and in the eurozone. Since we came into office, to this point, in those countries the unemployment rate among young people has been broadly flat, up a little but still around 20%. In our country it is down six percentage points, to 13%. That is not just a statistic; it means that hundreds of thousands of young people have had the opportunity to get a job when they leave school, college or university.
I thank my right hon. Friend for securing the debate. We reduced corporation tax from 28% to 20% but actually increased the tax take. As we exit the European Union, we will need to encourage more businesses to come to this country and create more employment, so it is essential that we reduce taxes further, rather than putting them up. That is the difference between the Government and the Opposition.
My hon. Friend makes a good point. As we are going to leave the European Union, we want to be more global and outward-looking and we want more companies to locate in Britain, so it seems to me that this is exactly the wrong time—if there ever is a good time—to increase corporate tax rates.
The right hon. Gentleman talks about the importance of what this Government have done for young people, but can he tell us how many people in the figure he mentioned are on exploitative zero-hours contracts? If the Government are so passionate about young people, why will they not pay them a real living wage? Why are they discriminating against the under-25s?
I am glad that the hon. Gentleman raises zero-hours contracts. It simply is not true that everyone on a zero-hours contract is being exploited. There is some good evidence from the Chartered Institute of Personnel and Development. I am not sure whether these data have been updated, but it did a survey in 2014 that showed that around 63% of people on a zero-hours contract—higher than the proportion of people on a permanent full-time contract—were satisfied with their terms and conditions. Most people on zero-hours contracts actually find that they fit their requirements, because they are either students or people with caring responsibilities.
There are of course people who would prefer not to be on a zero-hours contract. That is why I welcome Matthew Taylor’s review, which was published today. He thinks that employees should have the right to ask their company to put them on a permanent contract. Indeed, McDonalds recently offered that to its employees. It is true that some of its staff on flexible contracts said that they would prefer to move to a fixed-term contract, but about 80% preferred to stay on a flexible contract because it suited them. I just do not agree with the contention that a zero-hours contract is by definition exploitative. In many cases, it suits the worker and it suits the business—it is a win-win. But it is completely true that if such contracts do not suit people, it is better that they should have the opportunity to move to a full-time or permanent contract to guarantee them hours. I am pleased with Matthew Taylor’s report.
My final point about youth unemployment concerns what happens to young people’s opportunities in countries that do not deal with their public finances. The most obvious example is Greece, which clearly has not dealt with its public finances, where 47%—nearly half—of young people are without work. Countries that do not deal with their public finances damage young people’s opportunities, probably for their lifetime. I do not want us to go down that road and be that sort of country; I want us to keep focused on balancing the public finances.
There is an interesting factor relevant to my constituency. I looked at a debate in the House in 1983, in which my predecessor but two, Paul Marland, spoke. He pointed out that at that time unemployment in his constituency was 15.3%, which was 2% above the national average. I am pleased that, seven years into a Conservative Government, unemployment in my constituency is 1.6%, which is below the average for the south-west—1.7%—and below the United Kingdom average. Our economic record has not just delivered for the United Kingdom and for the south-west; it has absolutely delivered for my constituents, who now have the opportunity to be in work, which is important for their families.
My right hon. Friend is giving a characteristically powerful speech, which is why this debate is so well attended. In my constituency, youth unemployment has fallen by a staggering 61%, making a real difference to people’s lives. That is partly due to the expansion of apprenticeships, which more than 10,000 students have started. Last week I was proud to attend once again the graduation ceremony at Swindon College, where we are equipping young people with the real skills they need.
I am grateful to my hon. Friend for raising that point. He knows—not everyone in the Chamber will—that Swindon is my home town. I actually did my A-levels at Swindon College, so I am particularly pleased to hear that that institution is still delivering opportunities. The opportunities that I got at a comprehensive school in Swindon and at Swindon College meant that I was the first person in my family to go to university, and definitely the first person in my family to make it to the House of Commons. I am pleased to have had those opportunities, and I want every young person in our country to have them too. That is why this matters.
All that I will say about the Opposition—[Hon. Members: “Where are they?”] My hon. Friends make the point that there are hardly any of them here. [Interruption.] An hon. Friend says that they are out spending. They opposed all the reductions in public expenditure over the past seven years. It seems to me, having done a back-of-the-envelope calculation, that the debt would already have been more than £300 billion higher based on the Opposition’s public spending plans, and that if they had carried on spending at the rate they were when they left office, an extra £1 trillion would have been added to the public debt by the end of this Parliament. At the last general election, the Labour party manifesto was just, “Spend, spend, spend other people’s money,” with no credible plan to pay for it. That is not the route that our country should follow. The fact that so few Opposition Members are here to defend their plans tells us everything we need to know.
Having gone through our record and why I think we have been successful, let me say a few words about the challenges we face. Public sector pay is an important topic—in fact, it is what prompted me to call this debate. We all know hard-working public sector workers in our constituencies. It is good to pay them fairly for the jobs they do, but it is also fair that we look at all our constituents—those who work in the public sector and those who work in the private sector. It is worth reminding ourselves that after the financial crash a lot of people in the private sector experienced reductions in their pay, which did not happen in the public sector. According to the Institute for Fiscal Studies, which is a respected organisation, public sector workers are still paid slightly better than private sector workers, even after adjusting for qualification levels. Even after some public sector pay restraint, the levels of pay in the private and public sectors are about the same, and people in the public sector obviously have the benefit of a more generous final salary pension scheme.
We have not talked much about the fact that the 1% pay cap is of course a cap not on individuals’ pay but on the pay scales. Most people will not be aware that, even with that pay cap, many public sector workers have actually seen significant rises in their pay because they have moved up pay bands. I think that half of national health service staff have had a pay rise of more than 3%. Teachers have had an average pay rise of 3%, because many, unless they have a performance issue, move up the pay bands during their career. That is on top of the 1% pay rise. We need to look at all those facts and conduct the debate in the proper spirit.
There are many pressures on public spending. There is public sector pay and funding for our national health service and for social care, and colleagues want more money put into schools. Part of the challenge of being in government is that we cannot say yes to everyone; we have to make choices and set priorities. The right way to do that is to look at the economic growth forecast, at how much tax revenue we think we will have, and at recruitment needs in public services. We have to look at all those things together.
I congratulate the right hon. Gentleman on securing the debate. On the overall issue of rebalancing the public finances, does he agree that there is an example of effective and pragmatic expenditure in the recent announcement by the Prime Minister and the leader of my party? Is not it a good idea to have investment in an area of the United Kingdom such as Northern Ireland, where there has been high dependency on the public sector, in an effort to reduce the debt that is due to Northern Ireland, by the creation of private sector finance and private investment and thus better investment opportunities and more jobs? Is that a good project for the rest of the United Kingdom to follow?
I welcome that intervention, because one of the things that we set out in our manifesto, and that the Chancellor set out in the House of Commons, is our plan to invest across the United Kingdom in infrastructure such as broadband, to help the economy and businesses to be more productive. That is how to raise tax revenue, grow the economy and create the jobs that enable us to spend money on our public services.
I congratulate my right hon. Friend on securing the debate. He is right to highlight the importance of jobs, growth and apprenticeships, which should be at the forefront of any general election debate in a normal time. Does he agree that the public services are under pressure at the moment? We must recognise that. I work in those public services and I see it in my working life. According to the latest forecast, the target—a structural deficit of less than 2% of national income in 2020-21—will be comfortably met by sticking to the current tax and spending plans, so there is about £25 billion of leeway to invest a little more in those important public services, while paying down the deficit in a responsible manner.
I do not disagree with my hon. Friend about investing in public services. He will know that part of the reason why the Chancellor loosened the target a little in his first Budget last year was to build in some flexibility to deal with the headwinds that we may face in leaving the European Union, and some of the challenges, and I think that was right.
I was going to say—my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) has given me an excellent lead-in—that we can pay for our public services only by raising the money through economic growth, as he suggests, or by borrowing more, which I do not think would be sensible. It would damage the public finances, raise interest rates, as my hon. Friend the Member for Solihull (Julian Knight) said, and put pressure on our hard-pressed constituents. Alternatively, we would have to raise taxes, which I do not think would be the right thing to do either.
When the Chancellor looks at the public finance position in his Budget, he needs to consider the growth forecast from the independent Office for Budget Responsibility—what tax revenues he is likely to have. He then needs to consider the pressures on public servants and public services. He needs to look at all the pressures across the piece and come to a balanced Budget judgment, weighing up all those things. Then we need to back him in those decisions. What we cannot do is have a particular story that goes around each week, or decide that something happens to be the flavour of the month, and discover at the time of the Budget that we have run out of money. That is not the way to run a sensible Government, and that is the message for the Chancellor.
I want finally to consider how we pay for things. I remind my right hon. and hon. Friends that in our manifesto we said that we wanted to keep taxes as low as possible, because taxes are levied on businesses that employ people and on individuals who work hard and face decisions about how to spend their money. We will always be the party that keeps taxes as low as possible, and we want to reduce taxes on businesses and on Britain’s working families. We made it clear that we would deliver an increase in the personal allowance, that we would not increase value added tax, and that we would stick to our plan of reducing corporation tax, because that will bring investment and jobs to Britain. As I have already said in response to an intervention, that approach will raise more money for the public finances, not less. We need to stick with that plan and give the Chancellor the opportunity to act in that way.
Any Government worth their salt need to stick with sound public finances. That is how to get the growth, jobs and investment in the public services that we depend on. There are always more pressures on public spending than can be paid for. It is a difficult job for the Chancellor to balance those things. What we need to do, as his Conservative colleagues, is give him space to listen to the input—we can make our bids to him privately. He then needs to balance those things, taking everything into account, and come up with a balanced Budget judgment in the autumn. We need to back the Chancellor, which will mean we are backing our country and its growth prospects, and backing the prospects for jobs, growth and prosperity for all our constituents.
Order. I intend to call the Front-Bench speakers at about 10.30. Given the number of hon. Members who want to speak, I suggest that they limit themselves to a maximum of four minutes, if not a little less. I will not apply a time limit at the moment. We shall see how we go.
I pay tribute to the right hon. Member for Forest of Dean (Mr Harper), who made an interesting and succinct speech, as he always does. He has come to be known in this place as a deep thinker about all matters economic, and I hope that one day he will return to the Front Bench, from which he is sorely missed.
I feel somewhat like Custer at the battle of the Little Bighorn, as the Comanches come running towards me. I apologise to those Tories present, because I will pour cold water on some of the more political points raised by the right hon. Member for Forest of Dean. Over the past seven years the Government have been good at one thing—patting themselves on the back and congratulating themselves on what a great job they are doing with the economy. Even though so many families are more pessimistic than ever about the future, the Government still trade on the myth that they are overseeing a strong and robust economy. When they were elected in 2010, they were given a mandate alongside the Liberal Democrats to bring about change. They allowed people—intentionally, I believe—to believe that the deficit and the national debt were one and the same thing, and told the British people in 2010 that they would pay off the debt and bring the budget into surplus by 2015. It is now 2017, and they have failed.
Despite its being enshrined in legislation in October 2015, the Government have now abandoned their plan to achieve a budget surplus by 2019-20. The Chancellor of the Exchequer has said that the previous commitment will be replaced by a vague pledge to deliver a budget surplus as early as possible in the next Parliament. Since we have had a general election since that statement was made in November 2016, I imagine that that could happen in the next five years. According to the Institute for Fiscal Studies, even reaching that is likely to be difficult. The deficit this year is forecast by the Office for Budget Responsibility to be £68.2 billion, or 3.5% of national income. That is high by historical standards. Over 60 years, from 1948 until the eve of the financial crash and associated recession, average UK Government borrowing was 1.9% of national income.
I admire the hon. Gentleman, as he knows; I know his constituency well. I believe that we said there was a rush to pay off the deficit; the former Prime Minister and the previous Chancellor started an unnecessary rush to pay off the debt. We said it needed to be slower. We were concerned about high unemployment and a double-dip recession. But for monetary policy, that might have happened.
After six years of austerity, the deficit this year will be higher than it was for 80% of the time in the 60 years before the financial crash, while debt is now at its highest level as a proportion of national income since 1965-66. Is it any wonder that when the Tories tell the electorate “Trust us to pay off the deficit”, voters respond by taking their majority away? The Conservative party just do not get it. The electorate told them time and again that they wanted change, but they were given business as usual. Nearly 10 years after the financial crash of 2008, its legacy still weighs heavy on confidence and growth. By its very nature, it rocked financial institutions in this country. Suddenly, phrases such as “safe as houses” or “money in the bank” became laughable clichés. As the Labour Government rushed to bail out the banks and bring about a stimulus that was one of the largest in peace time, the Tories nodded their approval. It was not until much later that, for political purposes, they brought words such as “deficit denial” or “the age of austerity” into the political lexicon.
Sustained austerity has in the main been bad for the British economy. As the deficit fell from 10% to 3.5%, around a percentage point has been reduced from demand each year. The labour market has been unable to return productivity growth to anything resembling pre-crash levels. In June, the British Chambers of Commerce released its second quarterly economic forecast for this year, and the predictions do not make good reading. It forecast that, for the next few years, economic growth would underperform its historical average, falling to 1.3% next year and rising to only 1.5% in 2019. It also predicted that inflation would rise to a five-year high of 3.4% towards the end of the year. Interest rates are also expected to rise by 0.5% in the first quartile of 2018—much earlier than initially predicted. At the same time, there is a tax gap of £36 billion between expected and actual receipts in 2016. We can talk about tinkering with tax levels, but it means very little if we do not collect taxes effectively in the first place.
The Government have still not given any clarity on their plans for the post-Brexit world. The Government’s main tool to address inherent weakness in our economy has been monetary policy. Constraints on how low interest rates could go meant that the Bank of England had to buy gilts—so-called quantitative easing. That move, together with the cut in interest rates to their lowest possible level, has probably kept the lid on high unemployment, but it is only papering over the cracks. Listening to some of the speeches about how sunny the economic outlook is over the years during my time in the House, it has to be asked why people are not cracking open the champagne and singing, “Happy days are here again”? The reason is simple; people feel more anxious than ever, they view innovative technology with suspicion and they fear that jobs will be automated or lost. GDP can be a measure of the health of the Government’s spending, but it can never be a measure of people’s happiness, concerns, or worries.
Productivity has not recovered, and as a consequence, real wages are below what they were a decade ago—something no one alive has ever experienced before. The facts are stark. There is a 16% shortfall in the UK’s productive capacity. Monetary policy can only stabilise demand around the economy’s potential, it cannot increase it. Boosting long-term prosperity is firmly the job of the Government’s structural or supply-side policies—something that has been sorely lacking from the Tories over the past seven years.
Government policies influence investment in education and skills, capacity for research and development, the regulatory environment in which business operates, the flexibility of the labour market and—above all, in the light of Brexit—its openness to trade and investment. In the Queen’s Speech, the Prime Minister said that her Government would work to attract investment in infrastructure, so as to support economic growth. She also spoke of plans to spread prosperity and opportunity across the country.
I admire the hon. Gentleman for the mischief he is trying to cause me. Of course, I will always welcome people being in jobs, but I am concerned about the inherent weakness in the economy, which is the lack of investment and the lack of an industrial strategy over the past seven years.
I hear the hon. Gentleman saying that the economy is not growing, but my memory of the statistics is that we are the second-fastest-growing economy in the developed world, after Germany. On what metric does the hon. Gentleman say that we are not a fast-growing or strong economy?
The hon. Lady should have listened to my speech earlier— I do not know if she was on her iPhone or something—because I never said anything about growth. I spoke about productivity, which is 16% down. It has not returned to pre-crash levels, and the facts from the IFS bear that out. If the hon. Lady wants to challenge me on that, I am willing to take another intervention.
I understand that the hon. Gentleman was discussing productivity, but he also challenged the strength of the economy. The economic strength of this country is such that we are the second fastest-growing economy anywhere in the developed world, after Germany.
I accept that we are not growing at the same rate as we have historically. That is the point I was making. I believe there is an inherent weakness in the economy; it has been over-reliant on monetary policy—quantitative easing, low interest rates. But I do not believe that there has been investment in the real economy. That is the point I am making and that is why productivity is down.
The Prime Minister has mentioned the industrial strategy, but it is still empty words. There is no insight or strategy for how the Government will attract investment.
The hon. Gentleman says that the industrial strategy is empty words. However, the industrial strategy has involved, for example, the biggest increase in research and development and science spending since 1979. How can he possibly say that those are just empty words? Those are real actions that will increase the trend rate of the growth of the economy.
