Tuesday 20 December 2022
[Mr Laurence Robertson in the Chair]
Family Businesses: Contribution to Local Communities
Good morning. It is quite warm in here, so if Members wish to remove their jackets, they are free to do so. I remind Members that if they wish to speak they need to stand in order to catch my eye. I call John Stevenson to move the motion.
I beg to move,
That this House has considered the contribution of family businesses to local communities in the UK.
It is a pleasure to serve under your chairmanship, Mr Robertson. I am grateful to have the opportunity to debate the importance of family businesses and their contribution to our national economy, our local economy and our communities up and down the country. I appreciate that this might not be the best week for this debate, given that we are approaching Christmas, but this is a really important time of the year for many businesses, particularly in the hospitality industry, and an important time of the year for family businesses to succeed.
I want to put on the record my thanks to the Institute for Family Business for its support and the research that it has carried out into the success of family businesses and also the challenges that many of them face. The institute is the secretariat to the all-party parliamentary group for family business, which I chair, and it has been very supportive for all the time that I have been chairing that APPG.
I want to start the debate with a simple question: what exactly is a family business? There are many different definitions and people will have their own interpretations. The Institute for Family Business set out its own definition in its most recent report, but for me it is quite simply the involvement of family in a business. This can be a sole practitioner—an individual who has set up their own business and is effectively a one-man band. It could be a husband and wife team. The wider family and children could be involved. It could involve other members of the family such as cousins, and of course it could involve different generations. But it is also about the level of control.
When we look at a corporation, we look at the shareholding of that company—how many shares are owned by the family and how many are external. We look at who effectively controls that business. A family business might not always be run by members of the family. It might have independent management or a mixture of family members and outsiders. Each can be equally successful. They all have their own challenges, but that does not detract from the fact that they can be just as successful as a purely family-run business, or as a mixture or with outside control.
The real challenges come when there is third or fourth generation involvement in a family business. They all present different concerns. There are intergenerational matters, and shareholding or ownership of a business can be widely spread among many members of the same family.
What about the sector that the business is involved in? It is estimated that there are around 5 million businesses in the United Kingdom, all of varying sizes. Family businesses make up 85% of that 5 million, so effectively our economy is dominated by such businesses both at the national and local level. I will come specifically to the local level in due course.
The size of the businesses varies enormously. Most are microbusinesses—small one-man bands or small family units. Equally, there are some enormous businesses that have grown from small start-ups. Warburtons is a good example. Historically we could look at Mr Barclay or Sainsbury’s as examples of small businesses many years ago that became huge conglomerates and very large and successful businesses.
I thank the hon. Gentleman for securing this extremely important debate, because family businesses are the bedrock of our local economies. In my own constituency, Glencairn Crystal started as a local family business. It won the Queen’s Award and went on to develop the iconic Glencairn Crystal whisky glass, which is now internationally renowned. Does he agree that, with the correct package of support, financial innovation, contribution and development from Government, family businesses can become iconic and international successes?
The hon. Lady is right. It is always lovely to hear Members promoting family businesses and demonstrating their success. She also highlights an issue that I will come to about how we can ensure they get the support that they need to be successful.
I have talked about family businesses being small or large, but we must also remember that there are some huge international businesses, including Mars and McCain. An interesting general observation is that many large, international family businesses are invariably owned from North America. That indicates that family businesses are not just part of our economy but part of international economies across the world.
Family businesses are involved in all sectors. The obvious one is transport, with large transport businesses up and down the country displaying their logos. They are also in retail and manufacturing. One particular area that features a lot of family businesses is the food and drink sector. That is a very popular sector in which to set up and grow a family business. That has a knock-on impact on the hospitality industry, which has a large number of small family businesses.
Last week I went to the opening of a state-of-the-art factory by Equi’s Ice Cream in my constituency. That business has been around for a century, with its ice cream sold locally as well as in a number of supermarkets such as Morrisons, Co-op and Asda, and even as far away as Texas. Does the hon. Gentleman agree that such family-owned businesses not only contribute to our communities but are great ambassadors for them?
Absolutely. It is always lovely to hear individual businesses being highlighted by Members of Parliament. That demonstrates that family businesses are not just in one constituency but spread across the whole country. We need to be behind them in our local communities as well as nationally.
From our perspective as Members of Parliament, the importance and contribution of family businesses should not be underestimated. They matter to our national economy. Family businesses employ nearly 14 million people; over 50% of all private sector employment is in family businesses, so the majority of people are employed by a family business. It is estimated that they account for 44% of our GDP. Just think of their contribution to the Treasury, which is vital for our public services.
Family businesses are clearly the backbone of local economies up and down the country as well as nationally. Think of a small family business and the contribution it makes to the Exchequer. If it employs five people, that means five families supported by that business. The contribution goes beyond that, with the payment of national insurance for those five employees, and of corporation tax. It will probably collect VAT for the Exchequer and pay business rates at the local level. It makes a vast contribution, not just to the local but to the national economy. That is replicated up and down the country.
Carlisle is a good example as the home of national and international businesses which employ a lot of people and make headlines locally because of the number they employ and their brand names, such as Nestlé and Pirelli. But drilling down, what matters in many respects is the local family businesses. Story Construction is a first-generation business now moving into the second generation, employing in the region of 500 people. It was set up in the last 30 to 40 years and makes a significant contribution to local construction and to the rail construction industry. Pioneer Foods, a food hospitality business, is into its third generation of making a contribution to Carlisle’s economy. Thomas Graham is in its fifth generation of local leadership.
We have those international brands and companies, but I have just highlighted three individual businesses at the heart of our local economy that employ a lot of people making a vital contribution. They are now into their second, third and fifth generations. The individuals who lead those businesses are also vital to our local communities. They provide leadership. They are often respected, and local people will look up to them and may aspire to be similar to them, and to set up their own businesses in due course.
My hon. Friend mentions the contribution of small businesses to the local community. What I often see is something that is almost invisible. Does my hon. Friend agree that business owners often support community events, such as the recent Christmas tree festival in Aldridge?
My right hon. Friend is getting ahead of me. She is absolutely right, and I will come to the contribution that such businesses make to local communities. There are, of course, similar factors for family businesses at the national and local level: the high employment levels in family businesses, the investment that we want to see, and the tax contribution that they make both locally and nationally, which I have already highlighted. I have set out what I think is a powerful demonstration of the importance of family businesses; however, some people would ask what the difference is between a family business and other corporations. Are they not in many respects just the same? I accept and recognise that they face many similar issues.
At present, energy costs are obviously affecting many businesses, both those that are family run and those that have other structures. It is a serious issue right now. On taxation rates, what corporation tax is set at matters to both family businesses and others, although dividend tax and capital gains tax can have a particular influence on family businesses, because of the way they structure themselves and the way the families take profits out of the business. Skills matter to any corporation, as does getting the right staff and ensuring that the right training is in place. That also matters to a family business, which needs to recruit in exactly the same way as any other. Regulation affects different sectors in different ways. I have already highlighted the importance of the food and drink sector, on which regulation clearly has a huge impact.
There are, however, a number of issues that in my view are unique to family businesses. The obvious one is succession. Passing the business on to the next generation, or indeed between families, can be a challenge. Who should inherit? Who takes over? Can the older generation let go and allow the next generation to take the reins of the business? If there are cousins, or two or three generations, involved, how is that dealt with? Those are some of the principal challenges for family businesses, and the Institute for Family Business spends quite a bit of time helping to support family businesses with them.
There are additional challenges with financing and growing family businesses. How do we ensure that a family business can grow in exactly the same way as other corporations? In my view, family businesses have a real strength, in that they can draw financial support from members of the family, which can help with that growth. It can also be a weakness, because they need to attract external finance to grow. Family businesses must be willing to accept outside help and allow external influences to support the business in its attempt to grow. Families have to accept the risk that they may be taken over, or that their influence in the business will be diluted by external investment from other parties.
Family businesses also have some key strengths, such as resilience. They often deal with recessions better than most other businesses. They are flexible and more adaptable in terms of hours of work. A person is more likely to want to work longer hours in their family business to ensure that it will cope with any bumps on the road. Family businesses also take the long view. It is not just about the next set of financial figures; it is about the next generation. That can lead to long-term investment, rather than a short-term view about making profits here and now. The stats suggest that often staff are loyal, and remain with such businesses for far longer than they would otherwise. Also, family businesses are invariably very loyal to their staff, who in many cases have worked for them for many years. That creates a real element of stability.
Does my hon. Friend agree that family businesses showed that loyalty to staff during the pandemic? For example, a number of tourism businesses in Torbay decided that the family would take no wages to ensure that staff could be paid, which we would not see in many other corporations.
My hon. Friend makes a valid point. We saw that in the pandemic, and we often see it in recessions as well. Family businesses are more resilient and stay loyal to their staff, and that gets them through in a way that many other businesses would not necessarily tolerate. Another interesting aspect of the research from the Institute for Family Business is that there is more female involvement in family businesses than in general in business; we should research more why that is the case.
Family businesses are often the start of something. They start as very small businesses, then continue within the family, or at least owned or controlled by the family, but with external management; or they dilute and float on the market. I do not think that selling out is a negative, as the business—what the family have created—is successful and can continue to thrive but in a different environment and under a different structure. Life does move on.
I am a solicitor, and work in a practice that was set up in 1805. Until 1916, three generations of the family were involved. Since then, there has been no family involvement, but the business is still going strong today and it had that family involvement for those three generations.
Where I think family businesses provide an extra layer of benefit is in terms not of the economy but of the community. Family businesses are often embedded in their community. The children go to local schools. The business employs local people. The families want the local area to succeed because they live in it and socialise in it—they are part of it. They often get involved, as school governors and in charities and other community organisations. If they are brave, they may even get involved in local politics; they may get involved in other things, such as the local enterprise partnership or the chamber of commerce. They are invariably respected leaders in the community—people want to emulate them. That support to their local areas is a real strength of family businesses and the leaders within them; that element does not show up in national statistics, but it is vital to the success of our communities up and down the community.
I am very conscious of the lack of Government recognition for the importance of family businesses. I think everybody here would recognise that they are the backbone of our economy and a source of strength for our communities. Is there more that the Government could do, on the growing of these businesses, and in understanding their nature, the challenges they face and how we can ensure the investment and finance for them so that they will grow, expand and become the big corporations of tomorrow?
There is also the skills agenda. Training opportunities can be difficult, as many of these businesses are small or micro businesses that find it challenging to train staff and to get the skills they need. What can the Government do to support them?
There is also a need for general advice, for not just financial but succession planning. Quite often, family businesses feel they are operating in isolation. That is why organisations such as the Institute for Family Business are so important, because they help with that sort of advice, but many businesses do not get it. I wonder whether the Government could do more to help.
There is also the issue of profile. Leaders in the community, as I have already said, often come from family businesses. Some, though not many, have a national presence. Sadly, trust in business is at a low ebb right now, but family businesses often have a far better reputation. It may be that the Government should be seeking to exploit that in a positive way. We need businesses to succeed. We should celebrate their successes. I think people often feel more comfortable celebrating the success of a family business than the success of what they perceive as a faceless corporation. Maybe the Government need to associate business more with the family side of things, demonstrating the importance and the vital contribution family businesses make to our society, as well as to our economy.
In society, families really do matter. In business, family businesses are absolutely vital. Let us celebrate their success, but let us help them more than we do to ensure that they continue to be the backbone of our country and central to our communities.
It is a pleasure to serve under your chairmanship, Mr Robertson.
As a Scot myself, let me say that it is a pleasure to hear a canny Scot—the hon. Member for Carlisle (John Stevenson)—taking us through this important subject; I always think a gentleman from Aberdeen would have a particularly good grasp on the vital need to make ends meet and run a tight ship.
I ran my family business for eight years, and my brother runs it now. It was a cheesemaking business that grew out of small dairy farm on the shores of the north Firth. For eight years, I had to juggle the profit and loss account and know how to do a VAT return—I had to do all that stuff, and it was invaluable experience. I will not go any further, because I cannot plug a family business too hard, but my brother continues in the same vein and I am very proud of him.
Let me expand on the points made by the hon. Member for Carlisle. The local contribution of family businesses is crucial. They tend to use the local bank: businesses in my constituency deposit large amounts of money in the local branch and help keep it open. They mostly use a local solicitor, and that equates to jobs in the local area. They use a local estate agent if the need arises, and local shops. They rely on their reputation, as the hon. Gentleman hinted at; local businesses do not want to make a mess of things locally, because it is on their own doorstep. Those are the key things they bring to their areas.
No local business will survive if it cannot balance the books and get it to work. That expertise, as the hon. Gentleman said, makes a huge local contribution, in terms of the chamber of commerce, local government and so on. As a passing aside—this is as much about my party as any other party in this place—we could do with more local businessmen in the House of Commons. If we go back 100 years, there was a time when many Members of the House of Commons had made their fortune and knew what they were talking about when it came to the big issues. That would be no bad thing. But that criticism is not directed at any one party; it includes mine.
The hon. Gentleman makes a really interesting point about getting people with business experience here. Does he agree that, although traditionally important local businesspeople became members of the council, we do not see that today, and that is a big loss to us all?
That is a very apt point. I was elected to Ross and Cromarty District Council in 1986, which was a long time ago, and I have seen the sort of people who become members change dramatically in my lifetime. When it comes to local government finance, to have hard heads on the finance committee does not half help things.
Nurturing local businesses sits within a wider framework, which the hon. Gentleman touched on. He mentioned advice and access to finance as and when needed. Many of us feel that the day of the local bank manager has gone—the man or woman who could talk to the businessman and say, “Okay, that is a good idea. I’m willing to offer the following finance.”
In my part of the UK—my very far north constituency—a local business will do well and thrive if it has the support to which I alluded. We have an organisation called Highlands and Islands Enterprise, which was conceived by the Wilson Government in the 1960s, and did much good work over the years. I am sad to say that it is not what it was all those years ago. It is weaker, through no fault of its own; it is a small organisation and does not have the ability to offer advice and target finance as and when necessary. A lot of other infrastructure is required in our constituencies—in my own case, an airport, rail links and road links. A hardy perennial is the NHS, and I often raise the issue of maternity services. If any one of those vital key support networks is not up to standard, that sadly makes life harder for local businesses, particularly when it comes to recruitment or expansion.
I will close with an example. In Caithness we have an engineering firm called JGC Engineering, which is owned by the Campbell family. It is a third-generation firm that grew out of a blacksmith business, and it makes clever stainless steel stuff for the nuclear industry, Dounreay and others. As right hon. and hon. Members know, I have often talked about the potential of a space launch coming to my constituency—and I think it is just around the corner. A company such as JGC Engineering can use that but, if it does not have the infrastructure links, the back-up and so on, it will be harder for the company when the big day comes and it can go for those contracts. It is a basic point, and I make no apology for emphasising it again and again.
It remains only for me to wish all right hon. and hon. Members the compliments of the season, a very happy Christmas and a prosperous—in the business sense—new year.
It is a pleasure to serve under your chairmanship, Mr Robertson, and to follow my good friend, the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) and hear his experiences of business. I congratulate my hon. Friend the Member for Carlisle (John Stevenson) on securing the debate, which is a timely chance to highlight the role that family businesses play in Torbay’s economy.
As my hon. Friend the Member for Carlisle reflected, family businesses make a major contribution to the UK economy overall. Oxford Economics estimated that there were 4.8 million family businesses in the UK in 2020, making up 85.9% of all private sector businesses. Those businesses employed 13.9 million workers, or 51.5% of all private sector employment, and contributed £575 billion to the UK economy. These are big numbers overall, despite most family businesses actually being small firms—something like three quarters of all family businesses in 2020 were sole traders with no employees. A further 21% have between one and nine employees, although I understand that the estimates were based partly on data collected the previous year.
It is interesting to note that those numbers represented a decrease. The number of family businesses decreased in 2020 from 5.2 million in 2019, when they employed 14.2 million people and contributed £637 billion to the economy. If the Treasury was here, it would be interested in the fact that such businesses paid £205 billion in tax receipts. Some of that may reflect the impact of the pandemic, not least given that the typical family business many of us think of is a shop or a guest house, both of which were affected by that period.
Many family businesses are not just sources of economic activity, but mainstays of the local community. A 2021 survey of family businesses conducted by PwC found that the vast majority of UK family businesses also continue to engage in some form of social responsibility activity. Some 74% of family businesses surveyed contributed to their local community, and 47% participated in traditional philanthropy or grant-based giving as a company.
The hon. Gentleman is making excellent points. Given that family businesses are such a focal component of our communities, does he agree they have a key role in reducing the disability employment gap, and are often the businesses that promote disability inclusion in our communities?
I completely agree. The type of support a family can provide to someone with disabilities—even in their own family, for example, by extending the care and support offered to their loved one and supporting them in the workplace—can be vital. Many families have rightly shifted their expectations of what a family member with disabilities will be able to do. To be honest, past attitudes might have been, “Could this person work?” or “Perhaps they shouldn’t, perhaps they won’t ever work.” Thankfully, there has now been a big change in many businesses. The hon. Member is right that family businesses can help to lead that charge.
The economic and social impact of family businesses can be seen clearly in Torbay, and it is important to reflect on this positive aspect. I will start with Rew Hotels. The Rew Hotel Group was founded in 1970 by Mrs Sylvia Rew, and is still family managed. Positioned right on Torquay’s seafront are the two hotels it runs: Livermead House and Livermead Cliff. The family are not just quiet owners but part of the frontline delivery of services to customers. It is a good example of a family business where the family has been able to develop two distinct offers while making the business a family in itself, with several senior staff members having started waiting tables or behind the bar, and then been given opportunities to develop their career within the hotel and the business
Susan’s Flower Shop has been trading at the heart of Paignton, Devon for over 50 years; the business itself has become a family, given that it has been trading for such a lengthy period. Brian and Susan, who are the leading figures, are involved in many aspects of local community work and supporting the bay as a whole.
There is also Conroy Couch, which is one of the oldest established businesses in Torquay and one of the oldest jewellers in the UK. It was first opened in 1863 by Mr Conroy Couch, and such was the quality of its initial fitting that the shop front has altered very little since, with the height of the entry doors serving as a reminder of a time when men commonly wore top hats and would be wearing them when they attempted to come through the door. Towards the end of the last century, the shop was taken over by the Rowe family, who are well-known and respected jewellers in Torquay. Today, David and his daughter Michelle still hold the values that the original founder of the business held dear: it is an active part of supporting local Rotary appeals, and works to ensure that Torquay high street has an annual Christmas lights display.
A larger example of a family business is Beverley Holidays, which operates three holiday parks in Torbay. It has been a family-run business for over 60 years, and during that period its owners have seen some dramatic changes in Torbay’s tourism sector. A caravan holiday might conjure up images from the past of putting coins in meters and sleeping on a sofa, yet many caravans in those parks offer standards equivalent to executive hotel suites, meaning that as a family business Beverley Holidays can compete with the large national chains on both price and quality.
Family business is not just about retail and tourism—we have heard some examples today. In that context, one company that particularly jumps to my mind is Casting Support Systems, or CSS as it is commonly known. It is a family business that was established by Ted Head, and produces a range of products for the distribution, aerospace and automotive industries. Earlier this year, it won the Queen’s award for enterprise for its export achievements and relocated to a brand new, purpose-built factory in Paignton. To give the scale of the impact of that family business, between 2018 and 2021 its exports rose from £267,000 to £1.7 million.
Another sector that can be overlooked is one that is often seen in our local communities, and one to which family businesses are integral: travelling fairs. The name Anderton and Rowlands is synonymous with funfairs and bank holidays in Devon and Cornwall. That business started back in 1854, when Albert Haslam, a variety artist, set up on his own, giving magic exhibitions. His tutor was one Professor Anderson, and upon his death, Albert assumed the name of Anderton. In 1903, the show first travelled under the name of Anderton and Rowlands, the name that has been in existence since. Since the 1950s, the firm has continued to expand, and the name Anderton and Rowlands is now in its fifth generation. It is currently owned by the DeVey family. George DeVey—who was born in a showman’s wagon travelling to a maternity hospital back in 1937—Simon DeVey and Simon DeVey Jr are key parts of it, and it is now the biggest fairground operator travelling in Devon and Cornwall.
Finally, I should mention Bygones in Torquay. Back in the 1980s, Ken Cuming’s obsession with railwayana was starting to outgrow his house; I understand that the final straw for his wife Patricia came in 1986, when he purchased a 27-tonne steam railway engine from Falmouth docks. As fortune would have it, the couple spotted that an old cinema had become available in St Marychurch, and bravely took the plunge of turning their hobby into a family business. Over the next year or so, with the help of an excellent mason and carpenter, and many friends, the family recreated a Victorian street scene, and on 23 May 1987 Bygones was opened to the public by the then mayor of Torbay. Sadly, Ken Cuming passed away in June 2017, but his wife Patricia, son Richard and daughter Amanda are still working daily in Bygones, which is a popular attraction that also supports veterans.
I could be here all day listing great family businesses in Torbay, and it has been good to recognise some of them in my speech. I am sure that many Members will be thinking of businesses in their own constituencies; we have already heard about some. However, family businesses are not immune to changes in our economy, especially on the high street. Sadly, it has been a long time since Rossiters department store in Paignton was bustling in the week before Christmas. Rossiters was part of Paignton for 150 years. Father Christmas often arrived there in dramatic style—one year on a turntable ladder, and once in the late 1980s even by parachute jump on to Paignton Green—but changing shopping trends and competition from online and out-of-town retail sadly led to it closing its doors in 2009. Even yesterday, we read that the future of a 106-year-old family business, Shaws the Drapers, which has stores across Devon, including one in Torquay, is under threat. Managers of the family-run company have admitted that it must change to survive, and, sadly, signs outside its shops state that all remaining stock is now on sale.