When productivity is down, those things are too little, too late. They should have been thought of after the financial crash, when the Government told us from the very beginning that they were going to rebalance the economy and invest in manufacturing. I remember the former Prime Minister even saying at one point that we were going to invest to become an economy that makes things rather than sells them. That has not happened, so it is a bit late in the day to be talking about this.
In the light of the report by the British Chambers of Commerce, it is so important, now more than ever, that the Government implement a strategy to attract investment and generate the economic growth that we all want to see. That is easier said than done in a globalised world. Too many people have been left behind by globalisation. However, globalisation is here, and that will not change. The financial crash was probably the first crisis of globalisation. The only way to address growth, higher inequality and rising insecurity is to build a globalisation that works for all.
Society has to redistribute some of the gains from new technology. Technology constantly evolves and can lead to rapid changes in production, and therefore reskilling must be a constant. In a job market subject to frequent radical changes, people’s prospects rely solely on lifelong learning, which should be factored in by each and every employer. In the age in which we live, anyone can produce anything, anywhere. Someone sitting in their bedroom right now can broadcast across the world in minutes. They can sell to anyone at any time. We need to harness that entrepreneurial spirit. It should be the Government’s intention to bring that about in a way that equips people with skills for the future.
We live in exciting and changing times. With the right level of investment in our people, the age of austerity can come to an end.
I thank the hon. Gentleman for interrupting me just as I entered my finishing flourish; I was trying to come to my rhetorical peak. There are inherent weaknesses in the former nationalised industries. As I was talking about before, people feel that they are being ripped off and have no control. They see energy companies squeezing them all the time, and something has to be done about that. Most people, and basic economics, ask why we would privatise an industry that has no competition. That has been the problem, but that is a debate for another day.
I will finish, because I have spoken for far too long. I have no doubt that, with the right level of investment, the UK economy can seize the opportunities ahead of it.
Order. I remind hon. Members that we are very short on time and that there are a lot of Members who want to speak. I suggest that hon. Members keep their remarks to no more than three minutes, otherwise I will have to introduce a time limit after the next speaker.
It is a pleasure to serve under your chairmanship, Ms Ryan—it is the first time I have had the opportunity to do so. I will keep my remarks very brief because I know a lot of hon. Members want to speak, and I will try not to repeat things that others have said already. I congratulate my right hon. Friend the Member for Forest of Dean (Mr Harper) on securing the debate, which is of enormous significance as we consider the Government’s progress since 2010 and where we go as we look forward to a strong economy for the future.
When the Government came to power in 2010, they immediately set about putting right and reducing the massive deficit they inherited from the Labour Government. The deficit has been brought down by three quarters after starting as the highest since records began. At that stage, one pound in every four spent by the Government was borrowed. That deficit has been brought down from 10% of GDP to 3%.
That matters a great deal, for two reasons, the first of which is that anything borrowed has to be paid back. It is a fallacy simply to think that there is a pot of money that can be borrowed and spent, but that there is never a day of reckoning. If the deficit is not dealt with by this Government or this generation, it will have to be dealt with by the generations that follow. It is not responsible—it is not something I wish to be a part of—to hand down to my children and to the children who follow us a debt that we were unwilling to consider repaying.
Secondly, there comes a point when the borrowing rate increases and becomes unsustainable. Owing to the cuts to the deficit that the Government have made, they now pay 1% on their 10-year gilts. That compares favourably with Italy, which pays 2%, or Portugal, which pays 2.9%. That has avoided tens of billions of pounds of extra debt payment.
Borrowing is not free. In the year 2014-15, about £34 billion was spent on servicing debt interest, which is about 4.6% of all Government spending. Depending on how it is managed, that is bigger than the transport budget and approximately equivalent to the defence budget. No one should be under any illusion that, in borrowing such amounts, our spending on debt interest is equivalent to that of a major Government Department of State.
You are absolutely right—my hon. Friend is right—to point out that we are paying that much in debt interest payments. You will know that more than a quarter of our debt is held overseas, so by my calculations we are spending something like £10 billion a year to other countries for them to spend on their schools and hospitals. My constituents in Harborough will be shocked that we are spending that much to support public services overseas.
I am grateful to my hon. Friend for making that powerful point. He is right that when we are paying debt interest overseas, we are paying money elsewhere when it could be spent in this country building up the economy and spent on our priorities.
The central point is that a strong economy is needed to fund strong services. It is all very well to have a long list of priorities on which we would like to spend. Let us be under no doubt that everybody Government Member wants strong public services. We want to increase spending, but that must be done in a responsible way. That money, in order to be spent, has to be raised. If public spending is not balanced, it leads to a weaker economy. That means less money to be spent on our public services, and it means that we are in a weaker positon to withstand the next economic shock when it comes. In due course, there always will be a downturn in the economy and we need to be in a strong position to meet it when it comes. That is the overriding mistake made by the Labour Government.
Living within our means is not an ideological fixation. It is not simply a desire. It is a necessity to ensure that we can protect our public services and spend sensibly for this generation and for generations to come.
It is a pleasure to serve under your chairmanship, Ms Ryan. I congratulate the right hon. Member for Forest of Dean (Mr Harper) on securing this debate. It was somewhat mischievous of him to comment on one side of the Chamber being empty—interestingly, the Government side was empty last week when we were debating WASPI women.
For far too long, balancing the public finances has generally been done on the backs of the poorest and most vulnerable in our society.
I will not, because Members have taken quite a long time. Despite several years of austerity, Her Majesty’s Government continue to miss their targets on debt, deficit and borrowing. Quite simply, austerity has failed to rebalance our public finances, and we need to reassess and re-evaluate our approach.
The biggest contributor to a sluggish UK economy and the biggest threat to our public finances is the reckless hard Brexit currently being pursued by Her Majesty’s Government. That has not been helped by Labour Members voting to give the Prime Minister a blank cheque by voting against single market membership only two weeks ago.
Scottish National party Members will continue to stand up not only for access to but membership of the single market and customs union. When we look at our public finances, we see a major trade deficit, which in the three months to April was £8.6 billion, up from £6.9 billion in the previous quarter. By turning our back on the single market and pursuing a hard Brexit, we risk delivering further shocks to our already precarious economy.
The UK economy grew by just 0.2% in quarter 1 of this year. In comparison, in the same quarter Scotland’s economy grew four times faster. That was somewhat of a surprise, not least because colleagues in the Scottish Conservative party were briefing last week that Scotland was about to move into recession, which certainly did not happen.
We face difficult financial decisions in Scotland, not least because Scotland’s budget faces a real-terms cut of £2.9 billion due to UK austerity. That figure of £2.9 billion is significant, because had Barnett consequentials been followed during the Government’s grubby deal with the Democratic Unionist party, Scotland would have stood to receive £2.9 billion.
I want to move on and to some of my concerns about the deeply worrying consequences posed for Scotland by a hard Brexit. The stark reality is that Brexit threatens to cost the economy around £11 billion by 2030 and result in 80,000 fewer jobs compared with remaining within the EU. We understand and accept that, despite 62% of Scots voting to remain in the EU, we are leaving. However, the Scottish Government have sought to be reasonable and amicable, and have come forward with a compromise that would allow Scotland to remain within the single market. Unfortunately, those pleas have fallen on deaf ears.
We know that Her Majesty’s Government are pursuing a reckless approach to the economy, with a hard Brexit coupled to an ideologically driven obsession with austerity. SNP Members believe it does not have to be like that. Cuts are a choice, not a necessity. During the recent general election campaign, we put forward a responsible and credible fiscal plan that would return a balanced budget by the end of the Parliament. However, in doing so, we would generate an additional £118 billion cumulatively over the next Parliament, with around £10 billion flowing to Scotland. Our fiscal plan would stabilise net borrowing at the level it was before the financial crash and see debt begin to fall as a share of GDP from 2019-20.
Ministers and Conservative Members regularly tell us how employment is high under this Conservative Government. What they do not say is that much of that is due to part-time work or, worse still, exploitative zero-hours contracts. Unstable and low pay is a worry for my constituents in the east end of Glasgow, with the Resolution Foundation estimating that the period 2011-2020 will be the worst decade for wage growth in 210 years. That is before we take into account the Government’s con trick of the living wage, which will actively discriminate against under-25s.
I will not, because of time pressures.
Austerity strangles the lifeblood out of an economy by exacerbating inequality. The Government’s tax and welfare reforms disproportionately affect the least well-off. Charities have warned that current planned welfare cuts are set to drive a potential fall in incomes of 10% for the poorest third of working-age households and a rise in inequality not seen since the 1980s.
It is a pleasure to serve under your chairmanship, Ms Ryan. I commend my right hon. Friend the Member for Forest of Dean (Mr Harper) for securing this much-needed debate and for his excellent points.
I want to focus my comments on one issue only: income inequality, which the hon. Member for Glasgow East (David Linden) referred to. Almost a year ago today, the Prime Minister gave a statement on the steps of Downing Street in which she focused on her aim to make Britain a country that works for everyone by tackling deep-rooted injustices such as income inequality. That is one of the most pernicious issues facing our country, and it lies at the heart of our Prime Minister’s vision for our country. In this Parliament, we are setting out the meaningful ways in which we will effect change.
One thing that came up time and again in my election hustings, and I am sure those of other hon. Members, was the idea of taxing the rich more to pay for all the things on which Opposition Members propose to spend money. In fact, the Leader of the Opposition has proposed that as a highly desirable option, which he thinks would lead to lower inequality in our country. However, far from having the desired effect, would that not have precisely the opposite effect?
Is it not a fact that, under the Conservative Government, the people who pay the highest taxes in actual and relative terms are the rich? In 2016-17, the richest 1% in our country are set to pay 27% of all income tax revenue, a higher proportion than under the Labour Government. The richest 5% will pay 38% of total tax. I welcome that. Never let it be said that the Conservatives shy away from taxing the rich. We do tax them, but we do it in a way that delivers real income to the Exchequer. Labour Members—if they were here—would do it in a way that damages the economy, hurts businesses and jobs, and results in tax hikes for ordinary hard-working people, including my constituents in Redditch. Is it not a fact that, under the Conservatives, people on lower incomes are paying less tax than they did in all the years of the Labour Government?
I will be very brief, but I cannot let what the hon. Member for Glasgow East (David Linden) said go unchallenged, which is why he did not give way to me. Over the years that the Conservatives have been in power, income inequality has reduced. The country has become more equal, not less. That does not support Opposition Members’ arguments, which is why they do not want to hear it, but it is a fact of which Government Members should be very proud.
I thank my right hon. Friend—he has managed to make my speech a bit shorter.
I will focus on the lower paid, hard-working earners. For 2017 to 2018, the personal allowance is being raised to £11,500, which means that the amount of tax-free income someone can earn will be more than 75% higher than in 2010. That means more money in people’s pockets to cope with the cost of living, because taking people out of tax has the same effect as giving them a pay rise. We have discussed the importance of giving pay rises to everybody, which I welcome. People are keeping more of what they earn.
I reiterate my right hon. Friend’s comment that income inequality is in fact at a 30-year low. It continues to fall, and we want to see it go further. It is the Conservatives who are on the side of the lowest paid—we have taken them out of tax. We are on the side of those earning the minimum wage, and we are boosting their incomes with the national living wage. We are on the side of hard-working people, and we are stabilising the economy so that it creates jobs for people, and they can go to work and earn a decent living. It is the Conservatives who believe in fairness, because we have delivered the lowest levels of income inequality for 30 years, giving people a sense that our country works for everyone.
I congratulate my right hon. Friend the Member for Forest of Dean (Mr Harper) on securing this debate. I just wish it was much longer, as do we all.
As my right hon. Friend knows, every morning we are admonished about having a desire to please, but it is a salutary warning. It is too easy to spend other people’s money, particularly when it is future generations’ money we are getting through. I have to take issue with the hon. Member for Islwyn (Chris Evans). He referred to the financial crisis and the stewardship of the economy under Lord Darling. It was a privilege to serve in the Treasury in that period. I have to tell the hon. Gentleman that no one was under any illusions that, no matter how tough the decisions to be made in 2008 and 2009, the real tough decisions and the real grinding work would happen in the 10 years that followed as we sorted out the fundamental problems left to us by the Labour Government.
A lot of good things have been said today, and I intend to speak briefly so that other good things can be said. My hon. Friend the Member for Witney (Robert Courts) referred to the level of debt interest payments and the cost of servicing that debt. We have done an extraordinary job as a Government of reducing the share of our deficit from 10% to 3% of GDP. That has still left us with a monumental debt pile, which we all recognise. My hon. Friend the Member for Witney referred to the cost of servicing that debt pile in terms of transport, but I think of it in terms of policing and schools—just to service that debt is equivalent to the amount of money we are spending on both.
We have to consider what would happen if in some ghastly, dreadful other world this country chose to elect a Government that had less of a reputation for fiscal competence and in international markets. Where would our blended interest rate go from then? If it was to the rates currently endured by Spain, Italy or Australia, we would be looking at an increase in our debt service level of 40%, 80% or 120%.
It does not end there. It does not end on the immediate fiscal impact, with the money having to be raised in tax or added to our debt pile. It would also come in the dynamic effects that would flow—it would come in lower levels of confidence and investment and fewer jobs, meaning lower tax receipts, more borrowing, higher inflation and lower confidence. The cycle goes on.
The Labour manifesto was stuffed full of examples of desiring to please, and the impact on our economy would have been disastrous. Every pound that we borrow now and every pound added to the debt pile is a pound for future generations to pay off with interest. Every pound added to our already high levels of national debt reduces our ability to take sensible measures and make sensible fiscal interventions when the next cyclical downturn happens, as assuredly one day it will. Were we to fail in our generation to rebalance our books, it is the next generation that we would be failing.
It is a pleasure to serve under your chairmanship, Ms Ryan. I had 90 seconds at the end of the Queen’s Speech debate, as the last Government Member to speak, and I will continue that speech for these two minutes.
The point I made then was that austerity is not a choice; that is a facile argument. It is a mathematical reality determined by the size of the national debt, and most importantly, the future liabilities we are starting to accrue. The Office for Budget Responsibility says that in 50 years’ time, public spending is expected at current prices to be £156 billion larger than it is today, which is the cost of the NHS plus £10 billion. We have to find that money somewhere or consign our children and grandchildren to terrible austerity.
There are two suggestions for where we find that money. The most important relates to productivity in the public sector. According to the Institute for Fiscal Studies, if the last Labour Government
“had managed to maintain the ‘bang for each buck’ at the level it inherited in 1997, it would have been able to deliver the quantity and quality of public services it delivered in 2007 for £42.5 billion less”—
that is equivalent to the defence budget. The enormous savings that come from better productivity cannot be underestimated.
The other part of this, which I feel most passionately about, comes from the debate that came up in the general election about care and the intergenerational covenant. It is a staggering fact that the value of equity in the homes of those over 65, according to Savills, is now £1.5 trillion and earnt £26,000 last year for each pensioner household, compared with average national earnings of £27,000, or a graduate entering the workplace on £19,000, with no prospect immediately of getting on the housing ladder and no occupational pension, probably retiring at 75.
If people think we can put off that issue through parliamentary arithmetic, they are deluded. Economic arithmetic means that at some point in the future, as a mathematical certainty, whether we like it or not, the issue of equity for those who benefited from the housing boom will come up. We have to decide whether we deal with it voluntarily or put it off until we are bankrupt and in desperation.
We can change many things in this House. We can pass and change many laws, but the laws we cannot change are those of arithmetic. No matter how big the abacus, no responsible person can ignore the size of our country’s debt and the deficit we inherited. Our debt as a percentage of GDP was roughly 30% to 40% for decades, yet now, courtesy of the last Labour Government, compounded by a global recession, that debt is above 80% of GDP. Those figures alone should make it clear that borrowing more at this stage would be completely irresponsible.
How much does that debt cost us in interest payments? Currently we spend £48 billion servicing our debt. That is dead money. What else could we spend it on? There are many areas where we could use that extra cash. It is nearly half the NHS budget; that is a lot of doctors and nurses. It is more than our whole education budget; that is a hefty pay rise for teachers and more school facilities, with plenty of spare change.
I understand that many years of trying to live within our means is hard. However, the short-term happiness of spending will have dreadful consequences for our country’s finances and make things even harder. It would be the height of irresponsibility to mortgage our future, and there is no moral case for bingeing on the nation’s credit card, least of all when we are forcing others to pay the bill—namely, our children and grandchildren. As anybody who has ever got themselves into credit card debt will understand, it is impossible to pay back the original debt when all your cash is taken paying off the interest payments alone.
That would set us back just at the point when all our leading indicators are heading in the right direction: we have seen a significant reduction in the deficit, which is down by two thirds; unemployment is the lowest it has been for 40 years; the minimum wage is up by 26%; pensions are protected; 1 million new businesses have been created since 2010; and we continue to invest more in our NHS and schools. Those are signs not of a country living under austerity but a nation starting to prosper, despite the dreadful debt burden handed to us by the last Government.
It is a pleasure to serve under your chairmanship, Ms Ryan. I congratulate my right hon. Friend the Member for Forest of Dean (Mr Harper) on securing this really important debate.
Everyone who argues for a splurge on public spending needs to explain where that money will come from. It comes either from increasing taxes or from more borrowing. If we increase taxes, that dampens the economy and takes away people’s hard-won earnings. If we borrow, it drives up interest rates. At the moment, we are very fortunate, in that we have hard-won respectability in the financial markets, which has kept interest rates incredibly low. At a time when the Bank of England is warning banks to increase their capital and about the level of household debt, the risks of increased interest rates to households and mortgage holders are great indeed. We must be mindful of any idea of increasing public spending, given the constraints.
When it comes to tax, we need to look at reforming the system and particularly at how taxation of multinationals works. Amazon pays very little tax in this country and hardly any business rates, yet it is killing our high streets. That is not fair. We need to rebalance the tax system to make a level competitive playing field, not just on our high streets but across the piece in business, so that we have more fairness and all businesses can succeed and compete equally.
Finally, we have a productivity challenge. We must get more investment into the real economy, which is why there should be a much greater focus on both sides of the House. We owe it to all our citizens to do all we can to get the nation a pay rise.
Economies that lose control of their finances lose control of their destiny and that is why it is absolutely right to focus on living within our means. Conservative Members believe that the best way to do that is to power up an enterprise economy. We all hate austerity; we believe in prosperity. We believe in creating businesses and helping them to grow and expand to create the wealth to fund public services so that we can see them grow and develop.
We must be conscious that as a country we need not only to live within our means but to help our lower paid workers to have the means to live. I am proud of what the Government have done with the national living wage because we want well-paid jobs and decent public services. Productivity is the absolute key to higher wages, often for lower paid workers—a good movement, “Be the Business”, has been launched by Charlie Mayfield today. Technical education is at the heart of that, so the Government are putting it to the front. Dealing with extortionate housing costs in London and the wider south-east is also key to the productivity issue, because high housing costs are a drag on the economy. Our national productivity infrastructure fund, focusing on transport, digital, research, investment and housing, is absolutely the right way forward. We should have common purpose across the House; we must all focus on driving up the country’s productivity.
I am proud that, as a result of the hard things that the Government have had to do, the richest 1% are paying more in tax than happened under Labour and that income inequality is at its lowest since 1986—according to the Office for National Statistics, not the Conservative research department. Finally, the Government have taken 75 measures to raise an extra £140 billion in tax.
It is a pleasure to be in Westminster Hall with you in the Chair, Ms Ryan. I thank the right hon. Member for Forest of Dean (Mr Harper) for bringing this debate to the House. It is an important debate to have. It highlights the fact that a huge number of Conservative Members live on a different planet from the rest of us. In particular, the speech of the hon. Member for Redditch (Rachel Maclean) did not seem to have any link with reality as I and my constituents know it.
Conservative Members are putting out economic soundbites that could easily have been lifted from the Conservative party’s manifesto, but that is not the lived experience of real people. That is not what is happening or what the just-about-managings are facing. They do not feel like their wages have gone up; they do not feel like the reduction in tax credits is at all helpful. I get that the personal allowance has been raised; that is brilliant and I am pleased that it has happened. I also get that the minimum wage has been raised, but it is not to a level that people can live on. That is the problem. It is still a minimum wage and it is not applicable to younger people in the job market. They may have families and housing costs—the same costs that those of us who are over 25 have—yet they are not worth the same wage as others. I am frustrated by the debate because I cannot believe that Members can spill this nonsense.
When the Chancellor gave the spring Budget statement, he reckoned that inflation would be 2.4% in 2017. Actually, in the 12 months to May, it was sitting at 2.9%. The forecast by the Office for Budget Responsibility for earnings growth in 2017 was 2.6%. If inflation continues to grow at 2.9% and wages continue to grow at 2.6%, there will soon be a serious problem, particularly for households that are struggling with increasing levels of household debt. The Bank of England is concerned about the increase in household debt, which is at its highest since 2008. This is a real problem for families, especially when they will see their real wages eroded.
I was literally about to come to that. There are three ways for the Government to increase spending on public services: higher taxes, higher borrowing or higher growth. Those are not my words but those of the Chancellor, yet whenever an Opposition hon. Member suggests increasing public spending or simply not reducing it, Conservative Members say, “Oh, you will have to put up taxes.” As the Chancellor said, there are three ways to increase public spending.
Some of the things that Conservative Members said are a concern. My hon. Friend the Member for Glasgow East (David Linden) said that, according to the Resolution Foundation, 2011-21 will be the worst decade for pay growth for 210 years. That is quite some statistic.
It is interesting that the Government talk about how wonderfully they are doing for young people. The Institute for Fiscal Studies said that those born in the 1980s have by their early 30s accumulated half as much wealth as those who were born in the 1970s. The right hon. Member for Forest of Dean mentioned the IFS as a respected think-tank, and it won an award last night. If we are talking about mortgaging our future and concerns for the future, the lack of wealth accumulation compared with previous generations is a real problem, including for millennials. The way the Government are dealing with it is not working.
Not just now; I am conscious of time.
The Government are increasing spending on infrastructure. A recent report from the Institute for Government said that
“weak processes are leading to the wrong projects and contested decisions, wasting both government time and taxpayer money.”
We agree that infrastructure spending is a good thing, but we believe that the processes in place and the Government’s choices are poor and could be much better directed to infrastructure projects that will increase economic growth and create, as the Chancellor said, better spending on public services by growing the economy rather than simply cutting things or increasing taxes.
It is a pleasure to serve under your stewardship today, Ms Ryan. I welcome the Financial Secretary to the Treasury to his position. I have no doubt we will have many of these debates in future. I thank the right hon. Member for Forest of Dean (Mr Harper) for tabling this debate on this important issue and on the need for Governments to balance the books. I also thank hon. Members for inviting me to the 1922 Committee. It is a pleasure. That was a joke—give it a bit of thought and try to keep up.
It is worth looking at the Conservative Government, in which the right hon. Member for Forest of Dean was a Minister for six years when all those decisions were made. Since coming to office, the Conservative Government have consistently failed to balance the books and to abolish the deficit, despite continually pledging to do so.
May I get further into my speech? I will then be happy to give way.
First, it was promised that the deficit would be abolished by 2015. Then it was pushed back to 2020. We have now been told by the Chancellor that it is likely that it will not be abolished until 2025. The phrase used in the Conservative manifesto—hon. Members will appreciate that I read it avidly—was
“by the middle of the next decade”.
A full 10 years after the former Chancellor originally pledged to do it, and a full 15 years since the Conservatives started making the promise, the books still will not be balanced.
Does the hon. Gentleman think that our task of reducing the deficit would have been easier or more difficult if we had acceded to the Labour party’s continual requests for more spending and its opposition to every single reduction in spending that we put through?
The hon. Gentleman will appreciate that I am not going to get into hypotheticals or “what ifs” in this debate. We are looking to the future. That was promised. [Interruption.] I am sorry; I did not hear what was said. That was promised, but the Conservatives failed to deliver. I do not think that there is a case in modern political history of a British Government so regularly failing to meet their own economic targets.
In a moment, if I may.
A Government can balance the books in many ways, and very many difficult decisions have had to be taken during the past seven years. No one doubts that. However, this Government chose the path of austerity over the long-term prosperity of everyone in the country. Some hon. Members have said that that was not a choice, but it was. The Government chose to cap public sector wages and to cut local council budgets by 40% and in certain cases by as much as 60%, with more on the way.
Does the hon. Gentleman remember that the 2010 Labour manifesto promised a 1% cap on public sector pay? Does he think that that was because the Labour party does not support public sector workers, or because it was the right thing to do given the circumstances of the economy?
The reality is that that pay cap has now been institutionalised. It has been there for virtually a decade and it will continue. The Government have also chosen to underfund the NHS and cut £4.6 billion from social care, and they now threaten huge cuts for schools. However, despite those huge and deeply unfair budget cuts to public services, the Government have been able to find £70 billion of tax cuts for those who need them least of all.
Throughout the election campaign, which I might add is a happy memory, we were told that there was no magic money tree that could be used to solve the nation’s financial problems. If anything was magic about it, it was that it turned into a cherry tree, and the Prime Minister proceeded to pick the cherries and hand at least £1 billion-worth to the Democratic Unionist party to keep her in No. 10.
Under the previous Labour Government, low-paid workers were required to pay tax on earnings above about £6,500. The position now is that they do not pay it on earnings up to about £11,500. Is it not a positive thing to take low-paid people out of tax? Does the hon. Gentleman not welcome that?
Yes, I welcome anything that helps the low-paid, but that is not the only element in someone’s life chances or in people’s prosperity. The reality is that there was a mendacity in the deal with the DUP that will take a long time to be wiped clean.
Similarly, the Chancellor, in the spring Budget, was able to find a temporary £2 billion to backfill the cuts to social care and then further money to do a U-turn on raising national insurance contributions for the self-employed. There was a bit of cherry-picking there as well. It is clear that the Tories can find money when it is needed to oil the palms of certain people in order to assist the Prime Minister in retaining the tenancy of No. 10, and it is all dressed up as being in the national interest. That is not real and it is not acceptable.
When it comes to the long-term health of our economy and a wage rise for dedicated nurses and teachers, there is no money. They will have to continue with the pay they have, year in, year out. The truth is that austerity is not a necessity, but has been used by the Government to fulfil the ideological aim of shrinking the state beyond comprehension and privatising public services. That is a choice that the Government made. They should simply acknowledge that.
There are countless examples of countries taking a different approach. One hon. Member referred to Greece, and another referred to Portugal. The Government of Portugal, our oldest ally, have reduced the country’s deficit faster than us, but simultaneously they have restored state pensions, wages and working hours to pre-bail-out levels, and they managed that without crippling austerity. When we use examples, let us have a spread of international examples.
The well-off have done much better in austerity Britain. Meanwhile, those in the public sector have not seen their wages increase. The richest 100 families in the UK have seen their wealth increase by £55.5 billion. The Public Accounts Committee has reported that, while income tax for all taxpayers has risen by 9% under this Government, income tax receipts from high-net-worth individuals have fallen by 20% since 2009-10. That is typical of this Government’s approach: those who had nothing to do with the global financial crisis—the bulk of low and middle-income households—are made to pay the price of austerity through slashed services, increased taxes and falling wages, while the richest in society and big corporations get greater tax benefits. The old chestnut that we are all in this together is still trotted out.
I made this point in my speech, to which I refer the hon. Gentleman. Does he not agree that the richest 1% in our country are set to provide 27% of all income tax revenue in 2016-17, and that that is a higher proportion than it was under the Labour Government?
The hon. Lady made that point before, and I will repeat the point that I have just made. The claim is that we are all in this together, but Newcastle University has showed that, while my constituents saw a £195 per head reduction in spending by my local authority between 2010 and 2015, the constituency of the right hon. Member for Forest of Dean had cuts of only half that amount. If we are all in it together, is that fair or reasonable? It is not reasonable. Of course we need to balance the books, but doing it fairly rather than by cherry-picking is crucial. The Institute for Fiscal Studies has reported that for the Government to reach their target, they will have to find an additional £15 billion-worth of spending cuts or tax rises.
There is another question that we must ask ourselves. If this issue is so important, why are we waiting for the Finance Bill? We have waited and waited for the Finance Bill. I hope we get it this side of Christmas—we might get it next Pancake Thursday. I hope we get it on the Floor of the House so that we can debate it.
We can either carry on with the redundant approach of industrial-size spending cuts for most people and tax cuts for the rich and corporations, leading to an economy in the doldrums and falling household incomes, or we can start investing in our country, ensure that everyone pays their fair share, and use a growing economy to help to balance the public finances. We need a real long-term economic plan, without magic cherry trees, without bungs and smoke and mirrors, and without a Prime Minister who barely has the support of her Cabinet, let alone her party, and certainly not the country. We need a long-term economic plan for the many, not the few, and given the state of the Tory party under the Prime Minister, I do not think that that is far away.
It is a pleasure to speak under your chairmanship, Ms Ryan. I thank my right hon. Friend the Member for Forest of Dean (Mr Harper) for securing this extremely important debate and for the impassioned and meticulous way—we have grown used to that in his case—in which he dealt with some of the most important issues that our nation faces.
Many hon. Members have this morning gone back to 2010, as is right and proper, and set the debate in that context. Let us remind ourselves that in 2010 the deficit was 9.9% of GDP. To put that in context, the last time the Labour party put us into very deep and troublesome economic waters was in 1976, when the figure was somewhat lower but still led to the then Chancellor, Denis Healey, having to go cap in hand to the International Monetary Fund because this country was bust. That is the perilous background.
Over the past seven years we have made extremely good progress. We have reduced the deficit by three quarters and, according to OBR forecasts, are probably about two years ahead in terms of the interim targets that we have set and that have been discussed in this debate. One of the most spiriting aspects of the debate on the Government side of the Chamber has been the focus that was rightly placed on our huge economic achievements. Let us not forget that employment is at a record high, there are more women in employment now than at any other time in our history, unemployment is at its lowest level since the mid-1970s and, as many Members have rightly pointed out, we have sustained levels of economic growth that other members of the G7 would be proud of and wish to achieve.
However, as many Members have said, we cannot duck the fact that our level of indebtedness, which will peak at the end of this financial year at 89% of GDP, is too high. It is unsustainable. It is not just a burden on future generations, as has been pointed out, but means that we are vulnerable to external economic shocks. We need to get that level down.
Does my right hon. Friend agree that it is a sobering fact that in 2007 Greece had a debt to GDP ratio of 100%? The fact that ours is close to 90% means that we have to take this matter very seriously for our national security and that of future generations.
My hon. Friend is absolutely right. If we do not start to see the figure coming down, it can only bode ill for the future. That is why we are so determined to get it down.
Turning to the contributions that have been made, my right hon. Friend the Member for Forest of Dean made important points about our record on growth and jobs, about the threat of interest rate hikes if we fail to get on top of our debt and about keeping taxes low, particularly for our businesses. Many Members have made the point that as we have reduced corporation taxes the actual tax yield has increased, which rather suggests that the Opposition’s policy of raising them would be counterproductive in every sense. He made very important points about public sector pay. Let us not forget that this is not just about controlling public sector pay and spending, but about preserving jobs. The OBR reckons that by sticking to our plans we are protecting about 200,000 jobs in the public sector. When we talk about the 10,000-plus more nurses and 10,000-plus more doctors in the NHS, one of the reasons we have them is that we have given ourselves the room to afford them.
If I may, I will turn now to the hon. Member for Islwyn (Chris Evans), who made an impassioned attempt to take on the powerful arguments from the Government side. He is somewhat outnumbered. He suggested that he was like Lieutenant Custer. Of course, at Custer’s last stand, which was in 1876 at the battle of the Little Bighorn, unfortunately Custer was annihilated: he lost five companies, two of his brothers, a nephew and a brother-in-law to boot. It is remarkable that the hon. Gentleman is still standing after the onslaught from the hordes on our side of the Chamber today.
The hon. Gentleman made one point about the tax gap. He bemoaned the fact that, at £36 billion, it is higher than we would like it to be. That is absolutely true, but what he did not mention is that it represents 6.5% of the tax that we raise and is at the lowest level for very many years. As another hon. Member pointed out, since 2010 we have had about 55 new tax avoidance measures that in total have raised no less than £140 billion, which is three times the size of the deficit we face.
My hon. Friend the Member for Witney (Robert Courts) delivered the essential truth that borrowing must be repaid and the intergenerational unfairness of failing to do so. He made important points about the cost of servicing our debt and that if we lose the confidence of financial markets, those costs will rocket, to our detriment. The hon. Member for Glasgow East (David Linden) referred to Brexit as an ideological obsession, but I say no, actually: it is respecting the democratic will of the people. Although I, probably like him, was on the other side of that argument.