There are many positives to a strong family business sector, but what might inhibit its future growth? Family businesses are often based in and synonymous with one area. That means that the decisions of local councils can either boost or severely dent their prospects. Take, for example, the recent decisions of the coalition of Lib Dem and independent councillors that runs Torbay Council. Earlier this year, the coalition decided to close Torbay Road in Paignton to traffic as part of a pedestrianisation pilot. Torbay Road is a busy shopping street, and many businesses along that stretch of road and nearby are family owned. They have reported that trade has fallen off dramatically over the last three months. At a meeting last week, Conservative councillors requested that the coalition review the impact, but a review was decided not to be urgent enough. Similarly, the coalition’s decision to sign off a request from a developer to close Brixham Road for three months is unlikely to help many family businesses across our bay.
We must return to a familiar subject to me: business rates. Take Susan’s Flower Shop, which, as I mentioned earlier, is a family business that has been trading for just over 50 years. There is not a strong incentive to expand or maintain premises where business rates are concerned. Its shops are below the £12,000 rateable value, so no rates would be payable if it traded out of only one shop. As soon as a small family business has a second shop, rates become payable on both. That is a disincentive for family-run small businesses such as those in the floristry trade. Many shop owners would like to open a second shop for a family member to run when they are old enough. There is a reason why we see businesses called “Jacksons” or “Fredericksons” in our areas; that is a nod not just to a past surname, but to a time when a father might have set his son up in business after having taught him—Jack’s son—the trade. I am sure that many more empty shops would be filled by family businesses if that tax disincentive were removed.
I hope that the Minister will set out his thoughts on the following. First, how will the Government ensure that local councils pay attention to the needs of local family businesses when making decisions? Secondly, what consideration will be given to the position of family-run businesses in the long-awaited business rates review? Thirdly, not all members of a family have the skillsets required to grow a business, so they may need to recruit from outside the family for the first time; how are the Government supporting them to do so? Finally, what is the vision for family-owned businesses, from the Minister’s perspective? How does he see them being encouraged and nurtured by this Government? Knowing his own background and passion in the area, I expect that he will be particularly keen on that.
Family businesses are not just part of the economic output of our country, but an integral part of the social fabric. Without them, we would all be poorer, not only in the sense of the jobs and economic activity they create, but in the sense of the social responsibility that many show simply by wanting their businesses to be positive parts of the communities they are proud to call home.
It is a real pleasure to speak in the debate because I obviously have a particular interest. I commend the hon. Member for Carlisle (John Stevenson) for leading the debate so knowledgeably and for setting the scene so well. What a pleasure it is to follow my friend and colleague, the hon. Member for Torbay (Kevin Foster). The tag team is back together—I follow him or he follows me—and I thank the hon. Gentleman for his contribution. Unashamedly, I will tell hon. Members about some of the small businesses in my area—not all of them, because that would take me an hour and a half and, Mr Robertson, you would say, “Sit down.” I will pick out some of the smaller ones that I have known over the years. There are many.
As we approach Christmas, it is important to recognise the important role that local businesses play in our economy, including the family-run businesses that have served our local towns and villages—in some cases, for decades. I do not intend to wax lyrical about how great a place Strangford is—everybody already knows that—but I am more than happy to encourage everyone to make a journey to Strangford at some time in the future, as many in this House have done, including Ministers and other hon. Members, who have enjoyed it. At this time of year, we must take time to reflect and acknowledge that businesses are the backbone of our constituencies—they certainly are for mine. Some 99% of businesses in my constituency are small and medium-sized enterprises, and the pattern is similar across the whole of Northern Ireland.
There are many benefits that come along with family-run businesses and ultimately contribute to their long line of success, and there are so many success stories that I want to mention. The right hon. Member for Aldridge-Brownhills (Wendy Morton), who will follow this speech, and I have been working together, and she and I were just saying how we will unashamedly tell everyone in this House about our small businesses. I look forward to what she is going to tell us in a few minutes as she namechecks every one of those businesses, and I will probably do the same.
Strong commitment and common values are some of the successes of small businesses. When an enterprise is built on familial lines, people are more likely to put in extra hours and go the extra mile to ensure success, and the stability of the family structure has been pivotal for long-term family professions. One that always sticks in my mind is N.G. Bell & Son. I am probably the only person present who knows about N.G. Bell & Son, but I will share its success story. It is a family-run business specialising in timber, building, electrical and plumbing supplies, and it has become one of Northern Ireland’s leading building merchants. Norman and Elsie Bell came to Ballywalter from west Ulster in 1950 and bought an existing grocery and hardware business. On the untimely death of Norman Bell in 1973, his son Graham took over the running of the business at the early age of 19. He and the family have built the business, making it a complete success, and their business park in Greyabbey Road is at the centre of that.
The story of N.G. Bell & Son in Ballywalter resonates with me, because my own parents ran a shop in the same village from ’59 to ’79, and many of the relationships I built through the shop as a child remain strong to this day. I am minded that Margaret Thatcher, who was the daughter of a shopkeeper, said we were a nation of shopkeepers. I am pleased to be the son of a shopkeeper, and I am also proud of my roots. I understand at first hand how central the local shop can be to community life. My mum and dad owned a shop in Clady, south of Strabane. They also owned one in Ardstraw, and then they moved to Ballywalter in 1959. They owned the first V G Store, which was part of a chain of shops that are now run by the SPAR group and owned by the Henderson Group in Northern Ireland. It is an example of how a local business has grown—again, it is good news.
I am sure that I have mentioned before the importance of family businesses to our high streets. Newtownards is one of the main towns in the Strangford constituency and has many great businesses, most notably Wardens of Newtownards, which has been a presence in the town’s high street since 1910. In 2002, Wardens celebrated its 125th anniversary. As part of the celebrations, the store ran a competition to find the oldest receipt from the shop. A local farmer came forward with a receipt dating back to 1890s—not the 1690s, Mr Robertson, but the 1890s—which is just astonishing. There are still family members who work there today, and hopefully they will do so for many generations to come. For anyone who is curious—many are—Wardens has also had videos go viral on TikTok. I am told that the store has an account—I do not know how to use one—that has gained over 180,000 followers and millions of views. Again, it gives an indication of what a small, family-run store in Newtownards can do when it comes to promoting itself.
H & J Carnduff butchers in the square in Newtownards employs 55 people and is a local business that has done extremely well. It farms its butchery business out to other shops across the whole district.
Cafés are important businesses for local communities. To name a few in my constituency, we have the Tea Bay, Stacks, Niu Cafe, Vin 18 and Café Gelato, and they provide a place for people to meet, chat and come in out of the cold. Does the hon. Member agree that small, family-run cafés are often the highlight of local towns in providing that atmosphere?
I certainly do. Again, the hon. Lady says many things in her interventions that I absolutely subscribe to, and I thank her for that. The Regency is such an example of where people come together. I have a fry there every Saturday morning—it is my wee treat for the week as a diabetic as I try to be careful about my eating. Corries meats in Newtownards town is a family business that has grown to own a chain of half a dozen shops, and Knotts Bakery is another family business in the town.
The people of Strangford love a bargain—who doesn’t? My mother is a 91-year-old who loves going shopping and always wants to tell me about the bargains she has got. One place where bargains are guaranteed is Cotters, which is a family-run business that has been in the town for 20 years. My two youngest staff members have what they call their monthly “Cotters haul” where they get new cleaning supplies, bits and bobs for the office and, most importantly for two young girls, crisps because they are always a special price in Cotters—that is probably the attraction.
Loyalty and stability are two qualities of successful family businesses. That success allows for “beanstalk” family businesses where often four generations of a family have been involved. The hon. Member for Torbay referred to such a company in his constituency. The director of SME business at Ulster University has indicated that 74% of Northern Ireland companies are classed as family-run, which is amazing in being unique and serving the Northern Ireland economy in a different way.
The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) referred to bank managers. I have a story about a bank manager, although I am not sure I have the time to tell it as I am conscious that the right hon. Member for Aldridge-Brownhills (Wendy Morton) is following me. When I visited my bank manager for a loan when I was much younger, the discussion we had was not the same that people would have with their bank manager today. I told him I would pay the loan back as quickly as I could, and I paid it back in one year. That probably meant a lot of scrimping and saving, but I did it. Those were things that would not be done with a bank manager today because of the rules.
When I think of Warren Patton of Patton’s Bakery in Newtownards, which is a family-run business that I have known for nearly all its days, his sense of community spirit is so evident in his charitable donations and discounts for fundraising community events, and that deserves recognition. He employs some 76 people in his business. It is often much easier to get a donation for the local fair from the local bakery than the large supermarkets, and that is another reason why local businesses are a vital cog in the community machine. Warren Patton is fully immersed in everything in Newtownards. He is community-minded. He is the chair of the Ards football club. We are all keen to see them get their new ground, which is at an advanced stage. The land has been identified, the agreement has been done and now we are pushing for some grants to make it all happen. He is also in the Loyal Orders—the Orange Order and the Royal Black Preceptory, which I am in in Newtownards. Those organisations are part of the culture and history of our town. I say that because Warren Patton is one of those local success stories. That business started from nothing and he has it today.
The support provided by the public to keep these enterprises open is incredibly important, and we do our best to help and support all the businesses that make our economy what it is today. The former Minister—the hon. Member for Rochester and Strood (Kelly Tolhurst)—came to visit the high street in Newtownards. She enjoyed her time there, but more importantly she was able to engage with local businesses in a constructive and helpful way. Newtownards has won the best town centre in the whole of Northern Ireland in the past and was featured heavily last time as well. I say this without fear of being quoted wrong: Newtownards truly is the best trading town for businesses, opportunity, variety and family-owned businesses. Looking at the special nature of family-run businesses and their contributions to my constituency, I can only say to people: if you have any time before Christmas, come shopping in Newtownards in Strangford.
I thank my hon. Friend the Member for Carlisle (John Stevenson) for bringing forward this debate. As he recognised in his opening speech, this debate is very timely. It is not often that we have debates on family business, and to do so at this time of year is a reminder of just how critical this time is for so many of those businesses.
I start by referring to my entry on the Register of Members’ Financial Interests. As many in this room will know, I have a background in family business. Prior to coming into this place—too many years ago to remember—my husband and I started a business with the enterprise allowance, when that was around, at £40 a week. Two things were critical in starting that business: one was the allowance, which, although it did not seem like a lot of money, meant a lot because we felt the Government were prepared to back us and the idea my husband had; the other, touching on the point made by the hon. Member for Strangford (Jim Shannon), was the importance of our relationship with the local bank. The relationship we had with our bank manager was absolutely 100%. If she had not been there, there were some days we would probably have struggled. She helped us to get through and see the light at the end of the tunnel. Although we often discuss banking and the role of banks in the community in this place, it is a reminder that the role of banks to businesses and the presence of a high-street branch and a named person that can be contacted really does make a difference.
Being back on the Back Benches, as the hon. Member for Strangford alluded to, I see an opportunity to make several points, but also to highlight some of the amazing family businesses across my constituency. Don’t worry, Mr Robertson; I am keeping an eye on the clock, and I will not take all of the time and will leave plenty of time for Front-Bench speakers. I want to mention some of those businesses because I want to further demonstrate the variety of small, family businesses not only in my constituency, but right across the country, and the way that they form the backbone of so many local economies. They make a massive contribution to the Exchequer, but also to our local communities.
Six years ago, I visited a business called Jennifer Ashe Funeral Directors that had just opened on Brownhills High Street. When I went back there this summer for a visit and tour, it was incredible to see how that business had grown over those six years. It is no longer just in Brownhills, but has many other locations. We talk about generations, and the next generation of the family is now involved as well.
We also talk a lot about high streets in this place. We talk about Small Business Saturday at the beginning of December, which is an opportunity for many of us to go out on to the high street and highlight local businesses and how important they are. I am reminded of another occasion, which is called Family Business Week; I see the Minister is nodding. Perhaps that is something we need to make more of and highlight in the same way to embrace what we have in our communities.
Our high streets have faced a difficult and challenging time, which started before covid. High-street businesses were hit throughout the pandemic as well, but many of them are now finding their feet again. In Aldridge, we have a fantastic florist—another family business—called Herbarium, which is run by Mike and Sue Soles. I walked past and popped my head round the door just last week. Christmas is a busy time for them, and it really matters that we go out and support our local businesses. I was equally pleased to see a florist called the Bloom Room open just a couple of weeks ago on Pelsall High Street. It is also run by a local lady who wants to invest in the local community and sees that the time is right to do that. I wish her all the best in her endeavours
The hospitality industry is another key part of this. As we heard from my hon. Friend the Member for Torbay (Kevin Foster), seaside resorts have lots of hospitality. However, hospitality is a sector with many examples of family-run businesses. The Fairlawns hotel, run by the Pette family—now on their second generation—was actually rated one of the top 25 family-run hotels in the country. I am also told that it was one of only six outside of London to make the Tripadvisor list. Again, that is another example of a fantastic family-run business.
As my hon. Friend the Member for Torbay started talking about fairgrounds, I thought it would be rather remiss of me not to almost go into competition with him by highlighting the breadth of family businesses across my constituency. Pat Collins Funfairs is a fascinating story because Pat Collins was a Liberal Member of Parliament and mayor of Walsall, but he is actually recognised and remembered more for Pat Collins Funfairs, which was founded in 1899.
The family business was established remarkably quickly and, within a decade, Pat Collins was a leading showman in the midlands, owning several steam-driven fairground rides. He also went on to be one of a group of showmen who met in Manchester to create the Showmen’s Guild of Great Britain. To this day, the business is still owned within the same family; it is owned by Anthony Harris and his family. Anthony is a Conservative local councillor on Walsall Council, and his father married one of Pat Collins’ granddaughters.
We can see how family businesses go down the generations. One reason for that is probably the way in which such businesses can focus on flexibility and resilience. They often do not need much support from Government or local councils, but they do need the space and the flexibility to grow and invest, and the right economic landscape for that.
I know from my own experience that someone with a small family business often does go that extra mile—not just them but their staff as well. People go that extra mile and put in that extra hour, because it is not just about thriving but sometimes just surviving to get through the difficult times and challenges and finding the opportunities and keeping on looking and moving forward.
My final namecheck for this morning must go to a local family-run business in High Heath. Harjit and Jodie Singh, known locally as H & Jodie, run what many would call a corner store, but it is much more than that. It is the Nisa Local, but they have set up a community hub there and have community days. Many of us will remember that this last summer was incredibly hot. It does not feel like it now—although perhaps it is in Westminster Hall—but if someone needed anything, the best place to go was often H & Jodie’s. If you could not find an electric fan anywhere in the locality, Mr Robertson, you could go to H & Jodie’s, where they would be stacked on the shelves. I give that example because it shows the flexibility and dynamism of small family businesses and how they really do go that extra mile by just getting on with the job.
I am a firm believer that a strong family-business base can really strengthen our communities. That builds up the local economy and then feeds into the national economy. Let us invest more in them. We talk a lot in this place about research and development, and about innovation. I completely get that. I also get the importance of Silicon Valley. We have manufacturers across Aldridge-Brownhills, including apprentice-supporting companies such as In-Comm, which invest in apprenticeships and developing skills for the future. However, we also need the small businesses. Not everybody will be a scientist or a researcher. We need manufacturers and family businesses. Let us recognise their importance, because as my hon. Friend the Member for Carlisle set out, there are 14 million people employed across the sector, and it produces 44% of GDP. We do not talk about it enough; we do not give it 44% of the airtime when we are talking about businesses.
I would like to see us talk up our family businesses, because they really can play a key part in growing the economy. If we grow the economy, we can invest in our public services; if we grow our family businesses, they can invest in their business and their skills base, and that is what creates the jobs of the future.
It is a pleasure to serve under your chairship, Mr Robertson. I start by congratulating the hon. Member for Carlisle (John Stevenson) on securing this debate, which is a really excellent one to have on the last day before we break for Christmas. It is clear from the contributions that everybody has a story to tell about family businesses—either their own family business, or those in their constituency. Very strong feelings have come through about the contribution that family businesses make to our local economies and our national economy.
So many points were raised, which I will draw on, but I also support and thank, as other hon. Members have, the Institute for Family Business, which has made such an important contribution to raising awareness of family businesses over the last couple of years, particularly through Family Business Week.
The hon. Member for Carlisle was also right to highlight hospitality businesses, so many of which are family-run and family-owned, and so many of which play that very important role of being a home from home—a local place that people can pop out to in order to be with friends and neighbours, and indeed their own family. Family businesses give that “home from home” feeling that really touches our communities in special ways.
The right hon. Member for Aldridge-Brownhills (Wendy Morton) mentioned showmen, and I was going to mention showmen from my constituency. Feltham has a long tradition of showmen living in the area, and I have continued to support their place in the community and their role in a unique industry that gives a tremendous amount of pleasure, and even joy, to families across the country. I will also mention a couple of businesses in my constituency. Flowers by Eva’s is one. It has been in Hanworth since 1955, and has given the joy of great flowers and bouquets for weddings, as well as providing flowers for funerals and other special occasions. It gives that extra personal touch, because when we go to such businesses, we get to know the people in them.
I will also highlight businesses run by members from immigrant communities, for whom it has sometimes been hard to find a conventional way into employment. They have started businesses that have allowed them to make a big contribution to the community, and that have grown. One example is the Sanger family, which owns Heston Hyde hotel, Bentley hotel, Washington hotel and now the Courthouse hotel. The business is still run by the family—indeed, multiple generations of the family. That family started with nothing in this country, but they now contribute so much to our prosperity.
I again pay tribute to the Institute for Family Business for the way that it conducted, ran and brought to Westminster, Family Business Week, which was supported by NatWest Group. I was delighted to speak at the reception in November, having made a virtual contribution to Family Business Week last year. Family Business Week celebrates local family businesses, encouraging them through social media. The family business in my area that I popped into at the weekend was Priyas Tandoori in Cranford, a very homely place to get a takeaway or to eat in with family members.
I, too, grew up in a family business, above our small shop in Osterley, so I know about the contribution that family businesses make, and about the attitude that my parents had. They saw what they did as almost a public service. We sold school uniforms, jewellery imported from India, clothes—all sorts of useful items that people never knew they needed until they popped into Ramson of Osterley. I find it fascinating that people who went to the shop in the late ’70s and ’80s still remember it. They remember what my parents did and even remember me aged five, six and seven learning how to serve customers and the fun that we had with that.
Research from the Institute for Family Business has revealed that family businesses are key drivers of regional growth and prosperity, spreading economic prosperity to all corners of the UK. We have heard in the debate what defines a family business, and about some of the more technical points around voting rights, control and ownership, and levels of involvement in administration. We have also heard how family business issues reflect the issues that other businesses face, such as the rising cost of doing business, energy costs and so on.
I want to emphasise the point that was made about the part that women play in family businesses. It is a subtle point, but although we have heard about one-man bands, there are quite a few one-woman bands. It is important to make sure that we use language that reflects the work of women such as Anita Roddick, who set up the Body Shop, and so many other women entrepreneurs who run a family business.
The hon. Member for Torbay (Kevin Foster) and others mentioned the 13.9 million people in such businesses, and the proportion of private sector employment that comes from family business employers. We know from the research and the debate that there are many ways that family businesses contribute to their local community. They often have a long-term relationship with a place. It can be where the owners’ kids go to school, as was the case in my family. There can be loyalty, local staff, and the creation of local services. The hon. Member for Strangford (Jim Shannon) was absolutely right to talk about local services—the lawyers, banks and insurance companies. All of those make a difference to a community’s fabric. When we think about support for family businesses, those are important things to emphasise and encourage; we should think about how we actively nurture the family business leaders of tomorrow.
We have heard many examples of household names, but I might add Cadbury. My hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) is a member of the Cadbury family. We can see the social contribution made by family businesses that recognise the needs of their workforce and the community around them.
Although family businesses had a higher decrease in turnover than other businesses during the pandemic, they were less likely to see a decrease in staff. That speaks to the story and the contribution of family businesses, the loyalty of staff to the organisation and its culture, and the loyalty of the owners to their staff. However, family businesses are absolutely up against it. They have raised concerns about business rates, supply chain costs, access to schools, and the need for a stable tax environment.
A good Government should create an environment for business success. It is a concern to me that this Government and previous Conservative Governments have failed to do that. We have a supply chain crisis, petrol crisis, heavy goods vehicles crisis, CO2 crisis, energy crisis, cost of living crisis, cost of doing business crisis, and an industrial disputes crisis.
The hon. Member mentions the covid pandemic. It is interesting: during the pandemic, some businesses were really inventive and innovative. For instance, many food outlets offered a delivery service. I am sure my experience was exactly the same as that of many other hon. Members. It might be profitable for civil servants one day to take a look at some of those examples, and have a case study portfolio. We would be foolish to think that British inventiveness is dead.