My hon. Friend the Member for Redditch (Rachel Maclean) made some very important points. The Opposition always say that we are looking after the wealthiest in society, but the truth is a long way from that. Some 27% of tax is paid by the wealthiest 1% in this country. A statistic that could also have been used is that the wealthiest 3,000 people in our country pay as much tax as the poorest 9 million. We are doing a huge amount on the issue of income equality.
My hon. Friend the Member for Horsham (Jeremy Quin) made an impassioned speech in which he referred to the importance of keeping interest rates low by keeping on top of the debt. My hon. Friend the Member for South Suffolk (James Cartlidge) finished his contribution on the Queen’s Speech debate today, and I am glad that he did because he made some important points, particularly on productivity, and quite rightly referred to our £23 billion productivity investment fund.
My hon. Friend the Member for Chichester (Gillian Keegan) gave a powerful speech and referred, I think, to the shadow Secretary of State for Education’s performance on “The Andrew Marr Show” on Sunday, when the hon. Member for Ashton-under-Lyne (Angela Rayner) referred to Labour having a large abacus. I have to say that my jaw hit the Stride sofa when I heard her say that it would cost about £100 billion to wipe out student debt and that this was something they were looking at.
The other point that the shadow Education Secretary made was putting her leader straight when she admitted that more working-class children were able to go to university with tuition fees and that it is simply not correct to keep asserting what he says, which is that fewer had done so. The fact that she put her leader right was spot on.
As ever, my right hon. Friend is entirely correct.
My hon. Friend the Member for Dover (Charlie Elphicke) made important points about retaining the confidence of financial markets, and my hon. Friend the Member for South West Bedfordshire (Andrew Selous) talked about the importance of productivity, technical education, infrastructure, housing and all those elements, which matter.
The hon. Member for Aberdeen North (Kirsty Blackman) did at least welcome the personal allowance increases that we have implemented. They are now at £11,500 compared with about £6,500 in 2010, and will increase to £12,500 over the coming period. She made various comments about pressures on pay and wage growth, but one fact that I will share with her is that those in full-time work on the minimum wage have actually seen pay boosted by £1,400 a year going back to 2010. That is an achievement that this Government should be rightly proud of.
I very much welcome the hon. Member for Bootle (Peter Dowd) to his place and look forward to a constructive engagement over the weeks, months and years of this Government. He said that he has read the Conservative party manifesto. I urge him to read it again and again and to learn from it. I am afraid that even though he has read it, he has failed to explain how to square more spending and spending, taxing and taxing and borrowing and borrowing with future sustainable economic success.
May I finish with one overall observation? The Opposition are very keen at every turn to say that our commitment to what they call “austerity” and what I call “living within our means” is some form of harsh, uncaring cruelty. Surely the cruellest cut of all is when a politician struts the stage telling the audience that which they most dearly wish to hear, but knowing in his heart that he has no way of delivering it—knowing in his heart that what he suggests will lead to financial and economic ruin. When we look at that situation, what question do we have to ask? We have to ask: who will be most hurt if we go back to the days of 1976? The answer is the most vulnerable—the poorest—because they are the least nimble and the least well-resourced to get out of the way of the damage. They are the people who lose their jobs and cannot cope. They are the people who see interest rates on their mortgages go through the roof, and struggle to pay as a consequence. As many Members have also said, the others who suffer are the young and the as yet not born—those who end up being saddled with the debt of the profligacy of our generation and have to pay it down themselves.
I thank my right hon. Friend the Member for Forest of Dean for securing this debate. We must stay the course. We must make the hard choices. We must make it the first priority of this Government to have a responsible stewardship of our public finances.
I am particularly grateful to the Financial Secretary to the Treasury for closing his speech so excellently, because it leaves us with this one thought: balancing the public finances and having sound public finances is not an academic exercise; it is about enabling growth and jobs and allowing us to protect the most vulnerable in society, allowing the investment in public services, as my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) set out, and making sure that we can deliver on those important promises. Those who do not want to live within their means—the hon. Member for Bootle (Peter Dowd) spent a lot of money in his speech but did not set out how he could save it—would disappoint people, let them down and fail them. That is not a mistake that we are going to make.
Motion lapsed (Standing Order No. 10(6)).
Social Inequality (Children’s Centres)
I beg to move,
That this House has considered the role of children’s centres in tackling social inequality.
It is an honour to serve under your chairmanship, Ms Ryan. This issue is close to my heart. I am a secondary school teacher—at least, I used to be—and a primary school governor, and I have a burning desire to ensure that every child, no matter what their background, gets the best possible start in life. I keep reading that the Government agree, but where is the consultation on children’s centres that we were promised in late 2015? A recent ministerial written answer said that the details will be published in due course. I start with a simple plea: please do not wait. We are days away from the summer holiday. In new, young lives, one year without intervention squanders many years of potential rewards.
I will make the case for why children’s centres are worth investing in. The accelerating demise of access to children’s centres across the country over the last seven years is one of the saddest outcomes of austerity. The evidence showed that they worked. If we are serious about creating a society where every child fulfils their potential, we need to get serious about breaking cycles of deprivation. We must not just listen to the evidence but act on it.
It is a sad fact that a child’s parents’ circumstances remain the best predictor of how that child will do as an adult. Well-respected organisations such as the Joseph Rowntree Foundation and Save the Children have presented evidence over many years showing that, if we want to break that cycle and create a fairer society, we must not only focus on the bottom 5% but cast a much wider net to avoid stigmatisation and build community resilience.
Every single one of the children’s centres in my constituency closed last year. In fact, Oxfordshire County Council set out in 2013 to close all 44 children’s centres in Oxfordshire, explicitly to save £8 million from the early intervention budget as part of a £22.5 million saving across the department as a whole. Following a big grassroots campaign, the Liberal Democrats proposed a £l million transition fund, which was added to a cross-party budget in 2014. It has led to support for 29 community-led schemes, including in Kidlington, Cutteslowe, Botley and soon South Abingdon. However, they will provide only some of the services previously provided by the children’s centres, and one is run entirely by volunteers—I thank those volunteers especially for their hard work and service. There is no clear plan for what will happen after three years, and no long-term, sustainable solution.
The hon. Lady will know that I have some involvement as Chair of the Select Committee on Education at the time that children’s centres were established. She is right: all the research shows that early interventions such as Sure Start and children’s centres are the answer, but up and down the country, children’s centres have closed, and there is no policy and no money for early years intervention. I am glad that she is taking up the cudgels.
These stories demonstrate why it was a big mistake to remove the ring fence from the Sure Start budget. What we have seen across the country is that the seemingly more urgent issues of older children, such as behaviour management and preventing teenage pregnancy and drug use, win out. The older a child gets, the harder it is to intervene, and the more expensive the interventions become. Given the difficult choices and the reality of cuts, it is no wonder that measures provided by children’s centres have not been given the prominence that they deserve. After all, those children have yet to impact others.
I congratulate the hon. Lady on securing this important debate. Clearly, there is a lot of evidence that investment in the early years is good for children’s future life chances, but does she also agree that the issues are not entirely mutually exclusive? Unwanted pregnancies and the issues facing single-parent families can be dealt with through effective interventions linked to children’s centres. They work well. That is an important point for investment.
I agree entirely. Joined-up thinking in early intervention is important.
Parents tell me that children’s centres are a lifeline. The services that they provide, such as parenting support and breastfeeding and baby health advice, are valued by many, but almost as important is the sense of community that they create. Families who would never normally interact bond over the common challenge of making it through the day with a delightful but occasionally demanding toddler. How many parents have met friends for life at Stay and Play? It takes a whole community to achieve such aims, and there should be no stigma in asking for help.
In the past, the Government have accused those who raise the issue of being obsessed with the number of buildings. I am not, but I am obsessed with outcomes and access, and I can tell the Minister that we have a problem, especially with access. The impact on access comes from a double whammy: the remaining centres are far apart, and local transport links have been reduced. The convenience of getting to a site is a key factor for the families who need the services the most. I believe that we are at risk of leaving behind the same families that the Government purport to want to target.
I met a lovely woman a few weeks ago in Kidlington who explained that the new centre there has reopened but on a different site, and that it offers fewer services than the original centre. She had recently given birth to her seventh child, in a family that already included two sets of twins—I told her I thought she was a saint. Both she and her partner work full-time to support them all, but they are just getting by. Because the centre has moved out of walking distance and there is no direct bus link, she feels she can no longer get there. She said, “I can’t face the journey, and also when I get there, they can’t cater for everyone. I used to be able to go and there was something for all of us as a family to do. I really love to go, but it’s just too much hassle.”
The hon. Lady is being generous. Did she see the Children’s Commissioner’s report, launched yesterday, on how many children in this country are vulnerable on all the criteria? Will she please talk to the Children’s Commissioner about her campaign? At the moment, there are so many vulnerable children out there, and given the cuts in local government finance, local governments are unable to run proper children’s services?
I imagine she was quite busy with her seven children, but I will encourage her to do so.
One anecdote should not policy make. As motherhood and apple pie as this all sounds, I believe that education policy should be firmly evidence-based, so let us consider that. More needs to be done to ensure that all services provided by children’s centres are evidenced and effective. I applaud the work of the Early Intervention Foundation as one of many organisations adding to that body of evidence. We need much more of it. I also believe that all staff should be well-trained and properly qualified, and that allowances need to be made for differences in population. What works in one setting does not always work in another. We need to give credit to the professionals who can make an in-depth judgment, in the moment, of what works for the families in front of them.
The Government’s own evidence shows that interventions for one to three-year-olds play a vital role in life chances, especially for the poorest children. The Oxford University children’s centres study that was instigated by the Department for Education reported last year. It backed up what countless studies before it had showed: the benefit of interventions such as baby health and parenting support. Not only do they give value for money by improving outcomes for families as a whole; down the line, they help to reduce the chances of bad behaviour or smoking and raise educational attainment. The study further extrapolated that interventions will reduce joblessness and raise incomes for children in the future. What is there not to love?
As we have seen in Oxfordshire, the problem is that there is no budget. We need real long-term thinking at central Government level. The results of these interventions will not be seen again by the Exchequer until the children themselves start to pay it back in decades to come, but in my view it is worth the wait. Part of the answer is money. Hon. Members ask where it will come from. Frankly, it will come from the future. We borrow to invest in our own finances at home to reap rewards later, and the same principle applies. There is no single magic wand, but several magic wands waved early enough can make a big difference.
I look forward to the Minister’s reply and to contributions from colleagues. In my view, nothing is more important than the wellbeing of the next generation. Children’s centres are a proven and cost-effective way of promoting just that. Let us give our children everything we can and invest in them now, as a down payment on a more equal and fairer society in future.
I am very pleased to serve under your chairmanship, Ms Ryan. I congratulate the hon. Member for Oxford West and Abingdon (Layla Moran) on securing this incredibly important debate.
Tackling inequality is an absolute priority for the Government. I am pleased to have the opportunity to set out our position on the valuable contribution that children’s centres can make to the lives of disadvantaged children. I reassure the hon. Lady that I, too, have a burning desire to help these children. The Government are committed to improving social mobility and extending opportunity to all.
Children’s centres can play a very important role in offering families access to a wide range of flexible local services. I was fortunate enough to visit a fantastic children’s centre in my Scarborough constituency not so long ago, where I saw for myself how important children’s centre services can be to families with young children. Indeed, all three children’s centres in my constituency are still open. I was interested to hear from families and staff there that the people they really want to help are not in the children’s centres—they are the people who do not engage and do not see the advantage of coming. One of my tasks in my new role is to ensure that we can get to those families who are not in the children’s centres and in some cases are not even taking up the free childcare that is available. They are probably at home watching daytime television and do not see the importance of the home learning environment, or indeed the importance of taking up the offer that is there from this Government.
Children’s centre services can include early years provision, child and family health services, information, advice, training and employment services for parents, and social services for those parents who need extra support.
On improving the offer for people who are among the most disadvantaged and most in need of support and help, does the Minister agree that there is a certain fragmentation when it comes to joining up the work of health visitors and family nurses, who support some very disadvantaged families, with the opportunities available in children’s centres, which support some equally disadvantaged families?
My hon. Friend makes a very reasonable point that relates not just to children, but to the elderly: health and social services do not necessarily speak to each other or work together as much as they might want to. However, I pay tribute to the tremendous work of health visitors, particularly when new babies are born and families need assistance.
I welcome the Minister to his role. I do not want to be nasty to him on his first outing, but he mentioned people watching daytime television. I have to say that many of the people we are talking about are trying to keep their lives together by doing three jobs on zero-hours contracts rather than watching daytime television. How many children’s centres are still there? How many were there in 2010, how many were there in 2015, and how many are there now? That is the crucial point: they are closing all over the country, especially in the areas of greatest deprivation. What is the Minister going to do about it?
I should make a particular point about the offer that is available from this Government. We are improving the amount of childcare available. The point I made about daytime television was a point made by the staff at the children’s centre I visited. The issue that the hon. Gentleman should look at, particularly in respect of those working, is the offer coming forward in September for 30 hours of childcare for those in work. It will be a great opportunity for those who have been juggling work and childcare responsibilities. Indeed, many people will now be able to work during office hours, so to speak. Many families have had the problem of the husband and wife passing in the doorway at 6 in the evening when the husband returns from work and the wife has to go out to do additional—
Yes, I will. The position is not as bad as the hon. Gentleman points out. Let me give him some figures on childcare centres. Oxfordshire County Council had to close 41 of its children’s centres in the first quarter, including several in the constituency of the hon. Member for Oxford West and Abingdon. However, according to information supplied by local authorities, there were 2,447 children’s centres and an additional 735 linked sites—a total of 3,182 children’s centre sites—at the end of May 2017. Some 457 children’s centres had closed since 2010, and 14 new centres had opened.
I hope those figures clarify the matter. There had been some confusion in cases where a number of sites had been operated by one provider. Those should not be counted as closures, because those sites are still open.
On a positive note for the provision of children’s services in Oxfordshire, does the Minister join me in welcoming the council’s development of a new service for children that will combine children’s social care and early intervention, so that there is one seamless service?
Yes, absolutely. It is about providing a joined-up service, and enlightened local authorities understand that. They also need to ensure that the additional offer and the additional money going into childcare—more than £6 billion by 2020—dovetail with their own provision.
My next point follows on from that. Children’s services do not have to deliver all their services themselves. Indeed, they deliver many of them through local statutory, voluntary, community and private sector partners. The context in which children’s centres operate has changed since they were established. Funding for children’s services, including children’s centres, gives local authorities the freedom to decide how best to target resources and respond flexibly to local need.
We believe that it is up to local authorities to decide how to organise and commission services from children’s centres in their areas. Local authorities are best placed to understand local needs and how best to meet them, which does not always have to be through a children’s centre building. For example, the Government have established the troubled families programme to support those with multiple problems. Responsibilities around public health for under-fives now sit with local authorities.
The Minister is being generous in giving way. I congratulate him, as I should have done earlier, on his new position. The point about troubled families is concerning for all hon. Members present, given the difficult financial position that local authorities find themselves in. The level of provision is left to local decision making, but local authorities in difficult times often provide only the statutory minimum. There is a real challenge here, so what will the Minister do about it? How will he link up the good work done in early years by health visitors with what happens afterwards? Many disadvantaged families are losing out, which is affecting the children as well as the families themselves.
My hon. Friend makes another very reasonable point. Indeed, one of the challenges in our opportunity areas, where we are particularly focusing on disadvantage and how we can close the attainment gap, is considering how we can make early interventions with those hard-to-reach families, many of whom do not take up the childcare offer that is available— 15 hours of childcare are available for disadvantaged two-year-olds. Indeed, for those in work—many of these families are in work despite having difficulty in making ends meet—the 30 hours available from September will be a great fillip.
The Minister is a good, honest Yorkshireman—I know him to be one—so will he give me a straight answer to a question? He knows that the Children’s Commissioner made that announcement to which I referred. There was no Government Minister at the launch of the commissioner’s report on Monday, and I cannot understand why. Regarding all these vulnerable children, we know that the troubled families programme has been a disaster. What have the Government learned from that and what are they going to do to react to the commissioner’s report, which, as I say, was launched only this Monday?
I met the commissioner the week before and we discussed some of the points that she has made. Indeed, her work is very valuable in feeding into what this Government are doing and will continue to do in future to address the problem. As I have already said, we have introduced 15 hours a week of free childcare for disadvantaged two-year-olds and the diversity of childcare provision means that children’s centres play less of a role in delivering childcare themselves.