The hon. Member makes a powerful point. Indeed, what he says comes through in the data about how family businesses got through the pandemic. However, a recent survey has suggested that 80% of members of the Institute for Family Business were less confident going into this winter than they were last year, during the pandemic. Rising inflation is a threat, and there are concerns about the cost of living and consumer confidence. Clearly much, more support for businesses is needed. I am concerned that last week the Government slipped out in a written ministerial statement that they will be closing the “Help to Grow: Digital” programme, which was to give businesses support in adopting new technologies. They had all the warnings about the design and the roll-out, but they failed to listen to those important voices. That has cost businesses a year, and the possibility of moving forward in digital.
What needs to happen if we are to support family businesses at this time? First, we need to deliver macroeconomic stability, and respect our institutions, such as the Office for Budget Responsibility and the Bank of England. A key reason for the failure and devastating impact of the mini-Budget was the sidelining of our economic institutions. We need to make sure that we work with businesses to tackle the crises facing our country. Small Business Saturday has been mentioned; we all celebrated its 10th year this year, and I celebrate it every year.
We need to make importing and exporting easier; Brexit is not working as the Government promised. We need to address the inheritance challenges for family businesses, which have been mentioned—for instance, there should be clarity around rules, and support when there might be difficulties with succession planning. We should also have a proper industrial strategy, backed by ambitious investment, that makes decisions for the long term. It should be secured by an industrial strategy council that has a statutory footing.
Family businesses are not just our local small businesses; they are also key in manufacturing and other big sectors across the country. We need a proper plan for skills, which is an area where our growth and skills levy will bring the flexibility that is needed. We also need a plan for reform of business rates, because so many businesses are concerned about the unfairness of business rates. They should be reformed and changed, to level the playing field between bricks and mortar and online businesses.
This has been a fantastic debate. Labour has a long-term plan for growth, which would bring stability for businesses across the country and give our incredible family businesses the support that they need to grow and prosper. I look forward to the Minster’s response to this important debate, and to his saying how we can work together, across this House, to support our family businesses and the employment and prosperity that they bring.
It is a pleasure to see you in the Chair, Mr Robertson. I thank my hon. Friend the Member for Carlisle (John Stevenson) for bringing forward this important and beautifully timed debate. If Christmas is about anything, it is family. Moreover, business is important in this place; it is absolutely right to have a debate on family businesses on our last day of term. I thank hon. Members for sharing their fine examples of businesses in their constituencies; we are all very proud of those businesses. It is hugely important that we support them.
There were many fantastic points made in this debate. Most of all, hon. Members stressed the importance of family businesses to their communities. Their contribution is fundamental. It is not just about employing local people; they can contribute to local charities, sponsor local football teams, or indeed sit on councils. My hon. Friend the Member for Carlisle made that important point. Easingwold is still part of my constituency, though it will not be after the boundary changes, which is quite annoying. There used to be the old Easingwold Rural District Council. Around the walls of the council chamber were black-and-white photographs of all the former council leaders. They were all local business people that I knew really well. They were important, and so proud of the town and their contribution to it. Now that our model for local authorities has changed, maybe that connection between businesses and their communities is not as strong as it was; that was a point made by my hon. Friend.
My right hon. Friend the Member for Aldridge-Brownhills (Wendy Morton) said that local businesses’ contribution to their communities cannot be overestimated. I am very proud to be somebody who might be described as having a family business. We started our business back in 1992; I was in partnership not with a family member, but with a very good friend, John Waterhouse, but over the years, we gathered family into our business. It did not start off as a family business, but it became one. The point about the proportion of women contributing to family businesses being greater than the proportion of women in business in general is interesting; my sister took over as chief executive of our business in 2015, just before we listed it, and I have to say that she did a far better job of running it than I did. It very much became a family business.
I am very proud to have this role. I am from business and for business, and am proud to have an opportunity to play an important part shaping how we look after all businesses in future, not least family businesses. My hon. Friend the Member for Torbay (Kevin Foster) made a point about support for staff. In the pandemic crisis, lots of business people cut their wages to make sure that they did not have to cut staff from their businesses. We did the same. I always used to say to people when they were starting a business, “You work twice the hours for half the money, if you run a business. That is what you have to be prepared for. You do that for a lot of years.” The commitment cannot be overestimated.
The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) made another point that really resonated with me, about local reputation, which is fundamental. A family business operates and does the right thing because its reputation is on the line every single day, whether that is through the service provided to the customers or the way employees are treated. Those elements are vital to local reputation and are hugely important.
Of course, the family business community is very disparate, and its representation here is really important. I also commend the Institute for Family Business—I think we have some representation in the Public Gallery today—for its work. It is so important to highlight the benefits of family businesses and their contribution. I was proud to speak at the Family Business Week event, as did the shadow Minister. It was a fantastic event. There were so many people there, and a huge range of businesses, from construction to hospitality. It highlighted that 88% of UK businesses are family businesses, which employ 14 million people; and that 50% of mid-size businesses are family businesses, which shows both their contribution and the opportunity ahead.
I want to touch on what we are doing to support all businesses through a difficult period—there is no doubt that we will go through a difficult period—and I will come to some things we can do better in the future, to improve the prospects for family businesses. Clearly, it has been a difficult time for business generally, with the EU transition, the covid pandemic and now a supply-chain crisis and an energy crisis. It is important to recognise that these are global issues that we are trying to mitigate—they are not principally domestic—but they are clearly leading to recession, due to the need to put up interest rates to try to control inflation. It is therefore absolutely right that the Government should step in to try to mitigate some of the pressures, with measures such as the energy bill relief scheme, which is hugely important for businesses and is saving them a significant amount of money. That is a very expensive package; about £25 billion of taxpayers’ money is going into the scheme to try to mitigate the effects of the extra cost of energy for businesses.
The EBRS 2—the extension to that scheme—will be announced shortly. We are keen to make sure that we get all these good, viable businesses through this tricky time, until energy prices become more moderate. The one positive thing I can say about the difficult time ahead is that our business went through three recessions, and we came out stronger on the other side each time. Good businesses get through it and come out stronger, and the best years come after difficult years. Hopefully there is some optimism for the future, as well as a recognition of the challenges we face.
The Government announced a cut to fuel duty, and employment allowance has increased, reducing national insurance by up to £5,000 for small and medium-sized enterprises. There is also the £13.6 billion of business rate relief for businesses. I do not want to argue with the shadow Minister, as it is nearly Christmas, but I keep hearing that the Opposition are going to scrap or reform business rates—I am not sure which it is. To talk about getting rid of £22 billion without talking about what they will replace it with is not right and will create more uncertainty for businesses. It would be better to set out exactly how that money will be replaced. Perhaps we can deal with that issue in the new term next year.
The Government obviously reversed the decision to increase national insurance, which was helpful for most businesses and saved them about £4,200 a year. Importantly, at the Budget we announced the incentives to invest—the annual investment allowance. That is £1 million annually of full expensing against a business’s profitability. That is an important investment concession, and the Government are absolutely right to give that long-term certainty to businesses. That is an important new step, and that £1 million is permanent. That gives businesses the confidence that they can invest, knowing that it will be tax efficient.
My hon. Friend the Member for Carlisle and the shadow Minister talked about succession—passing on businesses to the next generation. Business property relief is a really important part of that. Not everybody understands exactly what it does, but it is an important tax concession that means that families can pass on their business to the next generation without paying inheritance tax. That hugely important tax incentive keeps family businesses together, and it is being done for exactly the right reasons.
The Government have exempted more businesses from regulations. Various business regulations have increased from a threshold of 50 or 250 employees to 500, which should lower regulations on many family businesses. We are trying to help family businesses, as well as many other businesses, transition to net zero. We have zero-rated energy on energy-saving products, which is really important. The Help to Grow: Management scheme improves management skills for SMEs. The Government are subsidising 90% of the cost of that scheme, which is hugely important in improving our management skills. Of course, the £4.8 billion levelling up fund and the £2.6 billion shared prosperity fund try to improve the communities that family businesses make such a huge contribution towards.
To improve the prospects of family businesses, and all small and medium-sized businesses, the most import thing that we can do is support them by spending our hard-earned money there and use them rather than their larger competitors. Like others, I was delighted to attend small business Saturday. From early morning to late evening, I visited fantastic small businesses across my constituency. I just want to name-check Taylor’s of Pickering. Pickering is a small town in a beautiful part of North Yorkshire, and Les and Joan Taylor started the business in 1969. It is a greengrocer and fishmonger, and it is in its third generation now. Peter Taylor, who now runs it, gets up at 2 o’clock every morning to deliver his groceries—he is a wholesaler too—and smoke his fish. It is a fantastic business. Those kinds of business are the backbone of our communities. As the hon. Member for Strangford (Jim Shannon) said, we are a nation of shopkeepers, and it is important that we go and shop in those businesses. I know that he does that on his high streets in Strangford.
We are doing a lot on finance, which a number of Members talked about. The hon. Member for Caithness, Sutherland and Easter Ross and my right hon. Friend the Member for Aldridge-Brownhills talked about the demise of the local bank manager. In my community, Ron Taylor was our local bank manager and a very well-known figure. I think that has disappeared.
We are doing things to improve access to finance for SMEs and family businesses. The British Business Bank has given £12.2 billion through various different mechanisms to 96,000 businesses, and when it comes to new family businesses, over £1 billion is now being lent in start-up loans to about 100,000 businesses. However, there is an argument that we need to once again put in place patient capital for intergenerational businesses—some other countries do that better than we do. Certainly, in lots of the G7 nations, particularly Germany, regional mutual banks provide long-term finance for family businesses; that, I think, is why we see many more big intergenerational businesses in places such as Germany. That is something we need to look at and learn from, and in my role I am keen to explore the potential of that.
The UK has a very good story to tell in terms of business. We are first in the OECD for the numbers of start-ups per capita, but we are 13th in terms of scale-up, so we do not get as many businesses growing quickly in those early years. Again, that is something I very much want to focus on in my role. It is a huge opportunity, because we know that if we can solve that particular equation—that first and 13th equation—we can solve the productivity puzzle.
We are looking at many other things, including through our review of payment and cash flow, which is another source of finance. We are very keen to scrutinise current practices and develop best practice in that area, to make sure we have good advice and mentoring services. There are 38 growth hubs around the country. We are keen to improve people’s growth hubs, and to hear stories from hon. Members across the House about the quality of their local growth hubs, to make sure that they are as good as they can be. We invest heavily in them. They are there to provide advice on access to finance and mentoring, and we want to make sure that they are delivering good outcomes for our local SMEs. We also want to improve procurement by bringing more SMEs and family businesses into public sector procurement. The Procurement Bill is going through Parliament at the moment, but there are lots of other lessons we can learn.
I will conclude now, to give my hon. Friend the Member for Carlisle a couple of minutes in which to sum up. As I say, it is a great privilege for me to be able to speak in this debate. All hon. Members across the House come to this place to make a difference, and this debate has been a great opportunity for me to be able to give something back to my community—the business community that has been transformational for my life. Thank you for that opportunity, Mr Robertson, and I conclude by wishing all hon. Members a very merry Christmas and a happy new year.
I thank the Minister for his contribution. He is a very unusual Minister in Government terms, in that he is a round peg in a round hole.
I also thank all colleagues for their contributions. It has been very interesting to hear about the significant contribution that family businesses make not only to local economies but—and this is equally important—to local communities up and down the country. Some 85% of all businesses are family businesses, and if I were to give one challenge to the Government on growing the economy, it would be to recognise that it is absolutely vital that those family businesses grow, expand and become much bigger, such that they contribute not just locally but nationally. That is how we will grow our economy. There needs to be greater recognition of the importance of family businesses, and we need to ensure that they grow, expand and receive support.
Finally, I follow the Minister in wishing everybody a merry Christmas and a happy new year. I hope that 2023 will not be as exciting as 2022.
Future of Rail Services
I beg to move,
That this House has considered the future of rail services.
It is a pleasure to see you in the Chair, Mr Robertson. I want to thank Mr Speaker for giving me the opportunity to host this debate. I have always believed that rail is critical to the success of our country. It connects our cities, towns and communities; it drives economic regeneration and growth; it is the employer of the present but also of the future, as new technological skills will be required; and it is the key to achieving many of our decarbonisation ambitions.
It is clear that the pandemic has caused many industries catastrophic problems, and the rail industry is no different. When covid hit, ridership fell to about 4%, which was a record low. Train operating companies that had been providing the Treasury with £100 million every four weeks were requiring a subsidy of something like £600 million. The franchise system—which had been broadly successful from 1992 to 2016, when it experienced a number of problems—collapsed and the Government became the operator of last resort.
It is not the case that all the problems of the industry came merely from the pandemic. The franchising system had worked well until 2016, but the more prescriptive franchising system set out in that round saw too much prescription and too little room for initiative. A distinguished predecessor of my hon. Friend the Minister recounts a story of how he was required to set the time of the last train from Southampton to Bournemouth. It should never be the role of Ministers to set timetables. There was too much interference.
Network Rail was the cause of 80% of the delays, which is what caused most passenger dissatisfaction. The new timetable that was introduced in 2018 collapsed in September that year, which triggered the response from the Department to have the Williams review. It is true that the Williams review took some time, but it has now come forward and highlighted some problems. There are some very good elements of the Williams review. I have already mentioned the incentives to decarbonisation and the suggestion that no one disagrees that the industry needs a guiding mind.
Equally, however, the review has embedded a number of problems. The concept of the guiding mind, the acceptance that the railways can drive social mobility and a cleaner, greener transport system, and that technology must be at the heart of future investment, are all absolutely key. However, I want to concentrate on two flaws of the Williams plan. First, the creation of Great British Railways as the guiding mind, the system operator, maintainer, enhancer and controller of operations, with the setting of passenger service contracts, safety and ticketing—I could go on—is to all extents and purposes the renationalisation of the railway system. Some in this room might think that is a good idea. Those of us old enough to have experienced British Rail will realise that no one in future would want to wear such rose-tinted glasses.
There is also concern that there is too little emphasis in the plan on the benefits that the private sector has brought to the railway. It gives no incentive for operators to offer an enhanced service, and suggests little punitive action if it is a poor service. The passenger service operating contracts may well be a short-term palliative, but if adopted in the long run they would drive the private sector from the industry.
I commend the hon. Gentleman for securing this debate. The key thing for me is the customer, and I know that that is the key thing for him as well. Does he agree that connectivity is essential to rural communities? The ability to jump on the tube or a train is missing in too many communities. We must look at not simply holding on to what we have, but at expanding the network so that we can tackle rural isolation. That is what the customer wants.
The hon. Gentleman is exactly right. If he listens to my speech later on, he will hear me say that the passenger must be at the heart of the new railway system. The new system needs not to go back to what it was previously but to evolve. In a few moments’ time, he will hear me make that point.
I have always been in favour of privatised railways, although I accept that there are some legitimate criticisms. However, the creation of a not just fat but staggeringly obese controller at the centre and heart of a hybrid railway system is likely to be the worst of all worlds. I can only echo the view of so many senior rail experts who believe that, as the Government are soon to finalise their plans, now is the time and opportune moment to consider not just the best of the Williams-Shapps proposals but radical change.
The first test of this iteration of the Government’s plans has come with the recently announced SoFA—statement of funds available—for control period 7, which is £44 billion. That is a huge sum of money, but it is £4 billion less than the amount given for control period 6. That partly reflects the fact that, while Network Rail has excellent leadership at the top, all too often there are layers of permafrost that stifle initiative, do not give clear prioritisation to investment plans and do not get them delivered. In some cases, they have prioritised engineering over the customer. I reiterate that if this money is to be used sensibly, as I will say in a few minutes’ time, it is absolutely clear that the future plans for this industry must have well-defined, accountable plans for investment.
I have also looked at the HLOS—the high-level output specification—which was even more revealing, probably for what it did not say as much as what it did say. I saw no reference in the HLOS to either the rail review or Great British Railways. Although I accept that I may well be overinterpreting the HLOS, the optimist in me thinks that that means that the Government are actually signalling that they intend to revise their proposals.
Disappointingly, there was no reference to encouraging the participation of the private sector in the development of projects nor in the financing or funding of specific projects, despite that being one of the core suggestions that the transition team works on as it moves from the old system to the new. In response to the point about connectivity made by the hon. Member for Strangford (Jim Shannon), I accept that paragraph 24 of the HLOS refers to engaging with regional transport authorities, but I believe that local, regional and national schemes are all equally important. I hope the Minister will confirm that that was an error of omission rather than intent.
Is the hon. Member aware of the very good example of rural connectivity with the recent reopening of Okehampton railway station in Devon? Is he also aware of the potential for rural connectivity at Cullompton railway station, which is also in Devon?
Interestingly enough, in my first life in this place I was the Opposition spokesperson on railways for four years, and for two years I was the Minister for rail, so I know all about Okehampton station and what it might bring forward. That refers back to the point I made a moment ago that, with clear prioritisation of investment and the right incentives to operators, there is absolutely no reason why regional and local investment should not be seen to be just as important as national investment. Indeed, the point I made at the beginning, about rail being the key to regeneration and economic growth in a number of communities, underlines the point that the hon. Gentleman was making
I wish to make that very point about economic growth and investment in an area. As the Minister knows, I have been campaigning for the restoration of the three trains between Cleethorpes and King’s Cross for many years and they now appear in the London and North Eastern Railway draft timetable for next May. When the Minister sums up, will he comment on whether those services are likely to happen? As my hon. Friend said, economic growth and investment are crucial to the regeneration and levelling up of many of our more deprived areas.
It is 20 December, but already many hon. Members wish my hon. Friend the Minister to become Father Christmas in his summing up. As it is Christmas, and given he is a great friend of mine and an acknowledged expert in this field, may I offer him a few Christmas cracker thoughts about how I would like to see him use this opportune moment by accepting the best from the Williams-Shapps plans but also looking at what could be done to make our rail system even better?
A moment ago I referred to “the staggeringly obese controller”. One of the first things that could happen is that the Fat Controller could go on a new year diet. Everybody agrees that a guiding mind is needed for this industry. It would be right for Great British Railways to be turned into that guiding mind, with the clear objectives of setting timetables in conjunction with the infrastructure provider and operating companies, and being the body to set safety standards, let current contracts, see an evolution of the system and potentially oversee slot auctions.
If that is what Great British Railways is to become, then it is implicit that the infrastructure operator and maintainer should be separate from the guiding mind. If both functions were under that one body, it would make that body partial to the interests of network engineers rather more than to ensuring the satisfaction of passengers, freight operators and ticket operators. It does not matter what that separate entity is called—we could call it national rail, network rail or whatever we like—but I suggest to the Minister that setting Great British Railways up as the guiding mind and distinctly separating the role of infrastructure operator would be an excellent way forward.
My hon. Friend is making an excellent speech. I want to back up his suggestion for a much more slimline future system operator for two reasons. First, if I understand his point correctly, that would put customers and passengers right at the front rather than system and network engineers, which is the right way round and the right order of priority. Secondly, that addresses the fundamental point that my hon. Friend raised at the start that the difficulties from 2016 onwards were of an overly centralised, overly controlled agglomeration of power. He suggests a dispersal and relaxation of that power, and a transfer of it out from the centre, which is essential if we are going to have the flexible system we need to adjust to the changes that the pandemic has brought.
I am tempted to say that great minds think alike, because my next point is to suggest to the Minister that the Government should look at passenger service contracts. We all accept that the post-2016 franchising system and the pandemic have meant there is a need for change, but passenger service contracts are a journey rather than an end in themselves and the Government should look at what the end might be, so I suggest two things. I suggest that we should look at evolving mechanisms, so that there is a spectrum of possibilities for either new contracts or revised franchises that look at revenue risk, how it is shared, a range of revenue incentives, and a range of arrangements that in some cases would allow slot auctions as well as new franchises and that potentially ensure passenger service contracts in some areas. To that end, a commitment to review what is now in place after two years would allow that to happen. As I say, it would also provide for greater competition by introducing slot and route auctions—initially, I suggest, for a limited number of some of the long-distance routes. It would drive passenger satisfaction, encourage initiative and secure a future for open access, which had been one of the drivers for change, and for a range of competitions.
Some really exciting recommendations in the Williams-Shapps review should be kept. They include a steady programme of electrification alongside the utilisation of enhanced battery and hydrogen technology; new procurement processes based on whole-life value, with consideration of opex and social value, not just old-style cost-benefit analysis; and the provision of open data being more accessible and available to all industry participants. Those are some of the sensible, well-thought-through suggestions, as is the need for a guiding mind, but I hope the Minister will also accept that now is the right time, as I understand that the Government are looking to bring forward new plans or even a Bill in the new year. I hope he will accept the points I have made about separating the guiding mind from the infrastructure provider, giving a commitment to revise the spectrum of possibilities for train operating companies, and giving a commitment to see the private sector work alongside the public sector to deliver a clear, identified and accountable investment programme, so that all the money that is available for investment is spent in control period 7.
I am optimistic about the future of the railways, and I am particularly optimistic about their being in my hon. Friend the Minister’s hands, so I hope that he will accept that what I am trying to do—in a very thumbnail and headline way—is to set out some ideas that I think will make the future of the railways even more secure. I hope he will accept them as positive, constructive and implementable ideas, so that we have a railway that is fit for the 21st century.
It is a pleasure to serve under your chairmanship, Mr Robertson. It is also a great pleasure to be part of this debate, which was secured by my hon. Friend the Member for Wimbledon (Stephen Hammond). He said at the very end of his speech that he hoped the debate would be taken as positive and constructive, with ideas to feed into the mix. That is something that I always do with my hon. Friend, who has great expertise both as a brilliant railway constituency representative and as a former Transport Minister. In that regard, I thank him and all the other former Transport Ministers who have fed their ideas into the mix. I hope that I can cover the points made by my hon. Friend in the round, but I will try to address some of them specifically.
The Government remain absolutely committed to reforming our railways and ensuring there are high-quality railway services across the whole country. As my hon. Friend pointed out, the Government commissioned Keith Williams to conduct the first root-and-branch review of the rail industry in a generation, which led to the publication of the plan for rail White Paper in 2021. Before that, more than 750 representations were made to the review, which met over 200 groups across the country. Although my hon. Friend pointed out that the review was completed some time ago—back at the end of 2019—it was extended to allow more time to test the conclusions and ensure that they were appropriate, given the impact of the pandemic on rail.
There have been various changes of personnel, as my hon. Friend is well aware. The Secretary of State and I have been in post only since the end of October. We are reviewing the options for reform, and we expect to be able to provide concrete proposals as to what the reform will look like very shortly. We believe that the case for reform is stronger than when the plan for rail was first published. The lasting consequences of covid-19, along with industrial relations, sustained poor performance and financial challenges, increase the need for modernisation and efficiency. I will come on to the role of the private sector. If we want to regrow the railways back to the passenger numbers that we have previously seen, the best way to do that is to wrap in the private sector, which doubled those numbers post privatisation. I am very much with my hon. Friend the Member for Wimbledon on those optics.
I am grateful to the Minister for speaking so eloquently about his vision for the future of rail services. As chair of the all-party parliamentary group for disability, I often hear from people right across the United Kingdom about difficulties in accessing rail services, ticketing offices and disabled toilet facilities. Will the Minister consider those important inclusion issues in his future vision?
Yes, we certainly will. We are looking at an interesting and challenging set of reforms. Ticket offices are largely unchanged from how they were 30 years back, but only 12% to 14% of tickets are purchased from ticket offices. The key is to find a way to get those personnel outside—on the platform and in the station—to help those with disabilities and mobility issues. Getting them on the platform and on the trains may mean change, but I hope that that will be a positive change for the passenger and the workforce. It will be a more interesting and exciting role with passengers.
The Minister touched on his current focus on industrial relations and the need to grow the number of passengers coming back to the railways. Is he aware of the situation with South Western Railway, which serves all of south-west London, Surrey, Wiltshire and the south-west? Until the new year, there will be no services at all on non-strike days at 40 stations across the network, including Whitton, St Margarets and Strawberry Hill in my constituency, and numerous stations in Surrey. Nurses who are not striking cannot get to work, police officers cannot get to work and children cannot get to the schools that are open. What is the Minister doing to work with South Western Railway to ensure that services are available on non-strike days? We will never get people back on to the railways and improve industrial relations if passengers cannot get where they need to.
I agree with the hon. Lady, and I am aware that she applied for an urgent question on the matter. I will write to her.
I call for all hon. and right hon. Members to come together as one on this issue. We cannot focus on good passenger experience and a future for the railways if there is industrial action that involves the workforce not working on rest days when it has previously done so. I have never encouraged that pattern or seen a future for it, because it means that we are reliant on goodwill. When goodwill is withdrawn at short notice, we end up with what the hon. Member for Twickenham (Munira Wilson) described. We need to move away from rest-day working, which does not work. Equally, I urge all those who are involved on the union side of matters to consider that it is Christmas. If we want a future for our railways, we must work positively and constructively, rather than withdrawing labour. I will write to the hon. Lady, as I mentioned.
I should make some progress, because time will push me towards the end. I shall try to take a further intervention if I can.
I want to talk about other parts of the reform: fares and ticketing. As part of the plan, we will invest £360 million to radically reform and improve the passenger experience. We will also look to deliver our manifesto commitment by introducing tap-in and tap-out at additional stations in regional and urban areas, and contactless pay-as-you-go ticketing at over 200 stations in the south-east. We will also introduce simpler, modern ways of paying for travel and a straightforward compensation process.
Let me touch on the proposals for reform. In addition to our significant investment in the passenger experience, one reform that we are considering is the creation of a new guiding mind to bring the fragmented railways under a single point of accountability. That would not be nationalisation; rather, it would be simplification. A simple, more agile structure will be needed to change travel and working patterns, introduce new technologies and enhance business models. My hon. Friend the Member for Wimbledon talked about the role of the private sector.
My hon. Friend the Member for Wimbledon talked about the role of the private sector. Rail reform must have at its core greater private sector involvement. I want any new model to take the very best of the private sector: innovation, an unrelenting focus on quality and the type of models that drive reform, a better experience for the passenger and better return for taxpayer value. I am happy to discuss the private sector contribution, and to meet my hon. Friend to reassure him about that. He knows that I have always had a real passion for what the private sector has brought for rail. I agree that, although the franchise model may have run its course, it was not made easy for the private sector to navigate, because it became a very complex, documented process that put off new entrants to the market. Any rail reform has to be simple and nimble enough to bring in new innovators, not just the largest.
My hon. Friends the Members for Wimbledon and for Weston-super-Mare (John Penrose) have championed open access. Rail reform must see an important role for open-access operators. We want to make the best use of the network and grow new markets for rail. The Department recently supported Go-Op’s innovative proposal to operate open-access services from Taunton to Swindon and Weston-super-Mare, providing new direct services and improved connectivity for communities.
I have challenged my Department on open access. It seems to be the case that we are not putting open access on equal footing, which means that there is some sort of charge and enablement. The response is always, “It just takes away from the other contracted operators.” We need to charge open access more to allow it not to take away but to compete. In my view, open access definitely has a place, but we perhaps need to reform the entrance requirements so it is not constantly turned down. I am very excited about those possibilities.
My hon. Friend the Member for Wimbledon asked when legislation would be forthcoming. We will not be taking forward legislation on rail reform in this parliamentary Session, as he is aware, but we will introduce it when the parliamentary timetable allows, and I am very keen that we do so. In the interim, rather than do nothing because legislation is not immediately forthcoming, many areas can be progressed outside legislation. They include making significant investment in ticketing and retail, and the formation of the reform proposals that we will focus on. I assure my hon. Friend that we will bring those forward in parallel with legislation.
My hon. Friend mentioned the control period 7 settlement. That process is vital for securing value for money for the taxpayer and providing certainty to investors. The Government published a strong funding settlement of more than £44 billion for England and Wales for the next control period, which begins in April 2024. My hon. Friend touched on that. That demonstrates our long-term commitment to securing a safe, reliable and efficient railway. The industry—public and private—now needs to work together to establish stretching yet realistic targets for improvements and reliability, supported by Government investment.
On the lack of reference to rail reform or GBR, the HLOS, which my hon. Friend mentioned, is more of a statement of principle. He should not read anything into that. We have not landed on one particular model, so it would not have been appropriate to insert one in there. I got my pen out and made sure there was reference to innovation and private sector involvement—I do not believe anyone took those words out. I was particularly keen to ensure that, with innovation, we included small and medium-sized enterprises so that we are focusing not just on larger private sector involvement but on the small innovators that can really drive change. They need to be in the room too.
On industrial action, passengers rightly expect a regular, reliable service, seven days a week. Current shift patterns and voluntary weekend working for railway staff make that vision nearly impossible. The only solution is for everyone to come together and agree a new way forward. I have met the unions and employers, and the Secretary of State has met the unions too. I hope that will send a message to this House that we want to facilitate an end to industrial action. I again ask all right hon. and hon. Members to come together and push not just the train operators and the Government but those who are responsible for the strikes—the trade unions. It is time for all to be called out where they can deliver more.
The Government are wholly committed to improving journeys for passengers and creating a better, more modern rail industry. I thank my hon. Friend for his contribution. I assure him that the private sector will be right at the heart of any reform proposals. The Secretary of State and I are committed to an improved railway with the private sector at its heart, and I hope that my hon. Friend will keep me to that mantra.
Expansion of the Ultra Low Emission Zone
[Stewart Hosie in the Chair]
I beg to move,
That this House has considered the expansion of the Ultra Low Emission Zone.
I am pleased to have secured this debate on one of the biggest issues affecting my constituency right now. It affects not just Dartford, but areas right across London and the neighbouring counties. It is, of course, Sadiq Khan’s extension of the ultra low emission zone. The decision by the Labour Mayor of London to extend that scheme to cover the whole of London will be catastrophic for my constituency, which neighbours London. The border is not neat; it straddles roads such as Maiden Lane and sits at the end of roads such as The Coppice, Bowmans Road and Stonehill Woods Park. Although their residents are in Kent, they have to enter London just to get out of their road—just to live. They have no choice but to enter London.
Currently, the border with London is fairly frictionless. Thousands of times a day, people drive across that border, often without even knowing it. That is good for London, and good for Kent and other counties bordering London, but now Sadiq Khan is building a financial wall between London and the rest of the country. A small business, particularly in outer London, that relies on customers travelling to it will be crucified by this form of taxation. The line that has been used by those desperately trying to defend the Mayor is that the scheme will not affect many people, but one in seven cars is already affected. Given that the Mayor ignored his own consultation on this scheme and did not include the expansion in his manifesto, as sure as night follows day, he will increase the number of vehicles that will have to pay—all to sort out the financial mess he has got his administration into.
The Mayor’s own consultation shows that 28,000 vehicles will be affected in the London Borough of Sutton alone. As my hon. Friend rightly says, it is small business people—those who can least afford to replace their car—who will be affected.
My hon. Friend makes a pertinent point. I think I am right in saying that almost two thirds of the respondents to that consultation, and an even higher proportion of those who responded from outer London and the home counties, opposed the expansion. That consultation, frankly, was a sham; the Mayor’s decision does not reflect what people have told him.
As I say, this is all about trying to sort out Sadiq Khan’s financial mess. Well, Dartfordians should not have to pick up the bill for his financial incompetence. Everyone will be impacted by the expansion of ULEZ, whether directly as a motorist or business, or indirectly by the damaging impact that scheme will have on the local economy.
I thank the hon. Member for bringing this important debate to the House. As chair of the all-party parliamentary group for disability, I have been contacted by a number of people who have mobility cars who do not have to pay, but also by those who do have to pay. They are extremely concerned about the financial impact of this decision, given the cost of living crisis. Does he agree that there should be some kind of overall exemption for people who have disabilities, and who require mobility cars to access the public services that we all should be able to access?
The hon. Lady makes an incredibly important and good point. Of course, people rely on their motor vehicles; some have no choice whatsoever. If public transport does not go the way that they are going, they have to use their motor vehicle, and she is absolutely right to highlight the impact that this decision will have on disabled people.
As far as exemptions are concerned, I would argue that everybody should be exempt. I do not think anybody should have to pay this charge, because of its nature and the impact it will have on so many people—on everybody around London. It is not just those who own vehicles that breach the ULEZ guidelines who will be affected; it is everybody.
I thank the hon. Member for securing the debate. I have also had representations, and heard my constituents’ concerns, about costs and the transition to green vehicles, but there is another side to this. I am sure he will agree that this is also about air quality, which we need to tackle in London. Has he read that the Mayor has decided to introduce two new temporary exemptions, from January 2023 to October 2027? Those grace periods will apply for those on disabled benefits and with wheelchair-accessible vehicles. Any way we move forward must be inclusive. There are still questions to be answered, including from my constituents.
The hon. Lady raises an important point about the impact on disabled people. I would reiterate what I said to the SNP spokesperson, the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron).
I believe that the constituency of the hon. Member for Feltham and Heston (Seema Malhotra) covers Heathrow airport. This will have a big impact on her constituency; it will stop people accessing that airport and make them go to other airports instead, so I would argue that the expansion has a big impact, and has unintended consequences for many people and businesses.
The Mayor is relying on not just the £12.50 per day charge, but the penalty charges for non-compliance, which make him even more money. The RAC believes that in the first eight months after the expansion of the ULEZ to the south circular, 1.6 million penalty notices were issued. This expansion will be to the whole of London; I shudder to think how many penalty notices will be issued.
We can see why the expansion is so financially and politically attractive to the Mayor of London. Those who must pay his seven-days-a-week charge to enter London cannot and do not vote for him. We are not Londoners in Kent; this is quite literally taxation without representation or accountability. The two areas hit hardest by the expansion are the counties bordering London, which cannot vote for the Mayor, and outer London, which the Mayor does not care about because it is not where the bulk of his votes come from.
The Mayor says that he will bring in a scrappage scheme for the poorest people, so that they can change their car. He is not doing that for those living in Dartford or anywhere else outside London, so the poorest will be hit the hardest. They will be unable to change their car or enter London to go to work, shop or pick up the kids from school. How will key workers get to London to support the health service, the police or other emergency workers there? Many of those key workers own cars that will be charged if they enter London, yet they keep vital services in London going. The supermarket ASDA has contacted me because it is concerned about the impact that the extension would have on its depot workers. It estimates that over half of those workers have vehicles that would be subject to the charge.
The scheme currently goes out to the south circular. We already see people parking just outside the ULEZ before continuing their journey using another form of transport. That is an understandable way of avoiding the charge, yet this practice could turn large parts of west Dartford and Joyden’s Wood—and areas all around London—into a car park. What justification does the Mayor give for his decision? He says that it is to reduce pollution. If he really wanted to reduce pollution in London he would ban the vehicles, but he does not want to ban them; he wants to make money out of them.
The expansion of the ULEZ has nothing to do with pollution. The worst pollution in London is in central London, not outer London. Of course, the expansion could not take place without the Mayor changing his transport strategy. He has changed it—with the votes of the Labour and Liberal Democrat Assembly members, and with only the Conservatives opposing. He held a consultation, which we have spoken about, on the ULEZ expansion and more than 60% of respondents opposed the idea, so what did he do? He just ignored them. What was the point of that consultation exercise?
His Majesty’s Government have stated on numerous occasions that they do not have the power to stop this expansion. Can my hon. Friend the Minister confirm, when he responds to this debate, whether that is the case? What advice has he sought on it? It seems that outer London boroughs can refuse to allow their land to be used for the camera infrastructure needed. Can he give his view on whether councils can refuse to allow their land to be used in that way, as it seems to me that that may be possible?
The ULEZ expansion will have a significant impact on the poorest in society. It will price people out of going to work, going shopping or otherwise going about their daily life. It will place a financial wall around London and take away people’s freedom of movement. It is aimed at those who cannot vote the Mayor out of office and those who do not vote for him. It is the most debilitating, unfair, undemocratic form of taxation this country has ever seen, and it is a window on the soul of the Mayor of London.
I rise as chair of the all-party parliamentary group on air pollution —I am of course the Member of Parliament for Swansea West, but I was formerly the leader of Croydon Council and an MP for Croydon—to support the ultra low emission zone. I am horrified to see so many outer London Conservatives gambling with people’s lives for their own political survival. We are 70 years on from the great London smog, yet 4,000 people in London are dying prematurely, 11 every day, from air pollution. As leader of Croydon Council, I introduced the Tramlink, 26 km of light rail. When I was in Croydon, I had to regularly take my oldest daughter to Mayday Hospital with asthma attacks because of air pollution. Now, in Swansea, my children have not had to go to hospital.
Is the hon. Gentleman familiar with the report produced by Jacobs entitled “ULEZ Scheme Integrated Impact Assessment”? If he is, how does he square his comments about Conservative Members from outer London not caring about people dying of air pollution with statements in that report such as this?
“The Proposed Scheme is estimated to have a minor (NO2) to negligible (PM2.5) beneficial impact on exposure to air pollution and achieving WHO Interim Targets across Greater London.”
I am glad the hon. Gentleman mentioned that, because the expectation is that the expansion of the ULEZ will reduce PM2.5 in outer London by 16%. He should know, but I am sure he does not, that studies at Harvard University and a Max Planck Institute found that covid deaths increased by between 8% and 12% when there was a marginal increase in air pollution from PM2.5—an increase much less significant than the fall that I mentioned. That is particularly relevant to poorer, more polluted areas and more diverse communities. We are talking here about life and death.
We know from studies done that there will be a massive reduction in PM2.5 and Nox as a result of the expansion. Indeed, there will be a major contribution towards mitigating climate change. The scheme already reduces carbon dioxide emissions by 12,300 tonnes; an expanded one will reduce it by 27,000 tonnes. We will be saving lives and saving the planet. The truth is that if we do not act, we will end up with 550,000 more people unnecessarily getting pollution-related diseases in the next 30 years, at an estimated cost of £10.4 billion. We should move forward on this. People who are neutral, such as the chief medical officer Chris Whitty, who has just released a report on air pollution, very much commend what Sadiq Khan is doing to save lives, as does the United Nations.
As a result of the ULEZ, there are 21,000 fewer vehicles in inner London and 67,000 fewer non-compliant ones—the latter figure is three times the former—so there are fewer vehicles overall. The scheme affects only 15% of vehicles—the most polluting—and £110 million has been set aside for scrappage schemes to enable conversion. The other thing to bear in mind is that the Government a year ago passed the Environment Act 2021. I wanted them to use COP26 to enforce World Health Organisation air quality standards, but instead, a year on, the Government are saying, “Why do we not try to get PM2.5 at 10 micrograms per cubic metre by 2040?”, as opposed to 2030, which was the previous deadline. The limit prescribed by the World Health Organisation is 5 micrograms, which Europe will achieve by 2030. We could achieve that here—this is a condition of doing so—with ultra low emission zones. Instead, the Conservative position is, “No, we will not bother with that. We will play politics with this, and continue to have 3,600 children every year in London going into hospital with asthma”, as my daughter did. That is unnecessary—and despicable, because it is avoidable.
The hon. Gentleman talks about playing politics, but it is the Mayor who has gone against his consultation. He says that Londoners are in favour of the ULEZ because they talk about air quality. Every Londoner would be concerned about air quality, but this is about the consultation that he refused to accept. The hon. Gentleman talked about trams in Croydon. It would be far better to pay for the tram extension in Sutton; that would be cheaper than what the Mayor is doing, and it would improve air quality by ensuring that people made fewer car journeys—and he would be taking residents with him.
I am pleased to hear that the hon. Gentleman supports trams. I very much agree that we should move forward with trams across London and elsewhere. As an aside, the tram system cost us £200 million at the time. It was a public-private scheme with £100 million of private money and £100 million of public. We could get 1,000 of those schemes and integrated transport across Britain for the cost of HS2, but that is controversial and off the point.
We should certainly take people with us; the YouGov poll shows that people support the extension of the ULEZ by a ratio of 2:1. It is very easy to go round knocking on people’s doors and saying, “Do you agree with Sadiq Khan’s attempt to tax you more in this despicable way?”, but if we do a neutral, objective study through YouGov, we find that people support it by 2:1.
Is the hon. Gentleman aware that the figures quoted by Conservative Members come from the Mayor’s own consultation, in which 66% of people said, “No, don’t do this”? That was despite being asked a load of leading questions about air quality. Despite that, it delivered a two-thirds opposition. That was not people knocking on doors; that was the Mayor’s own consultation.
So that we are clear about how these consultations work, the Mayor, a devolved Administration or whatever puts out a consultation that says, “Tell us what you think”, and then groups of people campaign around it. They put in their submission and await the outcome. YouGov takes a representative sample; it found that people are in favour by 2:1. That is the answer. The hon. Gentleman should read up on how these things work, rather than spouting off about how they do not.
In a nutshell, we are talking about ensuring better public health, and ensuring that we reach World Health Organisation standards in time. This is a critical part of moving forward, because London is a sort of death spot in terms of pollution. If we do not get London right, we cannot move together as a nation. We will end up with these ridiculously unambitious targets of 10 micrograms by 2040, instead of 5 micrograms by 2030. I very much agree with what the Mayor has done; best of luck to him.
I thank my hon. Friend the Member for Dartford (Gareth Johnson) for securing this important debate. Conservative Members have been campaigning assiduously on this issue, in particular my hon. Friend the Member for Orpington (Gareth Bacon), who has been leading on it for some time. The ULEZ will have a profoundly negative impact on many of our constituents. Hon. Members should be under no illusion: the ULEZ is about revenue generation on the back of poor financial management. This is a London tax, put forward by the Labour Mayor of London, and it hits the poorest, who cannot afford to update their vehicles. In Runnymede and Weybridge, families and businesses will suffer the most.
I put out a local petition, and there was an overwhelming response against the ULEZ. That is interesting in itself, but what perhaps gives more power to the arguments against it is the individual comments that people made in response to the petition. People explained that they cannot afford to update their car, because they do not have enough money. Public sector workers, who need to go into London to work, said that the ULEZ will have a serious impact on their ability to continue to do that sort of job. Businesses felt that it would make them go under. People living with disabilities need to use their cars to travel around, and that is a particularly substantial issue at the moment because, yet again, the lift at Weybridge station is broken—sadly, I have had to campaign too often to get it repaired. People are therefore forced into using cars to get to and from London.
Sadiq Khan says that the ULEZ is about air quality. If it really was about air quality, why does he use such a blunt tool to deal with the issue, as opposed to focusing on the areas with the most acute air quality problems, which are along trunk roads? Why the blanket approach rather than a targeted approach? If he really wants to improve air quality, why does he not push even faster car scrappage? Why does he not invest more in the bus fleet conversion to electricity and hydrogen vehicles? Why does he not listen to industry?
Earlier this year, I was at an event hosted by Octopus Electric Vehicles in Weybridge, which was looking at the transition to electric vehicles. There were lots of representatives from all sorts of businesses and innovators, and they said that the key policy to drive forward the uptake of electric vehicles is the zero emission vehicle mandate. They welcomed the Government’s incredible position in terms of bringing it forward, but they said that if we want to really push things, we need a more ambitious ZEV mandate. Why is Sadiq Khan not talking about practical, proper solutions to air quality, rather than pressing his attack on, in essence, the poorest?