I am sure hon. Members agree that it is vital that every child, regardless of their background, is given the opportunity to reach their full potential. We know that the first few years of a child’s life are critical to shaping their future development. We also know that high-quality pre-school education reduces the effects of multiple disadvantage on later attainment, and on progress in both primary and secondary school. We recognise the crucial importance of early years education. With two fifths of the attainment gap embedded by the age of five, improving outcomes for our most disadvantaged children remains a top priority for this Government.
The evidence shows that all children benefit from a high-quality pre-school experience, but disadvantaged children see additional benefits that continue beyond school. Children from less advantaged backgrounds can be up to 19 months behind in their learning by the time they start school. That is simply unacceptable. We want to close this gap. High-quality learning from the age of two can help us to do so.
This Government have invested heavily in childcare and early years education. By 2020, we will spend a record £6 billion per year on childcare. We will also invest an additional £1 billion per year by 2020 in the provision of free childcare entitlements. In response to concerns from providers, we have increased the average funding rate for disadvantaged two-year-olds from £5.09 per hour to £5.39 per hour. The early years pupil premium continues to provide over £300 per eligible child, and we have also committed to provide supplementary funding of around £55 million per year for maintained nursery schools until 2020.
It is fantastic that more and more children are benefiting from that support. Currently, 97% of four-year-olds and 93% of three-year-olds are accessing funded early education. In addition, I welcome the figures that were published just last week showing a further increase in the proportion of the most disadvantaged two-year-olds accessing funded early education, which now stands at 71%. Nevertheless, I am happy to work with the hon. Member for Oxford West and Abingdon to increase that figure, including in her constituency.
That is a deluge of statistics and information, which I very much appreciate—all Members who are here today will be grateful for them and we will all want to trawl through them. However, has the Minister discussed the present situation with the National Day Nurseries Association, which is a very lively organisation that is based in my constituency of Huddersfield? Its staff are very wise, so will he please meet them very soon to discuss early years provision?
The hon. Gentleman is absolutely right—we have a deluge of delivery for our young children. I am very proud that we are stepping up to the mark in that regard. I would be more than happy to meet his constituents in Huddersfield to discuss that. My wife used to run a pre-school playgroup and then went on to work as a classroom assistant, so I know from experience within the family how important this type of provision is—if it helps at all, my mother was a primary headteacher.
What is more, the 30 hours programme, which will roll out nationally in September, will support around 390,000 working parents with the cost of childcare. I am pleased that 100,000 working parents have already registered for this additional childcare. I encourage working parents who have not already registered to do so before the deadline at the end of August.
Although children’s centres themselves provide just 1% of funded early education places for three and four-year-olds, they can help to identify and support families who otherwise would be unlikely to take advantage of early childhood services. In particular, children’s centres often encourage eligible families to take up our offer of 15 hours a week of free early education for disadvantaged two-year-olds. Children’s centres also work closely with local providers, offering funded places for two-year-olds to four-year-olds to ensure that families who need that crucial extra support receive it.
I am pleased that outcomes for children are improving. Early years foundation stage profile results show that, in 2016, 81.6% of children achieved at least the expected level in communication and language, compared with 72.2% in 2013. More children are achieving a good level of development by the age of five, and the gap between disadvantaged children and others continues to narrow, from 19 percentage points in 2013 to 17.3 percentage points in 2015-16. That is encouraging news and I am determined to make further progress.
The quality of early education is hugely important. In December 2016, 93% of providers on the early years register were judged by Ofsted to be good or outstanding. As of January 2016, most two-year-olds benefiting from free early education were doing so in a high-quality setting. We also know that we need to invest in the dedicated people who are responsible for delivering early years education and care including, I suspect, those represented by the organisation that the hon. Member for Huddersfield referred to, which is in his constituency. Earlier this year, we published our early years workforce strategy to help employers to support, attract, retain and develop staff to deliver-high quality provision.
I have a few moments to comment on some of the points made in the debate. The hon. Member for Oxford West and Abingdon referred to the previous commitment to consult on the future of children’s centre services, of which I am aware. The Government are committed to ensuring that all children, regardless of background, get the best possible start in life. I will consider carefully whether we can take additional steps. Indeed, the debate has fed into my thoughts.
The hon. Lady mentioned the closure of Sure Start children’s centres. Children’s centres have an important role to play in tackling disadvantage, but it is for councils to decide the best solutions for their area. Some councils are merging centres to deliver services more efficiently. Where councils decide to close a children’s centre, they must demonstrate first that children and families, and particularly the most disadvantaged children and families, will not be adversely affected. Secondly, they must demonstrate that they still meet the duty to have sufficient children’s centres to meet local need.
I am very grateful to the hon. Member for Oxford West and Abingdon for raising the incredibly important issue of tackling inequality. This Government have made a substantial financial investment in the early years and we want to ensure that it works for everyone, including the most disadvantaged.
Question put and agreed to.
[Mark Pritchard in the Chair]
I beg to move,
That this House has considered Government policies on social mobility.
It is a pleasure to speak under your chairmanship, Mr Pritchard. This debate builds on debates that were called in the previous Parliament. I believe that social mobility—or the lack thereof for the many—is the big issue of our time. It is creating a divided Britain, which not only is bad for our economy and our future, but is the defining issue of our time, as we have seen in recent elections and referendums.
The recent report on social mobility confirmed the points that have been raised about our divided nation. Over the past 20 years we have come to have a new geographical divide, an income divide and a generational divide. The geographical divide is between successful city regions and places such as my constituency of Colne Valley and Kirklees, which have seen a lack of regional investment, leading to cuts that are affecting the most vulnerable. This Government have failed to address social inequality in all three areas.
Not that the hon. Lady needs any time to prepare her answer to that question, but may I just say that I think the gentlemen might be suffering a little with the heat? It is very warm, so colleagues should please feel free to remove their jackets.
That is why some of us wore dresses.
There is the intergenerational inequality and the lack of opportunity for today’s young people to progress, which I think was brought to the fore in the general election, and there is also the huge regional inequality that my hon. Friend the Member for Colne Valley (Thelma Walker) mentioned.
I congratulate my hon. Friend on securing this debate on such an important topic. The Government are currently undertaking the youth full-time social action review, and last year I was lucky enough to visit City Year UK, which is a full-time social action programme. Does my hon. Friend agree that it is important to support such organisations and that the Government should listen to the review’s recommendations when they are published in December?
My hon. Friend makes a good point, and I sure that the Minister will listen to what he has to say.
We have huge regional inequality and many communities have been left behind, which I think was expressed in the Brexit vote. We have stubborn wealth inequality, with a growing divide between rich and poor. Our country’s failings on social mobility is the national challenge. As the Social Mobility Commission’s excellent report “Time For Change: An Assessment of Government Policies on Social Mobility 1997-2017” shows, despite some progress and well-intentioned policies, progress by successive Governments over the past 20 years has been painfully slow. The report by the commission, which is chaired by the right hon. Alan Milburn, states that
“successive governments have failed to make social mobility the cornerstone of domestic policy”.
That is the argument that I am putting forward today.
My hon. Friend is right to refer to the report, because it is a powerful document. Much of it talks about the need for investment in early years and schools as the vehicle for social mobility. How does she think the Government can square that with the cuts to early years and schools? For example, Parrs Wood High School in my constituency—a school she knows well—faces losing the equivalent of 30 teachers between now and 2020.
I thank the hon. Lady for calling the debate, which provides us with a good opportunity. Will she welcome the fact that in her constituency 29,686 more children are in good or outstanding schools than were in August 2010? Is not that great progress from this Government?
What the Minister says is belied by the fact that in further education in Coventry there have been cuts of roughly 27% and in the youth service there will be no funding for youth leaders, which does not exactly help the situation. Does my hon. Friend agree that if we are not careful we will create another lost generation?
My hon. Friend makes a powerful point. Post-16 and youth service funding is critical to the debate and I will touch on that later.
I urge all colleagues to read the Social Mobility Commission’s powerful report. It highlights the fact that the challenges we faced in 1997 are very different from those we face in 2017. It rightly calls for social mobility to be at the heart of all Government policy, decisions and actions, because it is only through a prolonged, determined and comprehensive Government-wide strategy that we may actually start to change the entrenched inequalities and the lack of social mobility for the many. The social mobility agenda is about the many, not the tiny few we often hear about who manage to get themselves from the council estate to the boardroom or around the Cabinet table. The Prime Minister says that she is looking for a national purpose that brings all parties and the country together, and I say to her that if she made tackling social mobility her calling and the key test for her Government, against which all her actions were tested, she would get wide support from across the House.
Before looking at some of the policy areas where more needs to be done, let us remind ourselves why tackling the divides in Britain is so important. The Sutton Trust has found that failing to improve Britain’s low levels of social mobility will cost the UK economy a staggering £140 billion a year by 2050, or the equivalent of 4% of GDP. On current trends, by 2022 there will be 9 million low-skilled people chasing just 4 million low-skilled jobs, yet there will be a shortfall of 3 million higher-skilled people for the jobs of the future. The economic divides are even starker when we look at the regional disparities. Output per person in London is more than £43,000 a year, yet in the north-east of England it is less than £19,000. London and some of our renewed cities, such as my own city of Manchester, are increasingly the home of graduates and have vibrant growing economies.
Getting kids from ordinary backgrounds to university is a key way of enabling them to move up and get on. Will my hon. Friend join me in congratulating the previous Labour Government on increasing student numbers, while acknowledging that there is still work to be done, particularly in post-industrial towns such as Ashfield, where we send only 21% of 18-year-olds to university, compared with an English national average of 32%?
My hon. Friend’s excellent point fits entirely with one of the main thrusts of the Social Mobility Commission’s report, which is that there are huge regional inequalities, particularly between our growing and vibrant cities, where many graduates live and work, and our heartland towns and former industrial places.
My hon. Friend is being very generous in giving way. Does she agree that it is not just geography but ethnicity that makes a difference? We sing long about the successes of London, but if we look at who is doing well in our schools, we see that it tends to be young people from black and Asian backgrounds, with white working-class kids still not making progress.
I thank the hon. Lady for giving way, and I commend her for securing this debate on a topic I know she is passionate about, and about which she has spoken passionately in the past. She was just talking about access to higher education. Will she welcome the fact that access for working-class families is at an all-time high, with students from working-class backgrounds now 70% more likely to apply to university than 10 years ago? Indeed, that was one of the areas on which the Milburn report gave a green light when evaluating the Government’s progress.
I am happy to accept that point, which the report talks about more broadly, but challenges remain. There are some warning signs on the horizon and we should be careful that we do not end up taking a backward step in this important area.
The Social Mobility Commission has found that the generational divide is yawning. Over the past 20 years, poverty among pensioners has halved and their income today, on average, exceeds that of working adults. Meanwhile, young people’s earnings have fallen. That cannot continue. It is no wonder that we saw a huge upsurge of anger, activism and engagement from younger voters at the general election. The wealth and income divide has also become much wider over the past 20 years, with top pay increasing much faster than the incomes of lower earners. In 1998 the highest earners were paid 47 times that of the lowest. By 2015 the highest earners were paid 128 times more than the lowest. Gaps in wealth have also grown exponentially, with home ownership and house price inflation benefiting the lucky few who already own their home. It is not just about the economic price we pay for these failings; as a society, these divisions are causing unrest, anger and resentment. That is leading to political volatility and, arguably, the rise of populism.
Those are just some of the reasons why the social mobility agenda is so important. It needs to be not only at the heart of all Government policy, but a national mission for our country. Successive Prime Ministers—Tony Blair, Gordon Brown, David Cameron and our current Prime Minister—have spoken a great deal about social mobility. Most recently, the current Prime Minister spoke about the “burning injustices” of our society. However, the Government’s approach, while making progress in some areas, has not matched the rhetoric and has been piecemeal and disconnected.
Let us look at what could be done about social mobility. There are many recommendations in the Social Mobility Commission report and from the Sutton Trust, Teach First and many others. Recommendations should not be limited to education policy—far from it. Every Budget, every Bill and every policy should be judged against whether it tackles inequalities and boosts social mobility for everybody, everywhere. There needs to be a single cross-departmental plan to deliver social mobility.
I congratulate my hon. Friend on securing the debate and making an excellent opening speech. We know that the challenge with social mobility begins in childhood. An estimated 3,300 children in my constituency are living in households with problem debt. One suggestion has been to give a breathing space to families facing problem debt by giving them 12 months to try to get back on their feet. Does she agree that that is one step the Government could take to make a big difference to families getting themselves out of problem debt?
My hon. Friend makes an excellent point. That is another great idea that I hope the Minister will respond to, and it shows the extent to which these policy areas need to be looked at across the piece.
Tackling social mobility also means looking at difficult issues such as inheritance tax, transport spending and social care. All those policies need to be looked at through the lens of social mobility. However, today I will focus on a few areas for which the Minister has responsibility, and for which the evidence and action needed are known and relatively straightforward. The first is early years, which colleagues and the Minister will know is a bug bear of mine, so I hope they will allow me to expand on that for a moment. It is well documented that by the time children reach the age of five there is already a big gap in school readiness or development between those from disadvantaged backgrounds and their peers. Action for Children found that more than half of children from low-income families do not reach the expected milestones by the age of five. Often that gap is never fully closed during a child’s schooling.
Given that we know some of what works, why are we not doing more? Over the past 20 years we have made some progress through family support services, Sure Start centres, quality early education and targeted approaches, such as the offer for two-year-olds. However, in recent times and with what is upcoming, the agenda seems to be moving backwards.
My hon. Friend is making a powerful speech. Does she agree that one of the Departments that needs to be brought into this conversation is the Home Office? I am thinking specifically about incidents of domestic violence, which have been increasing in my constituency. Experiencing and being a victim of domestic violence impacts on children, particularly very young children, and their educational attainment.
My hon. Friend makes an excellent point. Being in a domestic violence setting at home can have the most profound impact on the outcome of any child. We need to link that with children’s services and other family support services. She is absolutely right.
The Government’s emphasis is now almost entirely on childcare support for working families. That is a laudable aim in itself, but it perhaps focuses huge resources away from social mobility outcomes. Almost all the money for the 30 hours of free childcare for working families and tax-free childcare will go towards better-off families. Those policies are taking the Government’s focus away from other issues. By definition, the most disadvantaged do not get the extra support, and the delivery of the new policies is also having a real impact on quality institutions
The hon. Lady must understand that people working 16 hours on the minimum wage qualify for the additional 15 hours of funded childcare. Indeed, many people who cannot get into the workplace because of the cost of childcare will take the opportunity of 30 hours of childcare from September. That policy is a great achievement and will improve social mobility among people on low wages.
By definition, the most disadvantaged will not benefit from the policy. What we are seeing in some places, certainly in Manchester and other local authority areas, is that free childcare was given to the most disadvantaged, but that is now having to be switched from them to deliver the 30 hours for working families, and that surely is not what the Government intended. The Minister needs to have a look at that. Another unintended consequence of the new offer is the impact on our maintained nursery schools, which are an outstanding resource. Every single one—100%—of our maintained nursery schools are good or outstanding. Nearly all of them are in areas of high deprivation and disadvantage, but due to the new funding formula and the changes to funding, they are now under threat. Ministers need to look at the policies they are delivering and ensure that they meet the social mobility test and are not simply about getting people back into work.
Action for Children, the Social Mobility Commission and many others are calling for a clear plan to boost social mobility in the early years. That must include quality teaching, family support, children centres getting the resources they need and boosting the early years pupil premium. What happened to the life chances strategy that the Government spent two or three years working towards? It seems to have evaporated overnight.
Next, I want to turn my attention to schools. I do not want to take up too much time, although I have taken lots of interventions. As Teach First has shown, the social mobility challenge in our schools remains. While much progress has been made at primary, progress remains slow at key stage 4. One in three teenagers from poor families achieves basic GCSEs, compared with two thirds overall. As my hon. Friend the Member for Ashfield (Gloria De Piero) highlighted, if bright children from poor families had the same support as others, four in 10 would go to a top university. Today, only one in 10 does.
I congratulate the hon. Lady on securing an important debate. She is making some excellent points, but in improving the life chances of pupils from disadvantaged backgrounds, is there not a case for putting money behind university outreach programmes to identify young people with ability and talent, as happened under the previous Labour Government? That would make opportunities for those people so that they can be helped into careers that they otherwise might not have thought were even possible, such as healthcare, where there is a real lack of people from working class and disadvantaged backgrounds.
I agree with the hon. Gentleman. The widening participation agenda has been successful in places and is important, but other barriers to getting those jobs remain for kids who perhaps do not have the same social networks or support at home, even if they have the same qualifications as some of their peers.