I will finish with this: the ULEZ is a London tax to prop up a failing administration. My constituents should not have to pay the price for Sadiq Khan’s failings.
It is a pleasure to serve under your chairship, Mr Hosie, and to speak in this debate secured by the hon. Member for Dartford (Gareth Johnson).
I very much welcome the debate, because air quality is one of the biggest issues faced by my residents in Putney. They hope that the extended ULEZ policy will have a significant impact on children’s lives and on small businesses, which complain to me about pollution on Putney High Street—one of the most polluted high streets in the country. However, that pollution is coming down as a result of the Mayor’s policies.
I thank the Putney Society, Putney Pollution Busters, Mums for Lungs, the London Sustainability Exchange, King’s College London and Clean Air in London for all their campaigning and for speaking up for residents in Putney, in Dartford, and across and outside London, who know that air quality is a silent killer. The hon. Member for Dartford, too, called it a silent killer, with air blowing pollution from London to his constituency, so I am surprised he does not welcome the Mayor’s actions to reduce that pollution and to instead have cleaner air for us all, especially our children.
Yesterday, the Government finally brought out their air quality targets under the Environment Act 2021. I have been calling for those targets for years, but they are not good enough. First, they just aim not to have toxic air by 2040, which is a whole 18 years away. Someone born now will potentially not see the results until they become an adult. Secondly, we cannot start to meet the Government’s targets without the ULEZ. It is needed, so I hope to hear support from the Minister for actions that will meet the Government’s air quality targets.
Outer London is disproportionately affected by this issue, because there are more older people, who are particularly affected by the damaging effects of air pollution. The UK has the worst death rate for lung conditions, and that simply cannot be ignored—we cannot hope that it will all go away in any other way than by us taking action. Recent analysis by Asthma + Lung UK has shown that the UK has the worst death rate for lung conditions—higher than anywhere else in western Europe. In total, around 600,000 people have a lung condition in Greater London, and 60% of them live in outer London and do not currently live inside the ULEZ. I hear again and again of people who say that they or their children did not used to have asthma but that they do now. We can see the effects. If we could see the air pollution on our streets, we would know it for the killer that it is.
Toxic air is shortening the lives of our constituents. Every year, up to 36,000 people in the UK die prematurely as a result of toxic air, and 4,000 of those deaths occur in London alone. In Dartford, the equivalent of 66 deaths per year are attributable to long-term exposure to particulate air pollution. But it is not only about deaths; it is also about people who are hospitalised or who live with debilitating conditions.
If the hon. Lady feels that the Mayor of London is expanding the ULEZ to tackle pollution across the south-east, does she think it is simply a coincidence that he is due to make hundreds of millions of pounds out of it, or does she think it is actually motivated by money?
I thank the hon. Member for his question. What is the Mayor spending the money on? He is spending it on local transport. Every single penny raised by the ULEZ is being spent on local transport, which is exactly what we need. That is the way we are going to overcome the toxic air that is killing our constituents.
I am not here to talk about local infrastructure, but we have to invest in the local public transport infrastructure so that we can overcome this problem. I had to give up my car—it was a diesel car— when the first ULEZ came in, and I do not have a car now. I rely entirely on public transport, but it has to be improved. How will we get the money to do that? The expansion of the ULEZ is one way to get that money. I hope to hear from the Government how they will fund public transport in London, if that is the key factor that we need.
Nearly 10 years after Ella Adoo-Kissi-Debrah became the first person to have air pollution recorded as a cause of death, people in Dartford and London are still breathing toxic air. Poor communities and black, Asian and minority ethnic communities—those who are least likely to have a car—are the worst affected by air pollution. We have to take action.
In Wandsworth, the borough where my constituents live, 129 deaths a year are attributable to the effects of toxic air. That is such a shocking figure. Knowing that I was taking my children to school and exposing them to toxic air every day really worries me, and it worries all my constituents too. Currently the ULEZ goes through Putney, but it is not a wall—the world has not ended, life has carried on and travel has continued. It is not the hard-and-fast border it is being portrayed as.
Expanding the ULEZ will reduce NOx emissions by 10%, and PM2.5 exhaust emissions by nearly 16%, and prevent 27,000 tonnes of CO2 emissions from being released. It will lead to a nearly 10% reduction in NOx emissions from cars in outer London, on top of the 30% reduction in road transport NOx emissions that is already expected from the current ULEZ and the tighter low-emission zone standards. It works, and it should continue. We need to have this action.
I welcome the news from the Mayor of London that, as part of the ULEZ expansion, he is introducing a scrappage scheme to support residents on lower incomes, as well as businesses and charities. It is the biggest scrappage scheme yet, at £110 million, and it will help those in Putney and every other area who are on low incomes and who need support to replace or retrofit their cars. I am pleased that the Mayor has also introduced new grace periods for disabled people, allowing them more time to adapt to change.
I do not have enough time to give way— sorry.
I understand the concerns raised about the impact on small and microbusinesses. I met the Federation of Small Businesses this week to discuss its concerns about the ULEZ. It welcomes the move towards greening businesses and a more sustainable future, because it makes clear business sense. We cannot simply do nothing. However, the FSB is concerned about the impact of the ULEZ on microbusinesses—those businesses with under 10 employees. I have two brothers-in-law who are plumbers, so I have heard their concerns as well. [Interruption.] They are very useful.
I know that this is a tough time for small businesses, so I join the FSB in urging the Government to support the ULEZ and to provide additional funding, on top of the Mayor’s £110 million scrappage scheme, so that it can support microbusinesses to change their vans, instead of stopping them coming into London. I also join the FSB in calling for small businesses to be given extra time to comply—up to September 2024—and for us to consider a way for small businesses to pay their charge into a special fund that they can put towards purchasing a ULEZ-compliant vehicle.
This announcement will ensure that the most vulnerable in our communities are looked after and give them the support they need as the ULEZ expands. So I will end by asking whether the Minister supports the Government’s air quality targets, the ULEZ itself and small businesses. If so, will he support them further by topping up the Mayor’s scrappage scheme? Also, does he support a new clean air Act, because the time has surely come for one. Are there plans to introduce one?
In conclusion, I welcome the ULEZ and this action to clean up our air for our planet, our health and especially our children’s health.
It is a pleasure to serve under your chairmanship today, Mr Hosie. I join colleagues in commending my hon. Friend the Member for Dartford (Gareth Johnson) on securing this debate.
Like most Conservative Members of Parliament in Westminster Hall today, my surgery has been inundated with constituents who tell a very consistent story: that they are dependent on their vehicles, mainly due to ill health or the need to support disabled family members in accessing medical care. They have older vehicles, which have often been extremely well maintained, and which they have had for many years, but the prohibitive cost of change now means that face a really serious negative impact on their quality of life and that of their dependants. As my constituency has the highest per capita vehicle ownership in London, we might expect to see many people like that coming forward.
Around 70% of Londoners do not own a car so, understandably, the Mayor of London has seen the ULEZ expansion as something that will not negatively impact on a great many constituents of his in central London. However, for those of us in the suburbs—my constituency essentially consists of eight villages, one of which has no access to a tube or train station and only very limited access to buses—dependency on cars and other private vehicles is much higher.
When we look at a map of London, and particularly at the north-west, we see routes such as Hill End Road in Harefield, which is barely the width of a car, but which is one of the routes that takes people out of our capital and into the surrounding counties, as well as Park Lane, Dene Road and Eastbury Road in Northwood, and the A4008 in Hatch End. All of these roads change from being in Greater London to being outside Greater London partway along, so people who depend on a car— particularly if they are disabled or in ill health—to come and shop in their local high street, access their GP practice or get to their local public transport network will have to pay £12.50 every time they do any of those things, simply to go about their daily lives. What is iniquitous about this is that they do not have a choice.
My wife lived in Westminster when I first knew her, so I completely understand that, in many parts of central London, there is a very high density of access to the bus network and other kinds of public transport, such as trains and tubes, but out in the suburbs that is simply not the case.
I thank the hon. Member for speaking about the most vulnerable people. Does he agree that it is particularly difficult for people with disabilities because not all rates of disability living allowance, child disability payment or personal independence payment are exempt from the scheme? Many people will still be adversely impacted, even from 2023. They are contacting me, as chair of the all-party parliamentary group for disability, and asking that more be done to support their particular needs.
That is an incredibly important point, which my constituents have made to me. There are those who may have a blue badge because they have a serious health condition that requires them to attend regular medical treatment, but who are not registered disabled or covered by the exemptions that the scheme envisages.
I will mention this in my speech, so I hope you will forgive the duplication, Mr Hosie, but I was contacted by a charity that transports emergency blood, breast milk for premature babies, and urgent medical samples. It contacted the Mayor of London about whether it would be able to get an exemption, or even a discount, and it was told no. Does my hon. Friend agree that that seems morally wrong?
That is characteristic of the Mayor’s response to the representations he has received: he simply does not want to take them into account.
Some constituents may be temporarily resident in my constituency—for example, because they are awaiting heart and lung transplants at Harefield Hospital. They are required to attend the hospital at short notice when a donor’s heart and lungs, or one or the other of those things, becomes available. That also has a significant impact. Again, the Mayor of London seems to have very little interest in that.
Those of us who have been interested in air quality for a long time recognise that, particularly in outer west London, the big source of pollution is Heathrow airport. This measure does nothing whatever to address the single biggest source of air pollution. It is very much a case of a Mayor pursuing the thing that makes money for the mayoral budget, rather than the thing that would actually improve air quality. There are no measures to improve local authority powers to tackle engine idling. There is nothing that addresses the impact of pollution coming from the M25 or from Heathrow airport, which are the things causing the significant air pollution that affects my constituents.
As this policy makes progress, we need to recognise that local authority powers under the Environment Act 1995, through which the Mayor is seeking to introduce this measure, should require there to be consent from local authorities. In that way, we can ensure that the people who are legally responsible—the local authorities—have a say on whether such measures will tackle the actual sources of air pollution in their area, as opposed to simply talking about them and raising money for an inner London zone 1 Mayor who clearly does not pay attention to the needs of his suburban constituents.
It is a pleasure to serve under your chairmanship, Mr Hosie. I, too, thank my hon. Friend the Member for Dartford (Gareth Johnson) for securing this important debate. I also thank my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer), who was right that I have taken a deep interest in the ultra low emission zone expansion for some time, and that is because there are a number of big problems with the policy.
The first problem is that Sadiq Khan does not have a mandate for this policy. He claims that ULEZ expansion is essential to tackle air pollution, and we heard his briefing being faithfully read out by the hon. Members for Swansea West (Geraint Davies) and for Putney (Fleur Anderson). Given that the Mayor was re-elected to City Hall only last year, we would imagine that this policy featured prominently in his manifesto, but it did not. He went to the polls on a 100-page manifesto, and one paragraph on page 55 mentioned the ultra low emission zone, but it pertained specifically to the extension to the north and south circular in October 2021, which he had already announced. There was no mention whatever of expanding the boundary to the outer part of Greater London.
When the Mayor decided in May this year to push ahead with that expansion, the Evening Standard article that covered the announcement said:
“On Friday morning, Sadiq Khan insisted that he would not press ahead with the plans if the public overwhelmingly rejected them during the public consultation.
He said: ‘It’s a genuine consultation—as were the previous two consultations in relation to the central London Ultra-Low Emission Zone and the expansion. I hope Londoners who care about the health of their families will respond.’”
They did, in large numbers, but the Mayor initially refused to release the results of that consultation. Eventually, after public pressure, the results were released on 25 November. They revealed that 60% of respondents opposed Sadiq Khan’s ULEZ expansion to outer London. That figure increases to 68% when we include the organised responses that the hon. Member for Swansea West mentioned; 70% of outer London residents oppose the expansion and 80% of those who work in outer London were also opposed.
This policy has no mandate and no public support. It turns out that it is not about air quality, either, contrary to the propaganda read out by Opposition Members, which comes directly from the briefing sent by the Mayor of London. The document I quoted earlier is not a hatchet job, but the Mayor’s own integrated impact assessment. I gave one example, but there are many, of where it uses phrases like “negligible to minor” in terms of the impact that the expansion would have on air quality.
There is no mandate, there is no public support and it is not really about air quality, because the impact is negligible. So why is the Mayor of London so interested in ULEZ expansion, and why is he rushing it? The answer is as old as time: it is about money. This is a cash grab, pure and simple. According to Transport for London’s own figures, it expects the £12.50 charge to hit 160,000 cars and 42,000 vans per day. In monetary terms, that is about £2.5 million per day—a big cash injection into the Mayor’s coffers.
There is a question about timing. When the inner and outer ULEZs were introduced, people had years to prepare. In this case, we have nine months. The average family cannot save up to buy a car that quickly, especially when household bills are rising, and we know that they are. Small businesses and charities may be forced to replace one vehicle or even a fleet that they had banked on being able to use for many years to come.
Who will be hit? The Mayor of London does not seem to understand who will pick up the bill for his policies. It is not wealthy Londoners—it is ordinary working people, on the poorer end of the socioeconomic spectrum, who are less likely to be able to upgrade their car, and more likely to own an older vehicle. There is a myth that Mayor Khan attempts to spread around that low-income Londoners do not own cars, or drive in Greater London. That is categorically false. What is more, he knows it. The “Travel in London” report produced by TfL in 2019 shows that, by its own analysis, 50% of outer London households earning as little as £10,000 own a car. Car ownership rockets to in excess of 70% for those earning upwards of £20,000. According to TfL’s impact assessment, low-income Londoners are more likely to own non-compliant vehicles. The ULEZ expansion is not a tax on wealthy drivers, but on poorer people who simply cannot afford to buy a new vehicle.
In my constituency, we do not have tubes or trams. We have trains that go into central London and we have private vehicles. Some 83% of Orpington households own a car, meaning that a great number of my constituents could be liable to pay the charge. As we heard from my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds), many of my constituents use their car every day to go to work, to the shops and to visit family and friends. Under the Mayor’s plan, they face a potentially disastrous annual bill of £4,500.
Other Members have spoken about the impact on public services. More than half of Greater London’s police officers and firefighters and around a fifth of the workers in my local NHS trust come into Greater London from outside. Those who work in outer London and those who work in shift work are especially reliant on their cars. Someone on a night shift faces a double whammy of a £12.50 charge driving to work, and a £12.50 charge after midnight when they drive home. It could cost them £25 per shift to go and do their work.
The ULEZ expansion will also impact on businesses in outer London. Many people drive in from Kent to shop in Petts Wood in my constituency. TfL estimates that 8% have non-compliant vehicles. Rather than paying £12.50 a time, many will simply choose to shop and visit elsewhere, depriving London’s high streets of customers.
Many drivers, both in London and those who travel from outside to work, shop or visit outer boroughs, are unaware that they may face an even higher bill. We heard from my hon. Friend the Member for Dartford about the increase in the level of fines—up to £180. The Mayor has just hiked the fine from £130 to £160, and will go further from January next year, raising it to £180. If a driver crosses into Greater London, perhaps unaware of the boundary or unaware of the existence of the charge or that their vehicle is not compliant, they will unknowingly rack up a cripplingly high bill. Potentially as many as 12,000 cars and vans a day may be hit by a fine.
The RAC estimates that Transport for London could raise £260 million a year by imposing those penalties. To put that into context, Churchill Insurance estimated that the total parking fines raised by every council in the country combined would come to £250 million—£10 million lower than Transport for London would make with those penalties in the first year. TfL could in fact earn significantly more than that, because if not all drivers pay within 14 days—reducing the penalty from £180 to £90—that could raise £390 million every year.
The Mayor of London has not been a success in office. The Metropolitan police and the London Fire Brigade are both in special measures. Violent crime has reached record highs, and it has not abated. He is not on target to deliver enough affordable homes, despite what he boasted about as being the largest settlement from central Government on record. Crossrail was years late and billions of pounds over budget, with billions more lost in fares that were never raised.
Indeed I am. The point I am trying to make is that Sadiq Khan is looking for something he can point to and claim as his. Leaving aside the fact that the ultra low emission zone was not even his idea—it was conceived and the preparatory work was done under my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson)—the Mayor has adopted it as his big idea. The expansion of the ultra low emission zone to outer London has no mandate or popular support. It will do almost nothing for air quality, it will be economically damaging and it will hit the poorest hardest—damaging not just those who live in outer London but millions who live outside Greater London. It is an appalling and unjust policy and it should be scrapped.
I thank my hon. Friend the Member for Dartford (Gareth Johnson), who is also my constituency neighbour, for securing the debate.
It has been said:
“As Sadiq Khan shows in London, Labour in power delivers.”
Those are not my words; they are the words of the Leader of the Opposition from April this year. They feel very appropriate, given today’s debate on ULEZ—and because it is pantomime season, after all. My hon. Friend the Member for Orpington (Gareth Bacon) just pointed out some highlights from the Mayor’s time in power; he mentioned Crossrail, and the Mayor’s record on the Metropolitan police and the London Fire Brigade.
I will stick to the subject of ULEZ, Mr Hosie, as you have asked. It is the last outrageous tax raid on drivers in outer London. We have had the Mayor’s share of council tax increase by 43% since he entered office, and it is expected to rise to above £400 next year. The ULEZ rise—a tax rise—on drivers in outer London and the neighbouring counties will hammer families, small businesses and emergency service workers with bills of around £4,500 a year to drive. I am not sure that even the champagne socialists of north London could afford that bill. If that shows what Labour in power delivers, then this really is the nightmare before Christmas for the British public.
As we have heard from hon. Members already, the ULEZ expansion was overwhelmingly opposed by the public, despite the consultation clearly being skewed to try to give TfL and the Mayor the answers they were looking for. It has also raised a number of serious issues and questions, including the process and powers being used by the Mayor to push it through, which I hope the Minister will look closely at. First, there are questions about whether the Mayor has the mandate to do this, given that it was not in his manifesto, and the impact of the expansion will also be felt outside the Greater London boundaries. That is alongside the fact that local authorities have a statutory duty over air quality, and several boroughs are opposed to the policy. Secondly, as highlighted already, the proposals were overwhelmingly rejected in the consultation by around 70% to 80% of people in outer London.
It is clear to see why people are so furious about the decision, especially with the current cost of living challenges. In Bexley alone, the area I am proud to serve, around 30,000 vehicles will be directly impacted, hammering businesses, families and key workers with the bill of £12.50 a day, or £4,500 a year. By introducing the charge in August, it gives people hardly any time to switch vehicles. Barely a day goes by without a constituent stopping me in the street and highlighting how ULEZ will impact them. They include pensioners who rarely drive, but need their car to go shopping or to hospital appointments, families who need to drop off their kids to different schools each morning before going to work, tradesman who need their vans for their tools and to get to jobs, and shops on the boundary, which fear that customers will stop coming into Greater London from the likes of Dartford because of the ULEZ charge.
I will happily answer the hon. Member’s question, because our buses in outer London have actually been cut—if he checks Bexley’s record, he will see that our bus routes have been cut. I will come on to the scrappage scheme later, to cover the exact point that the hon. Member is trying to make.
Alongside the clearly negative impact of the ULEZ expansion on businesses and hard-working families in my area, it is also important to highlight that over 50% of blue light workers in London live outside the capital, and 90% of care workers nationally use their own cars for work. That expansion will create many knock-on issues for the emergency services in the likes of Bexley, including—as we have heard—the doubling of charges for those working nights, an issue that was also highlighted in The Daily Telegraph a few weeks ago. It will also negatively impact patients, with my local hospital, Queen Mary’s Hospital Sidcup, sharing a number of services and nurses with the likes of Dartford. These are all issues that I do not believe have been properly thought through, as the Mayor desperately seeks to fill the black hole in TfL’s finances that he has created.
Bexley does not have the underground, and like many other London boroughs it does not have the same transport options and connectivity as central London, so it is extremely unfair that the Mayor of London is proposing plans for ULEZ expansion. In recent years, as I have said, we have also seen our bus and other services cut by the Mayor of London, and there is nothing in his so-called reinvestment plans that will help areas such as Bexley and in the south-east. The scrappage scheme announced by the Mayor does not even come close to matching demand, or addressing the costs and practical issues associated with buying a new vehicle, and the fact that he is forecast to spend double that amount—roughly £250 million of taxpayers’ money—to install cameras to fine people again highlights how this policy is designed to raise money, rather than improve air quality.
That point is supported by the fact that the Mayor’s own independent impact report on the policy highlighted a negligible impact on improving air quality in outer London areas such as mine, which are very different from central London and have already seen an improvement in air quality. For example, in its consultation response to the Mayor, Bexley council highlighted that air quality has been improving already, and that Bexley was one of 11 boroughs that recorded no population exceeding air quality thresholds. The Government have also brought forward their plans and investment to improve air quality, with £880 million of support for local authorities to take immediate steps to reduce nitrogen dioxide, and £2 billion of investment in cycling and walking over the course of this Parliament—the largest ever boost for active travel.
If the Mayor of London wants to help tackle air pollution rather than raise money, further investment should be made to support people with the transition to electric vehicles, including the installation of more electric vehicle charging points and leading by example with TfL’s own bus fleet. With traffic having been highlighted as one of the main causes of air pollution, there also needs to be a review of the impact of the Mayor’s road closures on increasing traffic and, potentially, emissions across London, closures that have again—by coincidence, I am sure—raised millions in fines for Labour councils in the capital. Dare I even mention the Silvertown tunnel, which will likely encourage more vehicles to drive through south-east and east London, and appears to be completely inconsistent with the Mayor’s so-called championing of air quality?
I again urge the Minister to do everything in his and the Government’s power to stop this disastrous ULEZ policy, which will hammer families, businesses and the emergency services in Bexley, Greater London and neighbouring counties. As I and other colleagues have highlighted today, the impact of ULEZ will go much further than the boundaries of London, and—once the cameras are installed—will likely lead to further taxes on drivers that I believe will be inconsistent with national transport policy. As such, I ask the Minister and the Government to please review the situation urgently, and if the Mayor of London is listening, I call on him to stop the virtue signalling and worrying about his book sales and to put hard-working Londoners first by U-turning on this tax raid on drivers in Greater London. If he does not, it is clearly time for this failing son of a bus driver to get off at the next stop, before calls for the Mayor to get scrapped get even louder.
It is a pleasure to serve under your chairmanship, Mr Hosie. I congratulate my hon. Friend the Member for Dartford (Gareth Johnson) on securing the debate, because much of what he and other colleagues have said so far about the impact that this scheme is going to have on their constituents certainly rings true for Carshalton and Wallington.
I note that not a single Liberal Democrat has turned up to the debate. Given that the Lib Dems voted for this policy in the Greater London Assembly, actually lamented that it took Labour so long to implement its policy and two Lib Dem boroughs have passed motions to support it, including Sutton, I am surprised that none of them could be bothered to come and defend it, but there we go.
I do not want to repeat what has been said about the ULEZ so far, but I want to highlight the severe impact this change will have on people in Carshalton and Wallington. As the Minister for London, my hon. Friend the Member for Sutton and Cheam (Paul Scully), who is no longer in his place, pointed out, 30% or 30,000 vehicles in the London Borough of Sutton are non-compliant, according to TfL’s own data. That is 30,000 people whose livelihoods will be impacted by this change in a matter of months, as the Mayor has given people next to no time to prepare for it.
As has been said already, this change will hit the poorest Londoners hardest. What many will not be aware of, and will be shocked to hear, is that there are no exemptions in this ULEZ expansion to support small businesses, charities, keyworkers or the elderly, and there is very little in place to support disabled people. These are people who rely on their cars.
Sutton has a public transport accessibility level of just 2, because we have no tram, no tube network, no London Overground and no Crossrail. We have a few National Rail services to central London, which are currently being reduced due to Govia Thameslink Railway’s timetable changes, and a limited bus network. We have also seen this Mayor of London cut the Tramlink extension from Croydon to Sutton, despite the money already being in place when he took office, and we have had no investment or improvement in our bus network.
The question a lot of my constituents are asking is: “What can I do?” They cannot afford £12.50 a day. They cannot afford an annual fee of £4,500, or even the £3,000 that is the more conservative estimate for those who do not use their car every day. My hon. Friend the Member for Old Bexley and Sidcup (Mr French) has already outlined that the scrappage scheme lauded as the apparent solution does not, in reality, even touch the sides. Back in May, even Sadiq Khan himself said that the scrappage scheme would need something like £180 million to cover everyone who would be affected, and even that was probably an underestimate. Furthermore, the scheme is open to those who were rejected last time, and two thirds of people were rejected last time. It is a system that will only breed more disappointment and discontent, with more people missing out.
The scrappage scheme is not the answer, but what is the Mayor’s answer, and what is Labour’s answer? I can tell hon. Members, because they were asked in the London Assembly. My London Assembly Member, Neil Garrett, asked the Mayor of London, “What should I tell my constituents if they can’t afford this charge?” The answer, not from the Mayor, but from a Labour Assembly Member was, almost word for word, “Well, a new car that is compliant is only about £3,000. Just go and buy one.” That is the political equivalent of Paris Hilton wearing a t-shirt saying “Stop being poor”.
That is the answer people are getting from the Labour party, backed up by the Liberal Democrats and the Greens, who are all saying the same thing: “If you can’t afford it, tough. You are going to have to live with it, or give up your car, give up your job and move out of London. You are not welcome here.”
I commend the work that is being done by Conservative-run boroughs in outer London, including Bromley, Bexley, Croydon, Harrow and Hillingdon, to do everything they possibly can, but I would like the Minister to feel the anger from our constituents and the huge impact that this change will have, not just on individuals, but on businesses and charities, and on the most vulnerable who live in outer London, and outside London.
As my hon. Friend the Member for Dartford set out very eloquently, this is taxation without representation for many people living on the outskirts of London. I represent a constituency that borders Surrey. The border between my constituency and Surrey is a small country lane, which leads from the lavender fields into Woodmansterne—this is not somewhere with huge trunk roads and traffic coming in and out of London. Yet the people who live on the other half of Carshalton Road have no say in who the Mayor is and cannot do anything about this policy.
I strongly urge the Minister to take this away. I would be grateful to hear what advice he has received about the Government’s powers in this respect, and I ask him to join us in urging the Mayor of London to scrap this policy. It will hit the poorest Londoners and our constituents the hardest, and it will do little to nothing to tackle air quality; as we heard so eloquently from my hon. Friend the Member for Orpington (Gareth Bacon), the Mayor’s own impact assessment says that it has nothing to do with air quality. The policy has no public support and he does not have a mandate for it in his manifesto.
In reality, if this is not about air quality what is it about? We have already heard that it is about money, but it is about much more than that. TfL has already employed people to work on a road user charging scheme. Once these cameras are in place, be in no doubt that the Mayor of London is keen to expand the ultra low emission zone to be a road user charging scheme instead; he will expand the eligibility of the number of cars that are captured by it.
The ultimate goal for this Mayor—he has been quite open about this in his own consultation documents—is to have a policy whereby every single Londoner is charged every single time they use their car, regardless of how new or old it is. That is what he wants, and the camera network for ULEZ is the first step towards that. We need to stop it and he needs to rethink; otherwise, we will see a massive amount of problems coming from our constituents who cannot pay this unaffordable charge.
Unlike the buses, I will be on time. I pay tribute to my hon. Friend the Member for Dartford (Gareth Johnson) for calling this really important debate.
I hope that the Mayor has been watching the debate to hear the forensic take-down of the reasons behind the policy. It has been quite powerful hearing colleagues speak about the actual facts behind this, because it is a really important debate that will affect constituents who cannot vote for the Mayor. This is about fairness and democracy. It is unfair that situations such as this will hit my constituents in the pocket and perhaps stop them from going to work, shopping or picking up their kids from school; charging them when they have no ability to stop that happening feels utterly wrong.
I recommend that anyone who wants to know the facts behind this should watch the forensic take-down that my hon. Friend the Member for Orpington (Gareth Bacon) presented earlier. I do not think that I will be able to match the detail that he gave, but some of his key points related to the fact that even the Mayor’s consultation said that this should not go ahead. Some of the feedback from respondents that I have read includes the point that the scheme penalises workers—correct. It comes at a time of increased cost of living; that is the case, sadly, as we are living in difficult times. This is about the affordability of daily charges, and it would be to the detriment of the local economy in London and to those who want to travel near London to places such as Watford in my constituency.
One of the key elements here is voting. Liberal Democrat and Labour Greater London Authority members voted for this, and my constituents did not have a say; again, that is completely wrong. This is ultimately putting an invisible wall around London. Some of my constituents probably will not even realise that they have gone through that invisible wall, and will be charged and impacted by something that they may not have known was coming in. As was stated earlier, this is happening in a very short period of time; it is a matter of months. There is no long consultation or period of time when people can prepare for this or buy a new car. Hon. Members have made the point that it is not easy to just go out and buy a car; the people who think that that is one of the solutions are really speaking nonsense, because the people on the lowest incomes are those who will probably be hit the hardest.
There are some legacy issues in Watford. For a long time there has been an argument about a Metropolitan line extension to Watford, and I understand that it was TfL and Sadiq Khan who stopped that from happening. If he really cares about people using public transport he would have helped to put in the additional funding, which was already being organised by Hertfordshire County Council and other organisations, to ensure that the line would be extended, but that did not happen. The argument is now that we should not use our cars, and that seems utterly wrong.
As I said earlier, my constituents have commented on this issue. In my intervention, I mentioned a charity that transports emergency blood and breastmilk to premature babies, and urgent medical samples—24 hours a day, 365 days a year. Its volunteers use their own cars and time, without compensation. Many of those vehicles may not be compliant, and the charity wrote to me to share its response to the proposed ULEZ expansion. It wrote to TfL, which said that it would not discount or exempt the emergency medical transport charity, citing the importance of air quality. I am sorry, but that does not seem fair or right. I get that there might be legacy situations across the country with similar schemes, but this is a new scheme. It seems utterly wrong that TfL cannot build an exemption into a brand new scheme.
I want to talk about the new technologies coming through. I met representatives of a business in my constituency that does carbon cleaning for engines, and they showed that they can massively reduce the amount of carbon coming out of cars and reduce emissions quite extensively. I have seen nothing in the consultation and the plans for expanding the ULEZ that will allow people to use new technology and new systems, or even to start looking at ways to get exemptions so that they could keep their cars but automatically reduce the emissions.
I join Conservative colleagues in saying that this is not a political point; this is about hard-working people who just want to live their lives. Extending the ULEZ, which will affect places outside London—I am not a London MP—seems wrong. Measures need to be taken to stop it happening, but we have no way to do that. I would like the Minister to tell us whether there are ways for us to take this issue to the Government in order to say, “Can we say to the Mayor that this is wrong?”. We need a longer period of time to bring in the expanded ULEZ, but ultimately we need to try to stop it, because it is not going to deliver the supposedly clean air that will be used as the platform for this. Actually, it is just going to cost hard-working people more money at a time of difficulty.
It is a pleasure to serve under your chairmanship, Mr Hosie. I, too, congratulate the hon. Member for Dartford (Gareth Johnson) on securing the debate.
I am going to scrap my speech for a second. One of the great honours of living in London for part of the week is understanding how absolutely fantastic the public transport system is. If you try to get back to Manchester today on an Avanti train, Godspeed to you all. If you have tried to get across the Pennines over the last few months, Godspeed to you all. I have had the great honour in my nearly nine years as an MP to spend one day a month walking in London. I have done the London loop, so unfortunately I have walked through most of the places represented by the hon. Members present, including Orpington, Petts Wood, Ruislip, Wallington and Watford. What a beautiful place London is. I am still astonished by the quality of the public transport system, which is second to none on this planet and the envy of everybody outside this great conurbation.
Every year, 4,000 Londoners die prematurely due to poisonous air, and the greatest number of deaths are in outer London boroughs, with 11 Londoners dying prematurely every day. Air pollution is quite simply a matter of life and death; it makes our communities sick. Despite the Government’s promise that there would be no weakening of environmental targets post Brexit, it seems that they are refusing to match the EU standards, setting a weaker target while sentencing our children and communities to an unnecessary 10 years of toxic air.
The challenge is threefold: we must tackle toxic air pollution, we must deal with the climate emergency, and we must deal with traffic congestion. I was at the Sutton Ecology Centre at the weekend, and I saw just how congested the A232 is and the problems there.
The A232 is actually congested because there are too many vehicles on it—that is what congestion is. London is a beautiful town, so I do not know why we allow it to happen. It is incredible to me.
The Government’s own watchdog, the Office for Environmental Protection, says that the Government have failed to announce new targets, as they should have done under the Environment Act 2021, and that the new Government air quality targets are too weak and will condemn another generation to poor air.
We know that around 85% of vehicles driving in outer London already meet the pollution standards. Mayor Khan has introduced the biggest scrappage scheme yet: £110 million in support for Londoners on low incomes, disabled Londoners, micro-businesses and charities to scrap or retrofit their non-compliant vehicles. He has extended the exemption period for them and for community transport. As the hon. Member for Orpington (Gareth Bacon) said, the scheme was devised under the last Mayor of London, but it has taken Mayor Khan to implement it.
As was already pointed out, the Mayor also announced plans to add an extra 1 million kilometres to the bus network—much of that in outer London. Again, that requires leadership and support from central Government. The Government’s clean air fund excludes applications from London boroughs and the Greater London Authority. London’s share would amount to around £42 million, which would have gone a long way to expanding or supporting the Mayor’s £110 million scrappage fund.
I am a Greater Manchester MP. We have had problems. There are nitrogen dioxide sewers—controlled by Highways England—going through my constituency. If those roads were factories, they would have been shut down. They are simply not acceptable in this day and age. Local authorities were given a legal direction to clean up the air by 2024, and like Birmingham, Bradford and Portsmouth, they had to act, but Ministers have comprehensively failed to provide the necessary funding. Ministers need to help families and small businesses switch to electric vehicles, and they must take action to expand charging infrastructure. Plumbers who use their vans for work are being priced out of this revolution. I commend my hon. Friend the Member for Putney (Fleur Anderson) for having two brothers who are plumbers—wouldn’t we all want that?
This week, we learned that instead of charging ahead, the Government are slipping back on the charging infrastructure strategy. Rapid charging fund trials have been delayed, changes to planning rules have been kicked into the long grass, and take-up of the on-street charging scheme is anaemic. Labour’s plan for green growth will drive jobs, tackle the cost of living and help to clean up toxic air. There will be help for families with the cost of switching to electric vehicles, and we will provide the action we need to tackle toxic air. Britain is the only country in the developed world where private bus operators set routes and fares with no say from the public. That is not the case in London, but it is for bus services outside London. I was delighted to see the work that Andy Burnham has done as Mayor of Greater Manchester in setting the £2 fares, which the Government are now copying.
I thank my hon. Friend the Member for Putney, who spoke eloquently about the problems of Putney High Street, which is one of the most polluted places in the country. As somebody who rides a bike to Richmond Park occasionally, I have to go and experience it. I also thank my hon. Friend the Member for Swansea West (Geraint Davies); he is in charge of his facts, and gave powerful personal testimony about asthma and his children.
Let me say this to Conservative Members, genuinely and from the bottom of my heart: where there are low-traffic neighbourhoods, and where cars are tackled, electoral popularity rises. Tackling air pollution is electorally popular. I look at the percentage chances of Conservative Members winning their seats in the next election. In Dartford, they have a 64% chance of losing. The hon. Member for Runnymede and Weybridge (Dr Spencer) has a 57% chance of losing. The hon. Member for Ruislip, Northwood and Pinner (David Simmonds) has a 64% chance of losing. No wonder the hon. Member for Carshalton and Wallington (Elliot Colburn) is going on about the Lib Dems—they have a 52% chance of winning that seat.
It is a pleasure to serve under your chairmanship, Mr Hosie. I congratulate my hon. Friend the Member for Dartford (Gareth Johnson) on securing the debate. On ultra low emissions, we heard quite a few emissions from the hon. Member for Wythenshawe and Sale East (Mike Kane), but I am not sure that any of them were really relevant to the broader debate. He seemed to praise the Mayor of Greater Manchester for what he is up to. The Mayor stopped his ULEZ. I not sure that the Leader of the Opposition and the hon. Member for Wythenshawe and Sale East are on the same page regarding the Mayor of Greater Manchester, given the Leader of the Opposition’s recent jokes at the Mayor’s expense.
The need to tackle air pollution is something on which I hope that Members on both sides of the House—and indeed the Government and the Mayor of London—agree, to answer the question from the hon. Member for Putney (Fleur Anderson). Air pollution is a big environmental risk to human health, and the Government are determined to tackle it. As my hon. Friend the Member for Old Bexley and Sidcup (Mr French) said, that is why we have invested more than £800 million to tackle air pollution in 64 local council areas. Much more can be done, although we can be proud that air pollution has reduced significantly since 2010, with emissions of particulate matter down by 18% and nitrogen oxides down by 44%, to their lowest level since records began.
As my hon. Friend the Member for Orpington (Gareth Bacon) made very clear in a tour de force speech, ULEZ will have only a minor or negligible impact, as the Jacobs report has said. My hon. Friend the Member for Runnymede and Weybridge (Dr Spencer) put forward various sensible solutions. My hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds) also reflected some of the issues, particularly around accessibility of public transport. As my hon. Friend the Member for Dartford said, the expansion to the London boundary was not in the Mayor’s manifesto—a point reflected by my hon. Friends the Members for Sutton and Cheam (Paul Scully), for Orpington, and for Watford (Dean Russell). It was against the Mayor’s manifesto and against his own consultation. Those are not political points, as some Opposition Members would like to suggest; they are facts, eloquently put forward by hon. Members.
I commend the Minister on the work that he has been doing on buses. Does he agree that the fact that the Labour group in Hillingdon Council supports the Conservatives’ campaign against ULEZ is evidence that this is not a matter of party politics but one of people putting their constituents and residents first?
I thank my hon. Friend for that point. It was interesting to hear from the hon. Member for Feltham and Heston (Seema Malhotra), who is not in the Chamber at the moment. She seemed to be on a slightly different page from some of the other Labour Whips’ remarks from the other hon. Members present.
Many hon. Members have spoken clearly and eloquently about the anger that their constituents feel about what is going on. I hope that the Mayor, the Labour party in London, the Lib Dems and the Greens hear that too. The Mayor of London, however, needs no agreement from the Government to pursue his proposed expansion of ULEZ. He is doing so using powers granted to him under section 295 and schedule 23 of the Greater London Authority Act 1999 to implement any road schemes that charge users within greater London. He has previously used those powers to introduce the congestion charge, the low emission zone, and the current ultra low emission zone. While he has notified my Department of his intention, he is not obliged to consult us. As hon. Members will also be aware, the Department for Transport will not provide any of the £250 million that the scheme needs in order to be set up.
I thank my hon. Friends the Members for Sevenoaks (Laura Trott), for Mid Sussex (Mims Davies) and for Bromley and Chislehurst (Sir Robert Neill), my right hon. Friends the Members for Bexleyheath and Crayford (Sir David Evennett) and for Epsom and Ewell (Chris Grayling), and other hon. Members from across the south-east of England who have also made representations to me on this matter, and who met with me recently. Sadly, the Government do not have the power to veto the Mayor’s decision. There has been some suggestion that the Secretary of State has powers under section 143 of the GLA Act to block the measure.
The Minister will know that it is the 10-year anniversary of the death of Ella Kissi-Debrah, who was the first person to have air pollution listed as the cause of death on her death certificate. Will he support the Clean Air (Human Rights) Bill that went through the Lords completely, with the support of Conservatives, and its ambition to introduce World Health Organisation air quality standards, ideally by 2030?
As I have said to the hon. Gentleman, we have already made substantial progress in that area. On the specifics of any legislation, I will write to him.
I have been advised by my officials in the strongest terms that section 143 of the GLA Act is focused on correcting inconsistencies between national policy and the Mayor’s transport strategy. It is not intended to be used to block specific measures that the Mayor would like to introduce under the devolution settlement.
Hon. Members raised two specific issues about councils and their land and about council consent and the environment. I will write to Members on those issues, as well as the other issues that they raised with me recently. In fact, I will write to Members across the House in the coming days.
I understand the concerns of hon. Members. Estimates show that approximately 160,000 cars and 42,000 vans that use London’s roads would be liable for the £12.50 ULEZ charge on an average day—approximately 8% of cars and 18% of journeys. But it is not just about the charge of around £1 million a day, as hon. Members have said. It is also about the fines, as my hon. Friend the Member for Dartford said.
In spite of the hundreds of millions of pounds that it is proposed will be raised annually, the Mayor has announced a new £110 million pound scrappage scheme to help certain Londoners prepare for expansion. The scheme will launch at the end of next month, but it will be open only to certain residents and to Londoners, not those from outside London who are affected and travel in every day, including 50% of people who work in blue light services. They will not be touched by that scheme at all. Moreover, it will only be for those on specific benefits, including universal credit. There will be no help at all for the majority of Londoners affected, with many small and medium-sized businesses, as my hon. Friend the Member for Sutton and Cheam said, left to bear that heavy burden alone.
As the hon. Member for Putney quoted from the FSB report, I will cite it as well. For businesses that do not currently comply with the zone, 25% said that they will immediately pass any increase on to customers directly, creating further inflationary pressure, and 18% of firms—almost one in five—said that they would close their business. That is from a Federation of Small Businesses press release today.
There is certainly no leadership from the Mayor of London, as we can see from all the hon. Members here, and there is certainly no leadership from the Lib Dems, who were too scared to turn up to this debate. I think the hon. Gentleman and I can agree on that.
My hon. Friend the Member for Carshalton and Wallington made a really important point about grace periods, because the exemptions are very limited. Points were also made by the hon. Members for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) and for Feltham and Heston (Seema Malhotra), and by my hon. Friend the Member for Watford (Dean Russell), who spoke passionately about charities. Grace periods will be extended for disabled and disabled passenger vehicles as well as wheelchair-accessible private hire vehicles. Those categories will be exempt only until October 2027. Minibuses used for community transport, the charities my hon. Friend spoke about, will be exempt only until October 2025. Some of those charities are in outer London and many work across the south-east—they will not even be able to apply for the scrappage scheme.
In addition, NHS patients may be eligible to claim back under the Mayor’s plans, but only if they are clinically assessed as too ill to travel to an appointment on public transport. It is not about whether the transport is available, but about whether they are too ill to travel on it. My hon. Friend the Member for Ruislip, Northwood and Pinner made the really good point that it is not available at all in many parts of outer London. As he said, the choice just is not there for many of his constituents, and it is not there for many other Members’ constituents, either.