The hon. Lady is making an excellent speech in this important debate. I think we can build a cross-party consensus, based on the report, about access to social and emotional learning. I might call it character education—I think one of her predecessors as shadow Secretary of State for Education and I debated that issue. Persistence, resilience and grit skills, as well as self-confidence and self-belief, are very important. They are often not given the same weight and therefore those who come from disadvantaged backgrounds do not get that access; access to extra-curricular activities is picked up in a similar way. Would the hon. Lady agree that that is something from the debate that could benefit from cross-party working?
I strongly agree with the right hon. Lady. I thank her for the joint working we have done on some of the issues in the past, and I hope that that will continue. When she was Secretary of State for Education, she was a strong champion for character education and extra-curricular education. I hope that that is something we can all work on going forward.
All the additions are absolutely right, but the foundation has got to be strong as well; the funding for our school places is important. If my son Jack decides to go to university, he will be the first in our family to do that, but the school that he is attending faces losing 19 teachers. The sixth-form college that he would almost certainly go to faces losing 22 teachers. At the same time, the Government have wasted more than £10 million on a failed university technical college and a failed free school. How can that make sense?
My hon. Friend raises a very important point. I know that he has been championing the issues in Oldham, and I hope to work with him to continue to do that. I will say something on school funding in a moment, if I could make some progress.
Of all the measures and policies of the last 20 years, one that stands out as transformational for our schools is the London Challenge. London went from having some of the worst schools to now achieving the narrowest attainment gap of anywhere in the country. It is a key part of the overall London effect; 30 of the top 50 constituencies for social mobility are in London.
There are two key learnings from the London Challenge, which are now seriously at risk. The first is the supply of great teachers. The Minister’s colleague in the Department for Education has finally started to recognise that recruitment and retention are major issues. Figures obtained by my hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) show that a quarter of teachers who have qualified since 2011 have left the profession. Statistic after statistic backs that up, and we know that it is the poorest children and the struggling schools that suffer most when teacher numbers drop.
Teachers deserve a pay rise. Yesterday’s pay settlement is a huge disappointment. Real wages of teachers are down by more than 10%. But it is not just about pay; it is about workload and the constant changes to curriculums and expectations. Ministers really must get a grip of the issue and do it fast.
The second learning from the London Challenge is about funding, which my hon. Friend the Member for Oldham West and Royton (Jim McMahon) mentioned. The increase in school budgets over many years, coupled with targeted support such as the pupil premium, has had a real impact on the attainment gap, which was narrowing until very recently. It has narrowed significantly in London, where funding was boosted the most. The real terms cuts to schools’ budgets that schools are now having to make—before we even get to the national funding formula—will, again, hit the poorest hardest. Interventions, extra support and supported activities all benefit the poorest most. Recent teacher polling has shown that a third of school leaders are now using the pupil premium to plug the gaps in general funding, that almost two thirds of secondary heads had had to cut back on teaching staff and that schools with more disadvantaged intakes were the most likely to report cuts to staffing.
The Government are totally kidding themselves if they think that the real terms cuts to school budgets, together with the teacher supply crisis, are not going to show in a widening of the attainment gap and a major step back in social mobility in our schools.
I met with the headteacher of Ashfield Comprehensive yesterday. The school faces a budget cut of almost £1 million from last September to this September, and he is facing a choice between bigger class sizes and fewer subjects. Does my hon. Friend agree that that is the sort of thing that hinders social mobility?
My hon. Friend is absolutely right. Those are some of the unpalatable decisions that headteachers are having to make. There is no question but that those decisions will have a real impact on outcomes, so I am sure we would all support the Minister going back to the Treasury to say that the real-terms cuts need addressing, and quickly.
Social mobility should be at the heart of education policy; every part of the system should work to unleash the talents of all young people. That means that existing grammar schools must do more to tackle the issues, rather than entrenching advantage and damaging wider social mobility. I am very pleased that the Government have dropped their plans to open new grammar schools. However, they said that they would tackle social mobility in existing grammar schools. Figures that I have released today show that since 2016, the number of children on free school meals in grammar schools has hardly shifted at all—it has gone up by just 0.1 percentage point—despite calls from Ministers that existing grammar schools should increase their intake of low-income children.
In the “Schools that work for Everyone” consultation, Ministers said that existing grammar schools needed to do more. They are now saying that they feel that they have fulfilled that objective and so are dropping plans to require existing grammar schools to address the issue. If existing grammar schools do not reform their admissions and play their part in boosting social mobility, they should cease to receive public funding. We should be rewarding the schools that do the most for pupil progress for the majority of pupils, and that narrow the attainment gap, which is why we should reform league tables so that they show not just attainment but pupil progress, and progress in narrowing the attainment gap.
I cannot cover everything in the short time we have. Needless to say, huge gaps remain in post-16 education. I hope that the new T-levels and quality apprenticeships will help to address that, but that will happen only if they remain focused entirely on social mobility outcomes and people do not get distracted by other agendas. As others have said, and as the Sixth Form Colleges Association and others have shown, post-16 funding in Britain is still among the lowest in the OECD. We need to address that too.
As we have discussed previously, access to university and, crucially, outcomes and access to work beyond university remain a huge concern. Too few graduates are working in graduate jobs; in fact, we have the third lowest level of graduates working in graduate jobs of all OECD countries. The only countries behind us in that league table are Greece and Estonia. That is a travesty and it brings into question whether the debt, and the exercise, is worth it. Destinations of graduates and others are still most determined not by qualification and ability but by networks and social connections.
We could have a whole other debate about regional inequalities and how we boost social mobility everywhere. The devolution agenda that we all support must also have social mobility at its heart.
I know that the Minister will want to tell us why we cannot afford any of these plans. I would say that we cannot afford not to do them. Our economy and society pays a heavy price for people working below their ability and for wasted talent and wasted communities. The Minister’s economics are false economics and will end up costing us dear in the long run. Achieving a step-change in social mobility for the many, not just the lucky few, is the challenge of our time. Opportunity and progress for the young, a new deal for left-behind communities and a radical rethink on tax and spend policies all need reshaping around a new national mission to make Britain a world leader in social mobility, not a country that sits towards the bottom of the pack, as we do today. Although Brexit will dominate and define, I am sure that we across the House will all come together around that national mission.
I thank the hon. Member for Manchester Central (Lucy Powell) for securing this important debate. The Government have made significant progress on tackling social mobility, but we need to do more to remove the barriers that stand in people’s way. People should not be prevented from fulfilling their potential because of their age, family circumstance, race, disability, sexuality, postcode or simply how much their parents earn. Too often, the ladder of opportunity runs out of rungs pretty quickly. The Government are already getting on with some of that, and we are seeing results. I am sure my hon. Friends will want to talk in more detail about that.
I am aware of that. The hon. Lady may not be aware of this, but in Scotland roughly one in five people leaves school and goes straight into the dole queue. That is why it is important that we look at both Governments’ policies on improving social mobility and continuing to provide good jobs. The record employment under this Conservative Government is so important.
I welcome the hon. Gentleman to his place as a newly elected Member. He is talking about the figures for Scotland, but does he recognise that, under the Scottish Government, more children are progressing from school to positive destinations than ever before? [Interruption.]
I am aware of that, but some of the things the Scottish Government consider to be positive destinations are things that most people would not consider to be so.
The Government are getting on with some of those things, but we need to be imaginative in our responses. We know that two children with parents on the same income and with the same educational qualifications will experience different levels of social mobility depending on their surroundings. A person is more likely to be upwardly mobile if they live in a mixed socioeconomic neighbourhood, so how do we create policies that bring different parts of the community together and expose our children to people with different views, values and backgrounds?
More and more people are working atypical hours, which often conflict with the opening hours of essential public services. If someone does not have a network to fall back on or someone to pick their kids up from school, they are more likely to drop out of the jobs market. If someone struggles to get a doctor’s appointment around their working hours, they are much less likely to get early help for a health problem.
As well as social mobility, we need to talk about social exclusion, because the latter is hugely detrimental to the former. Of course, a huge driver of social mobility is earning power and the confidence and self-reliance that comes from being in work. Conservative action to support a modern industrial strategy, invest in infrastructure, provide city deals for places such as the Glasgow city region, and cut taxes for small businesses, corporations and families alike, is helping to drive employment growth. We have more jobs and record employment. More low-paid are out of taxation, and the national living wage has been introduced. Those things really matter, because they broaden opportunity, deliver jobs and improve future generations’ life chances.
It is true that in-work poverty is too high in Scotland and the rest of the UK. There are UK-wide levers, such as tax and benefits policy and the national minimum wage, but the agenda can be set at a more regional level, both by the devolved Administrations—particularly Scotland, if there are further transfers of tax and social security powers—and by local councils. That should not be overlooked. Regional economic development can drive up wages and increase the demand for employees to work more hours. Skills development can help workers move into better-paid jobs, and a focus on economic diversification can aid unsatisfied workers change industry. For example, the underemployed—people who would like more hours but cannot get them—are more likely to work in fluid sectors such as hospitality and retail. That all helps to motor social mobility, and it must continue to form the cornerstone of the policy agenda. The Taylor report provides a fantastic opportunity for the Government to revisit many of the structural issues in the modern world of work, and to adapt and create policy that takes the new landscape into account.
Although education is devolved, there are things that we can learn from each other on both sides of the border. I believe that a good education is the single biggest social mobility tool we can provide. Much of the education debate centres on higher education and tuition fees, so I was pleased that the hon. Member for Manchester Central focused more on early years, because that is key. Many people have been dealt their cards for life by the time long before they fill in their UCAS form, so if we are serious about social mobility, funding has to be ploughed into early years. It is about not just increasing hours for three and four-year-olds, which most parents cannot access anyway—the Governments in Westminster and Edinburgh appear to be in an arms race to do that—but investing in high-quality childcare.
The Scottish Conservatives have a distinct voice and get it right on that issue. We say, first, that before increasing hours for three and four-year-olds, we need to extend the current allowance to two-year-olds and more disadvantaged one-year-olds; and, secondly, that we need to ensure that funding is used to train up a more highly qualified professional workforce. Early years education and childcare need to have a real purpose of intent. We must develop literacy and numeracy, which are dropping very quickly in Scottish schools, as well as social skills, to narrow the divide that is currently so wide as to be almost irrecoverable by the time our kids walk through the primary school gates. We must bridge the gap between the point maternity leave ends and free childcare provision begins. We need to understand that the driver of social mobility is in those crucial early years, when the attainment gap takes root.
Students from the most advantaged areas are four times more likely to go to university than those from the least advantaged areas in Scotland—it three times more likely in Wales and Northern Ireland, which is lower but still high, and two and a half times more likely in England. That starts right back in nursery. In Scotland, the gap in attainment can start as early 18 months.
My hon. Friend is making a very thoughtful contribution to this excellent debate. I completely agree with him about the need for investment in early years. We need to take a longer-term look at public investment, which does not always happen, to ensure the investment improves children’s life chances from very early on. Given that local government budgets in England are under a lot of pressure, and that a lot of early years funding comes from local authorities, what is his advice to the British Government about how to improve things in England, drawing on his Scottish learning?
I have learned that it does not tend to go down well when Scottish MPs stick their oar in, so English MPs should deal with their own system. There have been large local government cuts to the settlements in Scotland, which are impacting on services. My hon. Friend is absolutely right to talk about the long-term view, but unfortunately Governments of all colours in all Parliaments around the UK often look for short-term quick fixes.
One of the things I am particularly pleased to see down here in Westminster is the UK Government’s focus on technical and vocational education. We have not seen that in Scotland, where there have been huge cuts to technical education and more than 150,000 college places have been cut. The Scottish National party and the Scottish Government have decided to value academic education over and above technical education. That is completely the wrong way to do it. I am very excited to see what these changes and reforms in the English school system will do. The Scottish Government have finally given way a bit on things such as Teach First. The hon. Member for Manchester Central talked about the London Challenge, which was hugely successful, and which we can learn a lot from in Scotland. I am very excited to see how some of those reforms play out.
I would, but the Scottish Government have been in power for 10 years, and they seem only now to have decided to make education their priority. That has come a bit too late for many families and a lost generation of kids who have been in education under devolution.
My hon. Friend is making an excellent speech. I welcome him to his place. I want to touch on his comments about technical and further education. I have campaigned in this House to ensure parity of esteem between those routes and higher education. He talked about filling out UCAS forms. I have talked to Ministers about the idea of having a UCAS for apprenticeships system, which Alan Milburn recommends in his report and which was included in the Government’s industrial strategy. Will my hon. Friend join me in welcoming that proposal, which could ensure parity of esteem and make it easier for young people to embrace a career outside university?
I am pleased that the hon. Gentleman raised the issue of apprenticeships. It is important that we focus on access to university and higher education, but for an awful lot of young people, a route into an apprenticeship can unlock their potential. I co-chair the all-party group on apprenticeships, and we are launching a report today that focuses on what the Government can do to increase massively what schools and colleges do to promote apprenticeships, to ensure that schools are incentivised to send their children and young people into apprenticeships rather than just the university route. Otherwise, they close up avenues to young people who would benefit from apprenticeships. I encourage the Government to take up some of the recommendations in the report.
The hon. Lady makes me think of the number of graduates not going into graduate-entry jobs, which the hon. Member for Manchester Central mentioned earlier. Partly that is because of the exponential rise in the number of graduates, and because the UK jobs market has not kept pace with it. That brings us to the wider issue of whether there are a lot of people going to university whose future potential would be best tapped into through another route.
Kids learn differently, so we need to allow them to be taught differently. They have different skillsets, so we need to have an education system that allows all of those skillsets to be nurtured and developed. Ultimately, kids have different aspirations and goals and we need to ensure that we have guidance and routes in place to help every child get to where they want to be, rather than being funnelled automatically through to university education as a default, which is what happens in a lot of schools.
Many have said in the past that poverty is a cost that the UK cannot afford. They are right. We need to move from treating the symptoms of poverty to treating its underlying and fundamental causes. The commission, which is a few years old now, found that £4 in every £10 was spent on dealing with the causes of poverty after they had occurred, not on preventing them. That simply wastes bad money.
The Government have a great story to tell, but people are ultimately more than numbers on a spreadsheet or plots on a graph. Social mobility and the effectiveness of the Government’s policies are measured just as much in how people feel their lives are going on the ground. Far too many people feel let down and passed by. It is simply not okay for the UK to be a country where it is still better to be rich and a bit dim than poor and clever.
What was so important about the Prime Minister’s first speech outside No. 10 was that, like David Cameron’s life chances agenda, it understood that, although income is crucial, we will not get rid of poverty and improve social mobility by lifting income levels alone. We have to deal with some of the underlying causes, which means that too many people simply do not get a fair shot.
It is absolutely vital that, whatever else might be going on, the Government go back to the speech and put it at the heart of everything they do. If they can do that, they can truly tackle the potential sapping prejudices people face every day and make a real push on social mobility.
I congratulate my hon. Friend the Member for Manchester Central (Lucy Powell) on securing this debate. Obviously, party political points can be made about funding and the closure of Sure Start and children’s centres and suchlike but, leaving those to one side, I hope the Minister will not be defensive. He was very defensive in responding to one or two of the comments made and said, “Oh, this is what the Government are doing.” My hon. Friend had a powerful message: there is a need for a national crusade to tackle inequality and social mobility in our country. The various reports that have been mentioned have a powerful message. They state that there has been progress, but under successive Governments it has been slow and the gap between people has increased. It is now a national disgrace that, in one of the richest countries in the world, life is so unequal and so lacking in opportunity for people born into certain situations. The Minister needs to respond to that challenge rather than say, “This is what we are doing.” There is a time for a party political debate, but this is not the right time.
I will explain why I think this issue is so important. I started teaching in 1976. After my post-graduate course, I was able to choose which school I went to. I had studied social background and educational attainment, so I chose to go to a school with some of the most difficult challenges. The school was in an educational priority area. Teachers were paid more money to go there and the best people were recruited. If we went back to that area now, 40 or so years later, we would find that many of the same families are still stuck in a state of poverty and low achievement. I am not a prophet of doom, but that tells us that that situation simply cannot be right. It is simply unacceptable that we drive round our cities or our rural areas and can almost point to where there is low achievement and low aspiration. The challenge to the Government—hopefully the next Labour Government—is what are they going to do about it? We cannot go back to the policies that have not worked or have worked too slowly.