Currently, emergency vehicles are exempt from ULEZ and LEZ charges. However, the sunset period lasts only until October 2023, which is months away. Has an assessment been made of the impact on London services, including the ambulance service, the Metropolitan Police Service and the fire service? It will be interesting to see that, if there is one. There will also be an impact on the council tax bills of Londoners.
Several Members, including my hon. Friend the Member for Dartford, asked questions about the Mayor’s authority. Specifically, they are concerned that the Mayor may apply ULEZ charges to motor vehicles that are current under the scheme today, such as compliant petrol, diesel and hybrid vehicles.
I am sorry, but I will make further progress.
I reassure Members that if that were to occur, the Government would explore what more could be done and consider whether the Mayor was using his authority properly and fairly, without detriment to even more people. It is clear that the Mayor is prepared to go well beyond any pledges or manifesto he was elected on in order to pursue his own objectives.
The hon. Member for Wythenshawe and Sale East made an interesting point about there being no Government support for TfL or transport. He needs to look at the amount of support that the Government provide to the Labour Mayor of London. We understand that the pressure on Transport for London has been huge. Before covid, 70% of TfL’s revenue came from passenger fares, but passenger journeys reduced by as much as 95%. Fare income has recovered, but it is still less than nine tenths of what it was previously.
The TfL long-term funding settlement of 30 August provided TfL with £1.2 billion until the end of March 2024. That takes total Government funding of TfL to more than £6 billion since the beginning of the pandemic, or £650 for every Londoner. What has the Mayor done with the money? The £1.2 billion matches the Mayor’s own pre-pandemic spending. It will ensure that London’s transport network remains protected against potential lost revenue and the uncertainty of post-pandemic demand. Furthermore, it will enable the delivery of a number of projects set to revolutionise travel across London, including supporting £3.6 billion-worth of critical infrastructure projects, which will benefit not just London but the wider economy.
The Government have supported and helped passengers to benefit from major upgrades to our world-class transport network, including the Elizabeth line, which opened recently. The settlement also requires the Mayor and TfL to control their operating costs and to continue to progress initiatives to modernise, reform and become more efficient. We have been clear that the Mayor needs to put TfL on to a financially sustainable footing. In no way, however, does that require ULEZ expansion. That is clear. Taxpayers across the UK have had to support TfL continually. It is imperative that they get a fair deal.
The purpose of devolution is that decisions are taken by elected local politicians, not in this House or in Whitehall. Labour, the Lib Dems and the Greens need to know that political decisions have political consequences, and that there are political solutions to them. Were I the Mayor of London, I would not be going down the path he has chosen—but I am not. If Londoners do not like the decisions that he has taken, they will have the opportunity to have their say in 2024. In their local elections, I am sure that hon. Members will make it clear about the Mayor of London’s policies.
I thank my hon. Friend the Member for Dartmouth for bringing this matter to the attention of the Government. I thank hon. Members from all across the south-east for their ongoing work, and I will continue to use my role in Government to work with them. As I said, in the coming days I will write to all hon. Members across London and the south-east on the important questions asked not only in the debate, but in other recent meetings and by Members who have approached me. I also assure Members that, across Government, we will continue to ensure that the Mayor of London is held accountable for his decisions in our capital city.
Briefly, I thank all hon. Members for their contributions to what has been a productive and constructive debate. I am grateful to the Minister for his efforts in challenging this whole policy of the London Mayor. No one disputes the fact that we need clean air. In Dartford, we have very poor air. Frankly, however, that is a mask used by the Mayor of London to increase taxation. It is about raising money. It just so happens that it raises hundreds of millions of pounds for him. And it just so happens that he has a black hole in his finances and wants to bring in a broader charge, taxing every motor vehicle. This is about money and not about pollution.
I feel sick to my stomach that people who cannot vote out the Mayor of London—such as Dartfordians—cannot do a thing about this. That is not right or fair. The whole thing should be stopped, but I hear what the Minister says about his inability to do so. It is the most unfair situation that I can recall ever being put into.
Motion lapsed (Standing Order No. 10(6)).
Entrepreneurs from Ethnic Minority Backgrounds
I beg to move,
That this House has considered support for entrepreneurs from ethnic minority backgrounds.
I am delighted to serve under your chairmanship, Mr Hosie. I am grateful to Mr Speaker for granting this debate, and I am very pleased to see the Minister in her place.
I represent in Parliament the eastern half of the London Borough of Newham, which is probably the most ethnically diverse community on the planet. Last year’s census showed that just 45% of residents were born in the UK, and that 52% identify as Asian, compared with 9% nationally, and another 14% identify as black. Some 25% identify as white, compared with 82% nationally, so ethnic minority entrepreneurship is very important for the prosperity of the community that I represent. I regret the closure of the Department for Work and Pensions support programme for self-employment, with no sign of a replacement as yet. That programme gave helpful support to a significant number of my constituents to start up in business for themselves.
Minority-led businesses have made a lot of progress. Minority Supplier Development UK, a not-for-profit membership group that champions diversity and inclusion in public and private sector supply chains, highlighted in a report last year called “Minority Businesses Matter” that of the UK’s 23 unicorns—start-ups valued at $1 billion or more—eight had ethnic minority founders, including Deliveroo. That gives a sense of the huge potential in this area, which we need to realise much more. In May, the London Chamber of Commerce and Industry published the report “Ethnic Diversity in Business”. I commend the work of Esenam Agubretu and her colleagues. That report identifies the barriers that minority-led businesses face.
In 2021, about 14% of the UK population was from an ethnic minority background, but ethnic minority-led businesses constituted just 5% of small and medium-sized enterprises in 2020, and those businesses also tend to be in lower-paying sectors. We need to be doing much better than that. The economic contribution of ethnic minority-led businesses is large, but the potential is larger still. Baroness McGregor-Smith’s 2017 review, “Race in the workplace”, concluded that
“If BME talent is fully utilised, the economy could receive a £24 billion boost.”
We need to realise that opportunity. The Social Market Foundation has found that ethnic minority-led businesses are often more innovative, with a lot to contribute to levelling up the economy, and that the economy is weaker because those businesses lack support.
I want to highlight two main points arising from the London Chamber of Commerce and Industry report: the need to address the barriers that ethnic minority businesses face in accessing finance, and the need for better data on how those businesses are getting on. The key barrier, and the focus of that report, is problems accessing finance. Black entrepreneurs in particular report bad experiences with banks, and Asian entrepreneurs struggle to access funding outside their own communities. Those who do apply for funding are far less likely to receive it. The London Chamber of Commerce and Industry quotes Ismail Oshodi describing his experience:
“we had different people dealing with us and I had to repeat myself on several occasions, even with all of that, we were unable to get the amount we needed. We weren’t given a clear reason why, we was just told we did not meet their criteria.”
The LCCI says that 44% of black African business owners and 39% of black Caribbean business owners fear prejudice from financial providers, compared with just 4% of white owners. Let us be frank: racism is part of the problem. It is not that the banks do not recognise the problem; they do, and they are trying to do something about it. UK Finance published a report in July, “Supporting Ethnic Minority Entrepreneurship in the UK”, which profiled numerous initiatives. HSBC sponsored last year’s Black Business Week and Black Business Show. Santander works with a network of women of colour in business and supports a black inclusion programme. NatWest has a racial equality taskforce and an ethnicity advisory council. Barclays has a black founders accelerator.
The initiatives that I have seen most of are those supported by Lloyds bank. It has a black business advisory committee, chaired by Claudine Reid MBE, whom I first met when I was a Minister in the Department of Trade and Industry 20 years ago. I had embarked on a tour of social enterprises and found myself at PJ’s in Croydon, set up and run by Claudine and her husband. I also know the work Lloyds does with the Black Business Network, founded and chaired by Shari Leigh, which was highlighted to me by my former constituent Shi Dolor, whom I knew when she was a teenager and whose Noir Squared branding business has worked with the network.
In September, the network published the second of three annual reports called “Black. British. In Business …and Proud!” As a Lloyds executive recognises in her foreword, it makes for “uncomfortable reading”. The report refers to a
“breakdown in trust of formal institutions”,
and reports that 67% of black business owners have been negatively discriminated against in their past entrepreneurial efforts, that 84% of business owners see racism and society’s attitude to black entrepreneurs as a barrier to their business, and that black business owners turn to their friends, black business community groups or social media groups rather than banks for advice and support.
I thank the right hon. Gentleman for bringing this vital debate to the House. Does he agree that where there is intersectionality between ethnic minority groups and disability or gender, the barriers faced by people can be multiplied, and that banks and the Government should also take that into account?
I very much agree with the hon. Member. That point is made in the London Chamber of Commerce and Industry report, and she is right to highlight it.
Over half of black business owners say that they have seen banks taking action to deal with the problem, but only 12% think that that action taken is significant. Minority-led businesses also account for very little venture capital investment, less than 2% of which went to all-ethnic founder teams in 2019, according to the London Chamber of Commerce and Industry. Black African firms are four times more likely than white firms to be refused a loan, according to the British Business Bank. Mainstream services do not seem to be working for ethnic minorities. Ethnic minority groups have less wealth than their white counterparts, and there is a strong correlation between that and business success. They have fewer savings, so they are more reliant on external financial support.
Given that, it is no surprise that minority-led businesses do less well. According to London Chamber of Commerce and Industry research, 38% of Asian and other minority business owners and 28% of black business owners reported making no profit, compared with 16% of white business owners. Thirty-nine per cent. of black entrepreneurs and nearly half of Asian and other ethnic minority entrepreneurs stopped working on their business idea because of “difficulties getting finance”, compared with a much smaller proportion—just a quarter—of white entrepreneurs.
We need to be doing better than this, for the sake of not just business owners but the wider prosperity of our society. I welcome the Labour party review of start-up funding, led by Lord O’Neill, who was a Treasury Minister in the coalition Government. The review will consider how to ensure that ethnic minority entrepreneurs can access the finance, support and networks they need. Newham-based Shpresa is a community organisation supporting self-help among London’s Albanian community. It was founded and led by the remarkable Luljeta Nuzi, a social entrepreneur I first met when she came to the UK seeking asylum from Kosovo. She went on to graduate from the School for Social Entrepreneurs, and when today’s debate was announced, she drew my attention to the school’s match trading initiative, which provides enterprise grant finance, supported by Lloyds bank; the aim is that racially minoritised social enterprises should be early adopters.
When the Minister responds, can she give us the Government’s assessment of the lending practices of financial institutions to ethnic minority businesses, and say whether she sees real progress being made? It is welcome that between 2012 and 2018, over 11,000 ethnic minority entrepreneurs received Government-backed start-up loans. The additional action that is needed is largely for the financial services industry, but there is one area where Government action is particularly needed: public procurement. A big section of the report by the London Chamber of Commerce and Industry is devoted to this area, and it calls for a Government taskforce to work on increasing public procurement from ethnic minority businesses.
The LCCI wants the Government to move beyond merely “best endeavours” to introducing, for example, minimum target percentages for procurement from minority-owned businesses, in order to simplify procurement procedures and increase public purchasing from micro-businesses. It also wants tenders to be scored, in bid assessments, on supply chain diversity, and the Government to establish prestigious awards to highlight the achievements of minority-owned businesses.
In the LCCI’s report, a quote caught my eye from Demi Ariyo, founder of a funding platform:
“It became clear to me that there was a problem to be solved upon witnessing my church’s experience and hearing the first-hand experience of other minority ethnic entrepreneurs who had tried to seek funding.”
As the chair of the all-party parliamentary group on faith and society, I would like there to be greater support for entrepreneurship among people who are coming together in faith groups. Britain’s history is replete with great businesses that have their roots in religious faith. Let us have more of them, and newer ones.
My second point is about the lack of reliable data on ethnic diversity in business, which the report describes as “a recurring theme”. Here again, we need action by Government and by business. Companies House does not record the ethnicity of company directors. There is no legal requirement for businesses to publish their ethnicity pay gap, although they are rightly obliged to publish their gender pay gap. In 2017, the then Prime Minister, the right hon. Member for Maidenhead (Mrs May), promised to ask large employers to publish their ethnicity pay gap data. It has not happened yet. Can the Minister tell us whether that 2017 commitment still stands, and if so, when it will be implemented?
The paucity of data means that there is a lot that we just do not know. Without detailed and reliable data on ethnic minority entrepreneurship, we cannot fully understand the barriers that exist, as we must if we are to remove them. In this recession, the gap between ethnic minorities and others in business may well get worse. We need to grip this issue now, so that trends can be monitored and support appropriately targeted. We cannot meet the needs of minority-led businesses without having adequate information about their characteristics and their performance.
In the LCCI report, Dr Tony Matharu, chair of the LCCI’s Asian Business Association, and Lord Michael Hastings, chair of its Black Business Association, call for financial institutions to collect data about their support for ethnic minority businesses, as they do for women-led businesses under the Investing in Women code.
The two issues that I have highlighted are part of a much bigger set of challenges. When the Minister responds, can she assure us that the Government recognise the need, spelled out by the LCCI, for strategic engagement between the business community, Government and ethnic minority entrepreneurs?
I support the right hon. Gentleman’s efforts on faith and society. As one of the officers of the all-party parliamentary group on black and minority ethnic business owners, I am supported by Diana Chrouch. I direct hon. Members’ attention to an article in The Sunday Times of 14 February 2021, by Oliver Shah, talking to Wol Kolade, who has the initiative 10,000 Black Interns. He talks about unkinking the pipeline of black talent. It seems to me that letting people get through and do what they are capable of is what we should be aiming for.
I completely agree with the Father of the House. I had not seen that article, but it sounds to me as though it makes exactly the case that needs to be made.
I wonder whether the Minister will commit to better engagement between the groups I mentioned, in order to boost diversity in business. Bridging this large and persistent ethnic diversity gap is not straightforward. Realising the potential to which the Father of House has rightly drawn our attention is a long-term challenge. We need to be determined to end racial and ethnic inequality across UK society, including when it comes to start-up support, and to closing gaps that have persisted for far too long.
I hope that the Minister can reassure us that the Government recognise the importance of the issue, and will set out plans to make sure that we can all benefit from the skills and contributions of all those who want to set up in business but are too often excluded by unfair and unnecessary barriers.
It is a pleasure to serve under your chairmanship, Mr Hosie. First, I congratulate the right hon. Member for East Ham (Sir Stephen Timms) on securing the debate, and on raising this important issue. I do not want anyone to think I am consumed by Christmas spirit, but I very much respect him, as does everyone in the Department for Business, Energy and Industrial Strategy. We take every point that he raises very seriously.
The right hon. Member talked about his constituents, the fact that the majority of them were not born in the UK, and the challenges they face. That is me and my community. I am delighted to speak on behalf of the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), who is responsible for enterprise, markets and small business, because I want to make sure that we take all the issues raised incredibly seriously.
To continue with the Christmas spirit, we can certainly agree on the importance of ethnic minority entrepreneurs and their valuable contribution to our vibrant business landscape. I will not disagree with the right hon. Member on the challenges that have been mentioned. It is testament to the dynamism and resilience of ethnic minority entrepreneurs that they continue to adapt, and that they overcome so much, especially during covid. From small retail stalls to tech unicorns, the value of ethnic minority founders must not be understated. I am pleased to have an opportunity to shine a light on this community and what they do for the broader community.
On all of the issues raised, there are no challenges from this side of the House, but let me focus on some of the barriers that were mentioned, and talk about what the Government are doing to support ethnic minority businesses and to encourage an inclusive entrepreneurship environment for all. As has been said, if we get this right, and fundamentally get finance right as well, we could make that environment incredibly dynamic, which would be a boost to all our local economies.
The economic impact of ethnic minority entrepreneurs is far-reaching, with some estimating the contribution to the UK economy to be worth up to £25 billion. However, the crucial role of these businesses is much more than just economic. Their impact reaches much further than across the business ecosystem. As was mentioned, these businesses are most likely to invest in innovation, which is critical in helping us to achieve our ambitions around research and development investment and making the UK a science superpower. With more innovation comes improvement in productivity, so building on the potential of these businesses will be crucial to improving our productivity record.
What really matters to me is that these businesses operate in every region of the UK, including the most deprived parts. I doubt that East Ham is different from where I was brought up, Small Heath—an area often overlooked and underestimated. The efforts of black and Asian businesses are invaluable to ensuring that we level up across the country. Even more excitingly, these businesses are most likely to export, which puts them at the forefront of our efforts to harness global opportunities, which include our changing how we do business and diversifying our business models, especially now that we have left the EU.
Let me respond to some of the questions raised, starting with those about opportunities to access finance. Despite the impact of ethnic minority businesses, there is evidence to suggest that there are still barriers preventing them from reaching their full potential. Access to finance is regularly raised as one of the most significant issues holding those businesses back; there are reports of ethnic minority entrepreneurs keeping reservations about accessing financial assistance from traditional lenders.
As noted in the latest “Black. British. In Business & Proud” report from the Black Business Network and Lloyds Bank, 67% of black business people state that they have experienced some form of discrimination in their past entrepreneurial efforts, with only 40% trusting banks to have their best interests in mind. That has to change. The report’s recommendations rightly focus on improving the link between financial institutions, Government and the ethnic minority community as the best way forward. I will come back to some of the points raised to show how we are supporting ethnic minority entrepreneurs in accessing finance.
The issue of data was raised. In addition to the difficulties in accessing finance, the ongoing lack of data collection continues to inhibit funding opportunities for ethnic minority business leaders. Greater information sharing is crucial for bolstering our understanding of lending patterns, and this Government are committed to securing this transparency.
I am grateful for the case the Minister is making, and I agree with what she has said. On the point about Companies House, would it not be a welcome step if it recorded the ethnic origin of company directors, so that we had some sense of the scale of what is happening?
That is a very important point. As I am not the Minister responsible for that portfolio, I do not have an exact answer. Let me get through this speech; if the right hon. Gentleman is not satisfied, I will ensure that he is written to with that information.
Turning back to action 55, the Department for Business, Energy and Industrial Strategy is working with the Investing in Women code signatories and with trade associations to pilot data collection on the ethnicity of entrepreneurs applying for finance.
Trust in institutions is low in many ethnic minority communities, who often struggle to get the experience or even the exposure required, or the support that they need to run a business effectively. One way that we are trying to help is by improving the communication flow between Government and the ethnic minority business community, engaging with businesses and the organisations that represent them directly to understand their specific needs. In terms of business support, black, Asian and ethnic minority business leaders value mentors more than any other ethnic group; they are more likely to want a mentor and more likely to value the impact of having one. It is reassuring to see organisations such as Be the Business championing the role of mentoring. Furthermore, our Help to Grow Management programme, with its delegated mentorship component, offers businesses a subsidised training course designed to improve leadership and management skills and address firm-level productivity challenges.
While we should celebrate the success and impressive contributions of these businesses, we must acknowledge our role in helping to tackle the remaining barriers to growth and prosperity, which were mentioned. Off the back of the British Business Bank’s “Alone together” report, which emphasises the difficulties faced by ethnic minority entrepreneurs in accessing funding, we are working with stakeholders to understand what further interventions we can take.
Since its launch in 2012, the Government-backed start-up loans programme has issued around 20% of its loans to black, Asian and ethnic minority businesses. The future fund has also approved 1,190 convertible loans, totalling more than £1.1 billion. More than half—61.6%, to the value of £683.5 million—of the convertible loan agreements approved have been for companies with management teams consisting solely of ethnic minority team members and those with both ethnic minority and white team members. This is promising progress, but, of course, there is no denying that we have much further to go.
As previously mentioned, we are also delivering actions 55 and 56, set out in the inclusive written report, which aim to support and encourage those from less-advantaged backgrounds to thrive—this is where I am thinking of those from my community of Small Heath and the community represented by the right hon. Member for East Ham. Through these specific actions, we will support ethnic minority entrepreneurs in accessing finance more effectively and becoming more productive.
The Procurement Bill includes a new duty on contracting authorities to have regard to the barriers facing small and medium-sized enterprises. Among other things, they must consider whether there is a diverse representation of businesses in the pre-market engagements. We are always looking to engage with ethnic minority business leaders and networks to better understand the issues facing them. There was a recent opportunity to do so: the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Thirsk and Malton, was asked to speak at the third anniversary reception for the all-party parliamentary group for black, Asian and minority ethnic business owners. The Department is dedicated to continued engagement with ethnic minority entrepreneurs through valuable events, including those hosted by the APPG, as well as through the ethnic minority business group, a forum that convenes bimonthly to discuss priority issues affecting entrepreneurs from diverse backgrounds to see how we can work together to find practical solutions.
Ethnic minority leaders want to see themselves represented in the business landscape. That could be through their mentors, or through wider representation in senior leadership positions. The value of visibility and its longer-term impact on entrepreneurs cannot be overstated. Through the Parker review, we acknowledged that building a fairer economy means ensuring that the UK’s organisations reflect the nation’s diversity. The latest figures show that the number of FTSE 100 companies with an ethnic minority director on their board has increased to 89, with 42 companies having exceeded the target. The progress made so far is encouraging, but I argue that we have much further to go. We look forward to those figures increasing further, to reflect the real diversity of talent in the UK.
A question was raised by the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) on dealing with disability and other issues—I would expect that question from her, as she is the chair of the APPG for disability. Of course, that is another issue that we need to explore. The Father of the House talked about unkinking the pipeline of black talent, and I do not doubt that the Department will now be looking very closely at the report that he mentioned.