This is difficult for the Minister. We cannot pass a law that says there should be good parenting, but some of our families and parents need more support. It cannot be right that sometimes when a child goes to school or nursery, they cannot use a knife and fork. Something is wrong and we need to look at how we support families to get their children to the point they need to be at to enter our schools or our nurseries. We need to get them to the point where we can really say social mobility is the priority of whatever Government of the day.
It is a pleasure to serve under your chairmanship, Mr Pritchard. I pay tribute to the hon. Member for Manchester Central (Lucy Powell) for a very thoughtful speech, particularly on evaluating pupil progression and outcomes for graduates. There is much more work we can do in both those areas. I also pay tribute to my hon. Friend the Member for East Renfrewshire (Paul Masterton) for his excellent speech.
Opportunity for all was my calling into politics—we all have our own individual callings. I went to a school that was at the bottom of the league tables. My father died at an early age and I understood the importance of opportunity for all, regardless of background. In my remaining two and a half minutes, while celebrating the fact that record employment has seen youth unemployment in my constituency fall by a staggering 61%, which is a vital tool for helping social mobility, I have a quick wish list of things that I want a proactive and constructive Government to deliver.
First, it is welcome that 1.8 million more children are in good or outstanding schools, but as a society we need to do more to celebrate the very best of teachers: those who have made the biggest difference, particularly to those from the most challenging backgrounds. We need to make more of those really outstanding individuals. I am not biased because my father, grandma and grandad were all teachers.
We need far more mentors to come into schools, engaging the local business community and the voluntary sector, because the people who have made a difference can inspire young people. I still remember my careers teacher telling me I had no chance of getting into Parliament, so anything is possible.
I am a big fan of university technical colleges, but they have a challenge. The entry level is two years after the typical secondary school enrolment, so there is a disincentive for secondary schools to suggest their best students go there. Perhaps the Government should consider lowering the age of entry or share the school league table results of the students so that those who are more technically minded can embrace their full potential.
I am a huge fan of apprenticeships. I was proud once again to attend the graduation ceremony at Swindon College last week where people from some really challenging backgrounds have started their first step into a successful career. I love the idea of the UCAS system, but we need to do far more to promote the opportunities of apprenticeships to small businesses. The sugar tax is a wonderful opportunity to provide constructive sport, after-school and holiday activities, which make a difference to busy parents as well as providing enjoyment, confidence and teamwork skills.
The national citizen service is a brilliant scheme, but in recent years I feel the quality of the leadership there is not as good as it used to be, so we are missing a trick. I am a big fan of the introduction of the named work coach in universal credit that will for the first time provide support for those in work and not just finding work. Finally, on the income divide between the older and younger generations, only six Governments since the second world war have collected more in taxation than they spend. When that does not happen, a further burden is put on our children. We must never forget that.
It is a pleasure to serve under your chairmanship, Mr Pritchard. I congratulate my hon. Friend the Member for Manchester Central (Lucy Powell) on securing another debate on this incredibly important subject. As chair of the all-party parliamentary group on social mobility in the previous Parliament, I have read with increasing alarm the numerous reports produced by the Social Mobility Commission. Its recent report, “Time for Change”, was a real wake-up call. As my hon. Friend said, it is the challenge of our time. I was attracted to the idea of breaking down recommendations into four life stages, but the report shows that unless we get the right measures in place at the first stage in the early years, everything else becomes much more difficult. Sadly, falling behind in those early years is often a portent for one’s entire life.
Hon. Members have already talked about the geographical divide, but there is also a generational one. I do not believe that the recent general election was a ringing endorsement of the status quo. We saw that the more young people engaged with the question of what they wanted from the Government, the more they turned away from the existing set-up—and who can blame them? Do they want to better themselves and study at university? There are more opportunities now, but they come with an eye-watering debt that might never be paid off. Do they want to own a home of their own? Unless the bank of mum and dad is there to fall back on, it could be a long wait. Do they want to build a career in a profession doing something rewarding, financially and intellectually? Those opportunities exist, but for the few, not the many.
Young people’s more likely experience in the job market will be casual work, low pay and chronic insecurity. As the commission’s report highlights, young people’s wages have fallen by 16%; one in five people in the UK are stuck on low pay—a higher proportion than in comparable nations—wages have stagnated in real terms, leading to falling living standards, particularly for young people; and, although youth unemployment has fallen, the number of young people who are not in education, employment or training has barely changed. The number of young people receiving careers advice or work experience has fallen, and more new apprenticeships have gone to older workers than to younger ones.
As the report suggests, we should adopt what I would describe as a “mobility in all” approach, and examine every Government policy or proposal for how it would improve social mobility. One good example of how we are not doing well at that is the Government’s decision to expand the number of medical school places. The all-party parliamentary group’s report on access to the professions recognised medicine as one of the areas in which those from privileged backgrounds are disproportionately represented. I recently asked the Minister a written question on what steps the Government were taking to address that. His response was:
“Funding an additional 1,500 medical school places in England will provide more opportunities for people to study”.
Perhaps it will, but without further intervention it is more likely just to repeat the pattern of professions being dominated by people from fee-paying schools.
However, it is not only on access to professions that we need to do more. If the reports that up to a half of all jobs will be automated in the next decade are correct, we will have to undertake a massive, state-sponsored exercise in reskilling the workforce. The world of work is changing rapidly. Training and redeployment are threads that should run through a person’s entire life. Three, four or five career changes will be the norm in the future, and we are not ready for that.
It is a pleasure to serve with you in the Chair, Mr Pritchard. The recent work of the Social Mobility Commission, which has already been mentioned by a couple of hon. Members, was so damning that I rather suspect the commission is not long for this world. In two decades there has been no real progress: 20 years in which the only movement seems to have been backwards. From my brief look at the research papers, it appears that Scotland is not particularly included in the analysis. I do not know whether I would have found references to Scotland, Wales and Northern Ireland if there had been more time, but the report seems mainly to be a body of work referring to England. Scotland, of course, has its own Government and Parliament, to take forward more progressive policies—policies so progressive that Labour copied them wholesale in its general election manifesto and was then praised for being radical.
Social mobility, however, depends on a lot more than the current devolved powers can deliver. It requires easy access to social security—a helping hand for people who want to make a better life through education and perhaps start their own business. It also requires a good health service, good housing and a cohesive society. It needs opportunities to be available—an economy that works in the best interest of us all, rather than just a few. It needs the Government to take an attitude that encourages new enterprise rather than protecting those who already have money. Real social mobility requires an expansive, open attitude to the world—the kind of attitude that would embrace the EU and immigrants, and the opportunities that both bring. Social mobility needs parity of esteem between people, which seems to me to be in pretty poor supply in this place.
To deal briefly with the commission’s research, it said that both Tory and Labour Governments have largely failed the people they were elected to represent. I was particularly taken by what it said about the stalling of young people’s ambitions or, to put it in brutal capitalist terms, the waste of the great resource of youth. Young people’s wages are lower now than they were in 1997, for goodness’ sake; they should be building their lives, and the economy should benefit from their frittering away, if you like, a decent disposable income before they get serious financial commitments that eat it all up. That is before we consider the damage that carrying a huge student loan does to people’s prospects.
First, I am sure that the hon. Lady is aware that the rise in low pay is much slower in Scotland than in the rest of the UK. Secondly, given than in 2014 Alan Milburn said that a lack of political debate and engagement on social mobility in Scotland meant that it was sleepwalking into a social mobility crisis, does she accept that perhaps the Scottish Government had other things on their mind in about 2014, and that they took their eye off the ball in relation to social mobility policy?
I remind the hon. Gentleman that youth unemployment is at its lowest rate since records began in Scotland—it is the second lowest in the EU— that free tuition has been reintroduced and protected, so that young people do not start their working lives with enormous debts, and that a record number of Scots are supported into university. He appears to have forgotten those facts.
The proportion of young people not in education, employment or training is still at the same level. A valuable workforce in England is wasted, sitting on the sidelines whiling their lives away. Retention and graduate outcomes for disadvantaged students have barely improved. Careers advice and work experience opportunities are disappearing and apprenticeships go to older rather than younger workers. Generation after generation have been failed by the paucity of ambition of Governments who thought it more important to curry favour with the wealthy and privileged, and left a fabulous resource untapped. That is short-sighted at best, and more likely cruel and thoughtless. Social progress and social justice require social mobility. Governments, Parliaments and politicians fail if we do not facilitate that.
I think that the hon. Member for Edinburgh North and Leith (Deidre Brock) read a different report from the one I read, which highlighted both successful and unsuccessful policies. We should not finish the debate without mentioning one of the most extraordinary Ministers I have ever met—Lord Adonis. His work on the London challenge is a beacon, showing what can be done.
Housing is the largest issue facing my south-west London constituency, so I want to mention some housing facts. Owning a home is an important part of people’s feelings of self-worth and success, and social mobility. It was the most financially important thing to happen to my mum and dad in their lives. That is why it is worrying that home ownership among the under-25s has dropped by 50%. Even more worryingly for children, home ownership rates for 24 to 35-year-olds have reduced from 59% to 37%. It strikes me as extraordinary that the report suggests that some of the poorest families spend 31% of their income on housing, because people coming to my surgery spend 110% of their income on it. They work but are completely dependent on housing benefit to pay their rent. As for the people at the top, in 1997 they spent 13% of their income on their house, whereas today they spend 8%.
In 1997 the value of homes in relation to the income of their owners was in a ratio of 3.5:1, meaning that people could expect to buy a house worth 3.5 times their income. Today the ratio is 9.5:1. That is impossible to achieve, so we throw families with young children into the unregulated and uncontrolled private rented sector, where they have not only the monthly fear about whether they can clear their rent, but the knowledge that they can be evicted simply with a court order. The number of families I meet who have children—often disabled children—and who move house up to three times a year, and the thousands of children currently in poor temporary accommodation in the capital, paid for out of our taxes, is a ticking time bomb for social mobility. I hope that the Minister will discuss housing in his response.
It is a pleasure to take part in the debate with you in the Chair, Mr Pritchard. I congratulate the hon. Member for Manchester Central (Lucy Powell) on securing the debate, and on her thorough speech. She had ample support from this well-populated Chamber.
I want to mention a couple of speeches, including, obviously, that of my hon. Friend the Member for Edinburgh North and Leith (Deidre Brock), who has just taken over as the Scottish National party spokesperson on fair work and employment. She made a good speech about the situation in Scotland. The hon. Member for Gedling (Vernon Coaker) discussed his past as a teacher and previous initiatives. He is right: social mobility is about more than education. In many ways we need to address the reasons for children turning up at school in an impoverished state. That is something that will be important. It is not just a matter of education, although that is a driver for improving social mobility. We need also to consider why some children arrive at school like that. At the end of the day, that comes down to money in people’s pockets, and we need to address it quickly.
The “State of the Nation 2016” report highlights the devastating reality about social mobility in the UK:
“The rungs on the social mobility ladder are growing further apart.”
That is having an effect on an entire generation of young people. In fact, the Social Mobility Commission highlighted the fact that 35% of those aged between 18 and 24 in the UK believe that social mobility is getting worse. We live in a society where those from less advantaged backgrounds find it harder and harder to advance their social position in the UK. We therefore cannot afford to ignore their plight and watch the gap widen further.
The Young Women’s Trust, already quoted, has shown that in the UK more than half of
“young people said they feel worried for the future”.
That includes those who are transitioning from full-time education to work, and those who are suffering as a result of poor vocational routes. The report from the trust continues:
“As a result, young people are struggling to make ends meet, unable to move away from home or forced to live in insecure accommodation, skipping meals so they can feed their children and turning to food banks.”
The UK Government should be absolutely appalled by such realities.
The Social Mobility Commission’s analysis of the lack of mobility in the UK focuses on various life stages in which progress has or has not been made: no life stage has received a green rating; two are amber, “Early Years” and “Schools”; and two are red, “Young People” and “Working Lives”. That furthers the emphasis that should be placed on progressing the position of young people in society, and increasing incomes for all groups rather than just some.
The House of Commons Library blog notes that young people—those in their 20s in particular—have seen their average incomes slump, thereby linking the challenges faced by the younger generation to the lack of productivity in our economy. Children are told that work is the best route to greater success, but how can that motivate them when so many see their parents struggling day in, day out for low wages, with the worst wage growth in 200 years, according to the Resolution Foundation, uncertain job security and reductions in the tax credits that were designed to help them?
In Scotland, we have seen greater efforts to increase social mobility through free tuition fees, increased investment in education—in early years in particular, and £750 million invested in closing the attainment gap—and commitments from the Scottish Government to increase early learning and childcare entitlement to 1,140 hours per year by 2020. Those initiatives all aim to give every child the best start in life, regardless of their wealth or social background. The importance of free tuition fees remains prevalent and a key investment in the future of our young people. No child should be thwarted of an education through a fear of debt created by the harsh tuition fees imposed on students in the rest of the UK. We are therefore doing what we can in Scotland within the devolved framework.
It is time for the UK Government to step up to the mark, using the full suite of their powers. To do so, they should examine the UK’s position in comparison with other countries around the world. A report by the Stanford Centre on Poverty and Inequality highlights the fact that social mobility in countries such as Denmark, Norway and Finland is far greater than that experienced in the UK. Instead, we are likened to and ranked lower than the US. The Economist has detailed issues with social mobility in the US by linking them to education. Many elite universities seek to find talent from all backgrounds, but the middle class are still left with huge debts to repay merely because they want the most desirable jobs, most of which require a university degree. The ways of US education further the Stanford Centre’s analysis that
“the American Dream is evidently more likely to be found on the other side of the Atlantic, indeed most notably in Denmark”.
Looking to the practices of Scandinavian countries and learning from their efforts would ensure that a more proactive approach is taken to increase social mobility across society, rather than having it focused on the privileged few. Denmark in particular invests largely in its education, thereby allowing the cognitive skills of low-income children to benefit. It is time to invest in our services and our people to allow the best outcomes for people from all backgrounds to flourish. Right now, too many are being stymied by this UK Government’s policies.
It is a pleasure to serve under your chairmanship, Mr Pritchard. I, too, congratulate my hon. Friend the Member for Manchester Central (Lucy Powell) on securing this debate. It follows a debate in the main Chamber that she, the right hon. Member for Loughborough (Nicky Morgan) and the then Member for Sheffield, Hallam secured from the Backbench Business Committee in the previous Parliament.
The Government’s Social Mobility Commission report, “State of the Nation”, told us the scale of the challenge we face to improve social mobility in Britain. The report told us in no uncertain terms:
“Britain has a deep social mobility problem…We identify four fundamental barriers that are holding back a whole tranche of low and middle income families and communities in England: an unfair education system, a two-tier labour market, an imbalanced economy, and an unaffordable housing market.”
That was also referred to by my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh).
The report presented the Government with a number of proposals on parenting and early years, schools, post-16 education, jobs and housing, yet there is no evidence that they have yet listened fully to those proposals, let alone made them policy. Will the Minister tell us which of the recommendations his Department will take forward as policy? For example, on early years, the report calls for the Government to:
“Set a clear objective for early years services that by 2025 every child is school-ready at five and the child development gap has been closed, with a new strategy to increase the availability of high-quality childcare to low-income families.”
I welcome the contribution of the hon. Member for East Renfrewshire (Paul Masterton), who talked in particular about early years.
The Minister’s Department has made no indication that it will adopt such plans. In fact, its policies will do quite the opposite. Will the Minister tell us why, instead of directing resources towards those who need it most, his Department will spend around £1 billion a year on a policy of so-called tax-free childcare, which will be of greatest benefit to those who have £10,000 to spend on childcare? Will the Minister tell us which low-income families he knows who have £10,000 to spend, or will this be another ditched policy?
Will the Minister tell us why the eligibility criteria for the 30 hours of free childcare will actually mean that tens of thousands of low-income families are not eligible for the extra childcare? I am sure he is growing tired of being reminded of promises in the 2015 manifesto that are being broken, but the manifesto pledge was clear, promising that his party would
“give working parents of 3 and 4-year-olds 30 hours of free childcare a week.”
On manifesto pledges, will the hon. Gentleman clarify the situation on student debt? On Sunday, we seemed to get a different message from the shadow Secretary of State, the hon. Member for Ashton-under-Lyne (Angela Rayner), from the one we heard during the general election?
First and foremost, that was not in our manifesto. In this country, we have about £80 billion of student debt stored up, and the Department has already estimated that we will not get a third of that back. We already have the most indebted students on the planet, and at some stage the Government will have to tackle that scenario.
The Opposition know the immense importance of intervention in the early years to improve the life chances of children in Britain. That is why Labour opened more than 3,000 Sure Start centres, and increased education spending every year that we were in government. In this week’s spirit of new-found bipartisanship, will the Minister follow our example and support the most disadvantaged children, as we did in the previous Labour Government?
I will briefly address a number of recommendations. First and foremost, I remind the Minister that his own Social Mobility Commission took a clear view on his party’s flagship grammar schools policy going into the election. The commission said that grammar schools would not work. Eventually, however, the electorate sunk the policy, and that was sneaked out in a written statement while the Secretary of State and the Front-Bench team were on the Floor of the House of Commons.
Before the election, we heard a great deal about a White Paper. Will the Minister confirm whether we will be getting an education White Paper in this Parliament? Will he also confirm whether the £500,000 of funding pledged for new grammar schools will now start being put back into the general schools budget, which is under severe pressure, as we all know?
We have reached a point at which school budgets are facing real-terms cuts for the first time in 20 years. The National Audit Office has told us that there will be an 8% cut in per pupil education spending over the course of this Parliament. That will not help social mobility and is flagrantly breaking another clear 2015 manifesto commitment that the funding following a child into schools will be protected. I can see that from the Minister’s own education authority of North Yorkshire, including his fine constituency of Scarborough and Whitby. He pointed out to my hon. Friend the Member for Manchester Central how many children were in better schools, but £28.5 million is being taken out of schools in North Yorkshire between now and 2021.
Will the Minister therefore do what the Prime Minister failed to do when asked about that and explain why the Government are breaking another manifesto pledge? Cuts to school budgets will make it impossible to deliver on many of the Social Mobility Commission’s recommendations, shift resources towards areas that most need them, close the attainment gap and support teachers. Teachers continue to leave the profession in record numbers. My hon. Friend the Member for Manchester Central cited statistics that show that a quarter of trained teachers have gone since 2011. I am a former teacher myself—brilliant colleagues in Trafford, where I worked for many years, are leaving the profession because of the real-terms pay cuts over the years, the increasing pressures on school budgets, and class sizes, which are increasing more and more.
The Government have failed to give even a basic response to the recommendations of their own Social Mobility Commission. I wish that they would do so. I praise my hon. Friends the Members for Ellesmere Port and Neston (Justin Madders), for Mitcham and Morden and for Gedling (Vernon Coaker), and the hon. Members for Edinburgh North and Leith (Deidre Brock) and for Airdrie and Shotts (Neil Gray), for their contributions. The University of Oxford recently published a report about food bank use, in which the Bishop of Durham, the Right Rev. Paul Butler, wrote:
“This report highlights the need for all of us to refocus our efforts on ensuring that every child is able to reach their full potential regardless of their background.”
All Members should make that their motto when talking about this issue.
I certainly agree with the very last thing that the hon. Member for Wythenshawe and Sale East (Mike Kane) said; it seems to me that the entire House could be united around that comment by the Bishop of Durham. I thank the hon. Member for Manchester Central (Lucy Powell) for securing the debate; I am pleased to have an early opportunity to discuss this issue. I will leave a couple of minutes for her to sum up at the end, if she would like to.
Education is fundamental to breaking the link between a person’s background and where they get to in life. It is our primary tool for opening up opportunity and giving people a chance to go as far as their talents and ambitions will take them. The Prime Minister has talked about areas in which we can work together, and I hope that this is one of those. The hon. Member for Gedling (Vernon Coaker) was possibly a little churlish; I was really only trying to correct one or two facts that might have helped the hon. Lady to develop her arguments.
I am grateful to the Social Mobility Commission for setting out its views in its recent “Time for change” report, and I add my personal thanks to Alan Milburn. We welcome the report and recognise its conclusion that life chances are too often determined not by someone’s efforts and talents but by where they come from, who their parents are and what school they attend.
At the start of this year, the Secretary of State set out three priorities for social mobility. They were tackling geographic disadvantage; investing in long-term capacity in the education system, and ensuring that that system really prepares young people and adults for career success. Before I explain how we are delivering against those priorities, I should emphasise that we are driving opportunity through everything we do. For instance, there are now 1.8 million more pupils in good or outstanding schools than there were in 2010, including—dare I say it—11,043 more in Conservative-controlled North Yorkshire, where 73,096 children are in good or outstanding schools.
The Minister mentioned—it was a Minister’s “microphone moment”—1.8 million pupils. May I point out that those exact pupils were identified in 2010 by a Labour Government as being in coasting schools? The resources were put in, and this Government picked the low-hanging fruit. The Government say that more pupils are taught in good schools, but if that is so, why are our programme for international student assessment scores going down in international comparison?
I disagree. As some of the primary school results that recently came out show, we are making real progress, certainly in key subjects such as maths and English. I am sure that we all welcome the tremendous impact that that will have on young people’s life chances.
I could not resist intervening, as my hon. Friend mentioned North Yorkshire schools. As a North Yorkshire MP, he will be aware that the current funding formula disadvantages pupils in North Yorkshire to the tune of hundreds of pounds relative to similar pupils in other areas around the country. Will he urge the Secretary of State to continue her work to correct that unfairness in the funding formula and find a positive solution for students in his constituency, in my constituency and across the country?
My hon. Friend makes a valid point. When I was first elected, I visited a school in one of the most deprived areas of my constituency. The head, who had come from another part of the country, said, “If we were in the middle of Rotherham, Bradford or Hull, we would be getting about 30% more money because of the school funding formula.” People in North Yorkshire certainly look forward to that being addressed.
As well as increasing school quality, we are strengthening the teaching profession, opening up access to higher education, transforming technical education, delivering 3 million apprenticeship places and investing in careers education. Beyond that progress, the Department is delivering against its social mobility priorities in several specific ways. We are tackling geographic disadvantage by focusing efforts on supporting specific areas that face the greatest challenges and have the fewest opportunities. We are investing £72 million in 12 opportunity areas—social mobility “cold spots” where the Department is working with a range of local partners to break the link between a person’s background and their destination. Those areas face some of the most entrenched challenges, as described in the Social Mobility Commission’s index last year.
Our approach goes beyond what the Department for Education and central Government can do alone; it extends to local authorities, schools, academy sponsors, local and national businesses, local enterprise partnerships, further education colleges, universities and the voluntary sector. Through that process, we will not just build opportunity now but lay the foundations for future generations. I was in Oldham on Thursday, and I was particularly impressed by the ambition and motivation in that opportunity area. Indeed, I am no stranger to some of the challenges in such areas—one of them is in my constituency. Hon. Members will note that that opportunity area had already been designated when I took on my current role.
Tackling geographic disadvantage is important, but so is investing in the long-term capacity of the education system. We are absolutely clear that some of the biggest improvements in social mobility can be achieved by deploying high-quality teaching. Contrary to what the hon. Member for Manchester Central said in her opening remarks, we have more teachers in our schools than ever before. There are now more than 457,000 teachers in state-funded schools throughout England, which is 15,500 more than in 2010.
I indicated that I was happy to give the hon. Lady a couple of minutes to get her own back on me if she needs to, Mr Pritchard.
More than 14,000 former teachers came back to the classroom in 2016, which is the last year we have data for. That is an 8% increase since 2011. Although having more teachers is important for everyone, it is also essential to focus on how we support the learning of the most disadvantaged children if we are to improve social mobility. We continue to provide the pupil premium, which is worth around £2.5 billion this year, but we want to ensure that that funding actually benefits the most disadvantaged, so we are also investing £137 million through the Education Endowment Foundation to expand the evidence base for what works for disadvantaged pupils.
I made the point, which was supported by the hon. Member for Gedling (Vernon Coaker) from his experience of teaching and of previous initiatives, that we will see proper social mobility only if we understand and tackle the reasons why children arrive at school impoverished. Does the Minister agree that that is one of the fundamental ways we will change the social mobility crisis in this country?
The hon. Gentleman is absolutely right. That is why the work of the Education Endowment Foundation is so important in determining what early interventions actually work in improving the home learning environment for the many children who, as we have heard, arrive at school without knowing how to hold a knife and fork and, in some cases, not even potty-trained.
We are focusing on geographic inequality and we are building capacity. Our third priority is to ensure that the system prepares young people and adults for career success and encourages them to aim high. As was mentioned, we are taking steps to improve careers education and guidance for all ages. We are investing more than £70 million this year to support young people and adults to access high-quality careers provision. The Careers & Enterprise Company will ensure that every secondary school in each opportunity area has an enterprise adviser and delivers four encounters with the world of work for every young person. That will focus the whole education community in areas of the country where social mobility is lowest. We have also developed and expanded traineeships for under-25s, which give young people the skills and experience needed to progress to apprenticeships or sustainable employment.
We are delivering against our commitment to social mobility, but of course more must be done. We know that too often a child’s life chances are determined by where he or she comes from, and we understand that not everybody can access the opportunities available to them. In the early years, we must continue to work to ensure that all children are school-ready by the age of five. In schools, we must ensure that all children benefit from a rigorous academic curriculum and excellent teachers.
Beyond school, we must ensure that young people have the opportunity to pursue whatever route they choose. We must therefore continue to reform technical education to ensure that people have the skills they need to succeed in the world of work, and we must continue to provide the opportunity for disadvantaged young people to go to top-performing universities.
I am well aware of the point raised in the debate about UTCs taking children at the age at 14. Some children do not want to leave their friends at secondary school, and sometimes schools actively discourage children from leaving to go a UTC, even if the abilities and aspirations of that child would be best served in a UTC. We have a successful UTC in my constituency, working with local employers who are keen to have people leaving the UTC job-ready. Indeed, many see apprenticeships as the fast route into employment without the debt and problems that a university education can bring.
Throughout and after education, we must ensure that we equip young people with a high-quality careers advice offer so that every person can make an informed decision on their future. However, despite its pivotal role, education alone cannot transform social mobility. Improving social mobility requires support from all parts of society, including Government, employers and civic society. Success has the potential to benefit society hugely, as we heard in the debate. Work by Boston Consulting Group and the Sutton Trust suggests that greater levels of social mobility could add £14 billion a year to GDP by 2030 and £140 billion by 2050. That is why we are building much wider collaboration.
On 21 June, my right hon. Friend the Secretary of State spoke at the launch of the social mobility employer index. Employers naturally want the best talent, and the best employers are already taking steps to ensure that they draw their new recruits from a wider pool. That can include engaging young people in schools, introducing recruitment practices that prioritise potential, creating new routes to progression and promotion, and opening up alternative ways in through apprenticeships. The index showcases great work, including from Government and other public sector employers, and we hope that even more firms will sign up next year.
The Government are making significant progress on social mobility. Let me turn briefly to issues raised during the debate before I leave time for the hon. Member for Manchester Central. I congratulate and welcome my hon. Friend the Member for East Renfrewshire (Paul Masterton). I endorse the comments he made in his contribution. My hon. Friend the Member for North Swindon (Justin Tomlinson) made some thoughtful suggestions from experience, and he raised the point I made about UTCs.
The hon. Member for Manchester Central talked about maintained nurseries, which have a vital role. They are often in some of our most deprived areas—there is one in my constituency that does brilliant work—and because of the qualifications of the staff, it is more expensive to deliver such provision. Only about 1% of children attend that type of school, but in many ways they are the most needy children. She asked about how much extra we provided. Average funding has increased from £5.09 an hour to £5.39 an hour, and supplementary funding of £55 million a year has been made available for those schools until 2019-20. We listened to concerns and have responded.
The vexed issue of grammar schools was raised during the debate. As the hon. Lady may have noticed, there is no education Bill in the Queen’s speech, so the ban on opening new grammar schools will remain in place. We were encouraged by the number of selective schools that came forward voluntarily to improve their admissions arrangements in response to the “Schools that work for everyone” consultation. We will continue to work with our partners in the sector to ensure that more children from low-income backgrounds can go to grammar schools.
Points were raised about the attainment gap between disadvantaged pupils and their peers—which, I have to say, has been virtually eliminated in grammar schools. The attainment gap between disadvantaged pupils and their classmates in selective schools is 1.7 percentage points, compared with eight percentage points in all schools. However, I reassure the hon. Lady and the hon. Member for Wythenshawe and Sale East (Mike Kane) that I am no grammar school fundamentalist myself.
I am enormously grateful to the hon. Member for Manchester Central for the support she has given to this agenda today. She raised important concerns, and I hope she is happy that those concerns are at the forefront of our work. Social mobility is vital. We know that education plays a fundamental role in that, and we will continue to build on what we are already doing by working closely with employers and other partners. The benefits to be gained by the agenda are significant, and the more society as a whole can support it, the better.
I thank the Minister for his wind-up speech and for allowing me a short moment to thank those who have spoken in the debate. There have been some really thoughtful speeches and much agreement across the Chamber. I hope that that spirit can continue in these debates.
As ever, there were fantastic and important speeches from my hon. Friend the Member for Gedling (Vernon Coaker), from my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) as the chair of the all-party parliamentary group on social mobility, and from my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh), who raised some important points. I could also agree with almost the entire speeches of the hon. Members for East Renfrewshire (Paul Masterton) and for North Swindon (Justin Tomlinson). I thank them for their contributions.
The turnout for the debate shows that there is a huge appetite to get cross-party agreement on these issues. I hope that that continues over the coming months, and that social mobility becomes part of a national mission we can all get behind so that we can really create the equal and fair society we all aspire to.
Question put and agreed to.
That this House has considered Government policies on social mobility.
Worcestershire Acute Hospitals NHS Trust
[Mr Philip Hollobone in the Chair]
I beg to move,
That this House has considered the future of the Worcester Acute NHS Trust.
It is a great pleasure to be here under your chairmanship, Mr Hollobone. I am grateful for the opportunity to raise this matter, a cause of deep concern and worry for the people of Redditch and the surrounding area.
As this is a day on which health is being discussed in this place, I take the opportunity to pay tribute to the hon. Member for Kingston upon Hull North (Diana Johnson) for her tireless work on behalf of the victims of the contaminated blood scandal. I have a constituent in Redditch who has contacted me, even in my first few weeks of serving as a Member of Parliament, and I know that they and other victims will welcome the inquiry announced today.
The Worcestershire Acute Hospitals NHS Trust caters for a population of between 420,000 and 800,000 people. Referrals from GP practices outside of Worcestershire currently make up 13% of the trust’s market share. That clearly shows that the trust is under immense pressure to provide care to a huge number of widely dispersed people.
I will focus on the Alexandra Hospital in my constituency of Redditch. It serves approximately 200,000 people, is the county’s centre for urology services, and has eight operating theatres, MRI and CT scanners and cancer unit status. It may appear on paper that the hospital is well resourced. However, the Care Quality Commission’s most recent report, published in June this year, rated the Alex and the trust overall as inadequate, which is clearly a highly distressing situation. As a result, the trust is in special measures until further review, a status it has remained in since its initial inspection in November 2015.
Despite that status, I welcome that the trust is rated as good overall for its care. Feedback from patients, their families and friends is exceptionally positive in terms of their being treated with kindness, dignity and respect. My constituents in Redditch have often told me of their great personal experiences at the Alex.
I congratulate my hon. Friend on securing the debate. As a fellow Worcestershire MP, I agree wholeheartedly with her comments. While there are many concerns about our local hospitals, not a week goes by in which I do not get letters and calls from people saying how positive their experiences at them were. While a lot of things need to change, we should also recognise the hard work and dedication of many of the staff, who provide excellent service much of the time.
I wholeheartedly agree with my hon. Friend’s remarks. I am grateful to the Minister for his generosity in giving up his time to attend today, but I have some key questions for him. While a number of factors led to the trust being in this situation—the debate does not have the scope to allow me to describe them all—what is important to my constituents is what the Department and other responsible bodies are doing to plan for the future. We want the trust to come out of special measures as quickly as possible.
A related but somewhat separate issue is the consultation on the future of acute hospital services in Worcestershire. The review of services in the trust began in January 2012 when clinicians across Worcestershire raised concerns about whether they could safely deliver services due staff shortages. Those shortages meant that services had to be concentrated and centralised, owing to the provision being too small at each of the Worcestershire hospitals. Initial temporary emergency changes—births, complex emergency surgery, in-patient children’s services, emergency surgery on children and emergency gynaecology moved from the Alex to the Worcestershire Royal Hospital—have now become permanent. Those changes will be the subject of the consultation proposals put to the board of the three Worcestershire clinical commissioning groups for approval tomorrow.
As hon. Members will understand, those two wide-ranging issues when taken together have been highly emotive for my constituents, as well as for Members for the rest of Worcestershire. The “Save the Alex” campaign in my constituency has gained huge community support, and I have nothing but respect for the dedication and co