The right hon. Member for East Ham raised the Government’s update on the ethnicity pay gap data. As the Government have set out, ethnicity pay gap reporting continues to be voluntary. We will not be legislating for mandatory ethnicity pay reporting at this stage, but good firms, obviously, will want to make sure that their data is on record.
Again, I thank the right hon. Member for East Ham for introducing this important debate. Separately, I congratulate him, in his role as Chair of the Work and Pensions Committee, on today’s publication of the “Universal Credit and childcare costs” report. Affordable, accessible childcare is key to enabling parents to work and to increase their working hours; that is linked to today’s debate on entrepreneurial activity.
I conclude by reiterating the importance and the wealth of ethnic minority talent across the UK, which we are committed to nurturing and celebrating. On the one point that the right hon. Gentleman raised that I could not respond to, I will ensure that he is written to by the appropriate Minister with a formal response. I reiterate that we want to work closely with parliamentarians across the House, and with business and financial institutions to ensure that access is equitable. We want to improve our understanding of the issues faced, and to identify practical solutions that we can offer. I remind all colleagues from across the House that we are committed to bolstering the potential of ethnic minority entrepreneurs who, in turn, will help the UK economy to thrive.
I thank the right hon. Member for East Ham for raising this issue and, if I may be so bold, I wish you a happy Christmas, Mr Hosie.
Question put and agreed to.
Childcare: Affordability and Availability
I beg to move,
That this House has considered the affordability and availability of childcare.
It is a pleasure to serve under your chairmanship, Mr Hosie. I am eternally grateful to have secured—to have been granted—this debate so that we can address the important issue of childcare affordability and availability, because the simple reality is that this Government are seriously failing children, parents and businesses through the chronic lack of affordable and high-quality childcare in our country. My Slough constituents are far from impressed. Indeed, the reason why I put in for the debate was to express their anger and to try to express to the Chamber just how frustrated many individuals, not just in my constituency but across our country, are. As far as I can tell, Ministers have little interest in doing something substantial and radical to rectify this. However, the Government’s usual lack of effort and ambition, as frustrating as it is, does not mean that we should not at least try to persuade them that they need to up their game.
We know that the first 1,001 days of a child’s life are integral to their development, and evidence shows that improvements in children’s outcomes in both the long and the short term are strongly associated with the quality of their early childhood education and care. The Local Government Association has told me that by the time disadvantaged young people, in particular, sit their GCSEs at the age of 16, they are about 18 months behind their peers, and about 40% of that gap has emerged by the age of five. It is therefore crucial that we provide the best possible environment in which to bring up children.
I welcome the case that my hon. Friend is making, and congratulate him on securing the debate. Has he seen the report published today by the Select Committee on Work and Pensions on support for childcare costs in universal credit? It highlights two big problems. One is that people claiming universal credit have to pay the up-front costs of the first month’s childcare; they have to pay the first month’s childcare costs themselves and are reimbursed later. For some people, finding such a large sum of money is simply not possible. Secondly, the cap on monthly childcare support is the same as it was in 2005; it has not been uprated, so it nowhere near covers the costs of full-time childcare support.
I am extremely grateful to my right hon. Friend the Chairman of the Work and Pensions Committee, not only for that impressive intervention but for his tireless, persistent work in this area to try to shine a light on the injustices. I sincerely hope that the Minister and the Government will look closely at the findings in the Select Committee report and take action accordingly.
Since this Government came to power in 2010, parents of children under the age of two have had to deal with a 60% increase in the cost of a part-time nursery place. Average earnings have grown at only half that rate over the same period, putting ever greater pressure on already squeezed family budgets. As one Mumsnet user wrote:
“When we started using nursery 9 years ago it was £45 a day. Now the same nursery we use for our…3 year old is £90. He gets 30 hours free in January but they…will also be putting fees up then. Honestly when he goes to school we will have £1,000 extra”
“a month. It’s more than our mortgage.”
That is not an isolated case. A joint survey by Mumsnet and Pregnant Then Screwed found that close to two thirds of parents are spending on childcare as much as, or even more than they spend on their rent or mortgage. Shockingly, one in four parents is cutting down on food, heating or clothing in order to afford sky-high childcare costs.
What are parents doing in response? Increasingly, they are being forced to take themselves out of the labour market. Under this Conservative Government, a day’s pay is not worthwhile for a parent needing childcare.
Sadly, women are often hit hardest by the Government’s failed childcare system. Only three in 10 mothers with a child aged one work full time, and three in 10 mothers with a child under 14 say they have reduced their working hours for childcare reasons. The Office for National Statistics found that the number of women who are not in work in order to look after family has risen by 3% in the past year alone. That is the first sustained increase in at least 30 years, reversing decades of reduction. Women who are reducing their hours, forgoing promotions or even leaving work altogether due to unaffordable childcare suffer lasting financial consequences, and that widens the gender pay and pensions gaps.
This is also a huge issue for business. At a time when so many vacancies are going unfilled, this motherhood penalty equates to 43,000 women dropping out of the workforce in the last year alone. It is no wonder that even the Confederation of British Industry is calling for reform, highlighting that childcare costs in the UK are now some of the highest in the OECD and that our economy is suffering from losing £28 billion of economic output every year, because women are being forced to choose between their careers and their children. We could add a whopping £57 billion to our GDP simply by increasing female participation in the workforce—something that greater childcare provision would help achieve.
On this Government’s watch, the childcare system is failing families, women, businesses and our economy. I would therefore think that addressing it was a priority, especially given how formative these early years are for our children, so why are the Government not taking decisive action to fix this mess? They tried to convince us that they were by announcing the 15 and 30-hour free childcare entitlement, alongside their commitment to the tax-free childcare scheme. As with so many other Conservative policies over the past 12 years, even this small stepping stone towards improving the accessibility of childcare has failed to deliver the bare minimum. As I pointed out last month in the Chamber, the Government, not satisfied with hammering parents, women, businesses and the economy, have set their sights on making it too expensive for childcare providers to operate by consistently underfunding the 15 and 30-hour entitlement by more than £2 an hour, thus forcing providers to use their own resources to plug the gap and further driving up the cost of childcare. Meanwhile, Ministers have spent a whopping £2.37 billion less than they allocated for their flagship tax-free childcare scheme in the past four years alone.
Rather than ensuring we have even more childcare providers to meet the significant demand for childcare across our country, the Government have created an environment in which 4,000 childcare providers closed between March 2021 and 2022—that is 4,000 providers in just one year. We have childcare costs rising twice as fast as wages and businesses struggling to fill vacancies while women who want to work cannot because of childcare. Despite the demand, thousands of childcare providers are closing while the Government underfund the sector. That is this Government’s record.
As a country, we can and must do much better. The Government must recognise that families need support from the end of parental leave right through to the end of primary school. While more investment is needed, surely as a minimum the Government should stick to their original commitments. I ask the Minister to commit to investing in the childcare system the more than £2 billion her party has pledged. During this cost of living crisis, families are already struggling, so when will the Minister step in to ensure that parents are not forced to sacrifice a meal or a night of heating over the winter months to pay for their child’s care? Maybe the Government would be in a better position if they had developed a long-term plan. With five Education Secretaries this year alone, the Minister is probably just happy to get through the year without any more chaos. However, families across our country should not be made to suffer because of the Government’s continued incompetence.
Parents need the introduction of universal primary breakfast clubs for every primary-aged child in England, which I look forward to hearing more about, I hope, from the shadow Minister. That would help disadvantaged pupils, in particular, to access additional support from staff and friends, allowing them to catch up on learning. Where is the Government’s commitment to that? Instead of cutting hundreds of Sure Start centres, the Government should be investing in local children’s centres and helping parents with young families in some of the most disadvantaged areas in our country to get them the best possible start in life. Why aren’t they?
The hon. Gentleman is making an excellent speech. This is a vital debate to have in the Chamber at this time. Does he agree that for very young children, nursery might be the first place where teachers can pick up on special needs and then help to refer them for autism diagnoses? People often wait far too long to receive that diagnosis. I refer hon. Members to my entry in the register, but I was shocked to hear that training placements for educational psychologists may be being funded to a lesser degree in the future, and that some educational psychologists are actually having to fund their own placements. Does the hon. Gentleman agree that it is vital that the Government address some of those concerns on the part of the profession, and that they also ensure that children with autism and special needs have the support that they need at the earliest stage in their childcare?
I thank the hon. Member. She has made some excellent points, no doubt based on her experience. Indeed, we know that those early years are incredibly important for the child, but also for teachers, or those in authority, to pick up on certain issues, whether it is a child being on the spectrum, or other special educational needs. That issue comes up again and again in my constituency, so I am incredibly grateful to her for that intervention.
Given that so many childcare providers have been forced to close on this Government’s watch, is it too much for my constituents, and parents across the country, to expect that there will be childcare places locally? I do not think so. What are the Government doing to not just halt but reverse the decline in the availability of childcare?
As we can see, the current picture of childcare in England is far from ideal, and it does not seem as if this Conservative Government are willing to take any meaningful steps to change that. Instead, in the face of all those issues, they are happy to sit on the billions of pounds that they have pledged to the sector, while hoping that no one notices. Well, hard-working families across our country are noticing the impact and deserve better. If the Government really want to build a better future for Britain, they must start by looking after those very people who are Britain’s future.
It is a pleasure, once again this afternoon, to serve under your chairmanship, Mr Hosie. It is also a pleasure to debate issues around childcare for the second time in fairly quick succession in Westminster Hall. I think that is helpful because it shows that, across the Chamber, as well as from the hon. Member for Slough (Mr Dhesi), there is a great deal of interest in how we improve the care of our youngest citizens.
I thank the Minister for the personal interest that I know she has taken in this issue. It was a pleasure to welcome her to Harefield Infant School in my constituency, and to hear from a headteacher who is also very much engaged with the local children’s centre about the way in which parents interact with it—the journey that they go on from the moment their child goes through the door of the children’s centre, how they access childcare in the local area, and how the child develops to be, hopefully, school-ready. The headteacher also described how such settings, by working together in partnership, can address the kind of emerging issues that we have heard about. That may include special educational needs and disabilities, and safeguarding issues, which often first come to light when the child is in a formal setting.
It is perhaps worth my framing my contribution to the debate by saying that I have had the privilege of being a lead member for children’s services in a local authority, both under the previous Labour Government and in the years since 2010, with the election of the coalition and then a Conservative Government. I have had the opportunity to see how childcare policy in the UK has developed over those years. I think it is fair to say that in the Labour years, when attention to childcare was a relatively new thing from Government, the key focus was very much on the availability of the cheapest possible childcare in order to encourage women to rejoin the workforce.
Since the coalition was elected in 2010, there has been a much greater focus on not just availability to encourage people to go to work, but the quality of what happens in those settings. Examples of that include the development of the childcare workforce and a focus on qualifications, on the quality of the physical environment in particular settings, and on the way in which Ofsted regulates those settings to ensure that every childcare placement is not just safe, but an environment in which children can thrive. As the parent of two very young children—I am sure the hon. Member for Slough would acknowledge this—I can say that children are expensive, and delivering quality for them is even more expensive.
It is helpful to reflect on a number of the policies that the Government have introduced in the past few years that have gone to the heart of extending both the availability and the affordability of childcare. Both from a policy perspective and as somebody who has been through this as a parent of young children, I welcome the fact that the Government have focused on direct support for families and, particularly, working families through the advent of the tax-free childcare policy. Although it is right that the Government are now focusing on a programme to raise awareness of that policy among working parents and to increase its take-up, it has been enormously helpful in making access to childcare much more affordable for working parents.
There are some technical issues that could be addressed. The decision to use National Savings and Investments as the payment processing organisation for tax-free childcare accounts generally means that it takes a long time for a parent’s contribution to make its way to the childcare provider. That makes the process more difficult than a faster payments processing provider would when changes of arrangements need to be made at short notice—for example, when there are school holidays and changing work patterns. None the less, treating childcare in the same way as we incentivise people’s personal pensions or their saving to buy their first home, for example, by giving them tax relief is an important, valuable step. It is also reflected in the direct support that families receive through universal credit, although the points that the hon. Member for Slough made are important to bear in mind. The way in which that system works is worth considering.
Let me turn to the broader context of availability. For many years, local authorities have had a duty to secure both the availability and the supply of childcare in their local area, and to play a role in developing that market. It is important to be clear that local authorities are not the providers, but if we look at the London Boroughs of Hillingdon and of Harrow, which serve my constituency, both authorities have a families information service that parents can contact to find out where they can access a childminder or a nursery placement in their local area, and also access information about other issues to do with childcare. For example, if a child has special educational needs or disabilities, their parents might need to access a specialist organisation to guide that child on their journey, and the families information service can point them in the correct direction.
Many families will be able to access a proportion of free hours that increase as the child gets older. That does not just provide an effective subsidy to the hours that would otherwise be paid for by working parents, enabling them to top up from their tax-free childcare account, but means that a greater proportion of children in the lowest-income households can access that free childcare early. Those of us who are parents will have seen from the recent communications from our children’s schools that as we go into the Christmas holiday period, we are being made aware of what the local authority and other organisations are doing. Families that are eligible for the holidays activities and food programme are being alerted to it, and we are being alerted to what local authorities are doing about safeguarding through our schools, so that we know what to do should we have those urgent needs, or should our neighbours, friends and acquaintances require that support as the holidays get under way.
Moving towards a conclusion, although it is easy to criticise, we need to recognise that the focus on how we spend the money and how we ensure the highest possible quality in our nurseries and among our childminders has been a big benefit to childcare in the UK. The Government’s announcement of a substantial investment in the early years workforce is an important step in the right direction. The focus on Ofsted as the regulator of quality is significant, as is the developing evidence base from organisations such as the What Works centres funded by the Department for Education, which look at the best means of intervening to help children in the earliest years of their lives.
With respect to the ability to secure new infrastructure where a lack of buildings or physical capacity is a challenge—we aired that during the debate on the Levelling-up and Regeneration Bill last week—capital contributions by developers under section 106 of the Town and Country Planning Act 1990 can be used to create new early years and childcare facilities where that is a priority for a local area. Although that guidance is owned by the Department for Education and not the Department for Levelling Up, Housing and Communities, it remains in place so that new infrastructure measures envisaged in the Levellinyg-Up and Regeneration Bill will include the ability to use that money in the same way local authorities might use it to support police and law and order organisations in their local area.
It is clear that a number of different resources and steps are available on the capital side to help with the physical creation of new capacity. It is also possible to invest in the workforce to improve the quality of what is available, and introduce a broader set of policies with direct support to ensure that working families and parents have childcare available to them.
I will finish with a plea, once again, to recognise that, although research overwhelmingly shows that the money we spend in the earliest years has the biggest impact on outcomes in children, the way in which we distribute education funding still favours much older children. There needs to be a national debate about the fact that although everybody pays attention to GCSE results, it is the money spent on nought to five-year-olds that gives children the best possible chance when they are 16 and 18 and as they go into adulthood. We need to look at rebalancing the way we spend that money over time, so that we spend it where it has the greatest positive impact.
It is a pleasure to see you in the Chair, Mr Hosie. I congratulate my hon. Friend the Member for Slough (Mr Dhesi) on securing this important debate. The availability and affordability of childcare is a pressing issue for families right across our country, and it is right that we debate it in the House.
I am grateful to all the hon. Members who have attended this debate, especially the hon. Member for Ruislip, Northwood and Pinner (David Simmonds), who has spoken from his extensive experience as a former Cabinet member for children’s services. I am confident that had this not been the final Westminster Hall debate on the last sitting day before Christmas, more colleagues would have joined us. I know that this issue is presenting itself in Members’ inboxes and surgeries in many parts of the country.
Childcare is vital social infrastructure. It helps parents to work, it delivers early education to the youngest children and it underpins the growth of our economy. However, under this Government we have seen the cost of childcare rise, increasing numbers of providers closing their doors and an increasingly complex funding system for parents to navigate, resulting in low take-up of both subsidised two-year-old places and tax-free childcare.
The costs are eye watering. The latest release from Coram reports that the average cost of 25 hours a week in a nursery in England for a child under two is over £140. The same amount of time with a childminder is over £124. The cost for a child of two and over is more than £135 at a nursery, and £122 with a childminder. Those costs are averages so they can be significantly higher, particularly in London. Analysis by the TUC estimates that the cost of childcare for a child under the age of two has increased by £2,000 a year on average since 2010.
A survey by Pregnant then Screwed of 27,000 parents found that 62% reported that their childcare costs are now the same or more than their domestic costs, rising to 73% for lone parents. More than four in 10 mums reported that childcare costs had made them consider leaving their job, and 40% said that they had to work fewer hours than they would have liked because of the costs of childcare. Another survey found that almost a third of new parents said that the cost of childcare was preventing them from having any more children.
The Women’s Budget Group estimates that 1.7 million women are being held back from taking on more hours at work due to the cost of childcare, and recent data from the Office for National Statistics has shown that for the first time in decades, the number of women leaving the workforce to look after family is increasing—it is up by 12.6% in the last year. The unaffordability of childcare is also placing strain on grandparents, many more of whom are now giving up work or reducing their hours—not simply to spend time enjoying their grandchildren but to step in effectively to provide formalised childcare.
The Government’s funding model is undoubtedly part of the problem. Parents can access help with childcare costs from a wide range of sources, depending on their circumstances and the age of their children. The subsidy for two-year-olds is means-tested, but some of the subsidy for three and four-year-olds is applicable only to working households. Some funding is provided through the benefits system, and some through the tax system. There is significant unclaimed funding for childcare because the system is so complicated and confusing for parents to navigate, and the Work and Pensions Committee report published today highlights serious flaws with the universal credit childcare costs element, which really is not working for the families who need it. The amount of funding claimed through tax-free childcare is far lower than was previously spent through childcare vouchers, and there is similarly low take-up through the benefits system.
The system does not work for the providers of childcare either. The Government have admitted that they do not pay providers what it costs them to provide the so-called free two-year-old and three and four-year-old places, so they have effectively created a cross-subsidy model for childcare. This drives up the cost for parents of under-twos and leaves childcare providers in areas of deprivation, where parents of very young children simply cannot afford to pay higher rates, really struggling. It also forces nurseries to charge parents for additional costs, such as for particular activities and for lunches, which really should not be the case when parents are already paying so much for the core costs of that provision. Providers are facing rising energy costs, wage bills and food costs, and many are finding it hard to recruit the staff they need, which has led to a tsunami of nursery closures this year. During the summer term, from April to July 2022, 65% more nurseries closed than in the same months in 2021.
I pay tribute to everyone who works in childcare and early years education. They are highly skilled professionals to whom we entrust our most precious little ones, yet they are under-recognised for the work they do. The best settings, such as the Early Years Community Research Centre in Shirecliffe, Sheffield, which I had the great pleasure of visiting recently, are a partnership with parents to support and care for young children, providing support to the whole family. Working with very young children should be a rewarding vocation and a lifelong career. It should offer the opportunity to develop expertise and specialisms, and to progress accordingly, yet all too often there is no opportunity for development or progression, and nurseries report that they end up competing with better-paid roles in retail or distribution.
After 12 years of Conservative government, our childcare system is failing families, failing children, failing providers and failing our economy. It is holding back parents from succeeding and progressing at work, and what is the Government’s response to this situation of such central importance to our economy and family life? The response is silence. There was not a single mention in the Chancellor’s Budget statement last month of the affordability and availability of childcare, which is holding back our economic growth. The main measure that the Government have mooted is the relaxation of childcare ratios to allow the same number of staff to look after more children. There is no evidence that this would have any impact on the costs to parents, but there are concerns that it reduce quality and compromise safety. That is not what parents or providers want, and it is not what is best for children.
Labour recognises the fundamental importance of childcare to parents, children and our economy. We also recognise that childcare costs do not stop when a child starts school, which is why we have announced our plan to introduce fully-funded breakfast clubs for every primary school in the country, supporting parents to work and helping to address food poverty. We will make sure that every child, wherever they are in the country, starts school ready to learn. Our children’s recovery plan proposes to increase the pupil premium for the early years to the same level as for reception, quadrupling the funding and ensuring that additional support is available in nursery settings for children who have suffered the impacts of the pandemic in their early development. We will address disadvantage and prevent it from becoming embedded for a lifetime.
Breakfast clubs are just the first step on the road. We are committed to building a childcare system that supports children and families from the end of parental leave until the end of primary school, as part of the vital infrastructure that underpins our economy. It is vital that the Government get a grip on this issue and show the vision and leadership that has been so badly lacking.
It is a pleasure to serve under your chairmanship, Mr Hosie. I thank everybody for coming to this end-of-term debate, and for their continued presence in all of the debates we have had on this important subject. I congratulate the hon. Member for Slough (Mr Dhesi) on securing the debate today.
I know how crucial early years are for children’s development and for their parents to get into work. I also recognise that this is a critical time for the sector and I put on the record my thanks for the dedication of the staff in settings across the country, who are working tirelessly to give our children the best start in life.
I have been privileged to go on so many fantastic visits in my time in this role. Just this week, I went to see a childminder in action and was reminded of the brilliant developmental work that they do. Last week, I was with my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds) at Harefield Infant School, speaking to the headteachers there about the way they work with the local children’s centre. It was excellent to see that provision in place. I also recognise the quality of their work. Some 97% of our early years settings are good or outstanding, something of which we can be very proud. That comes down to the dedication of all the workers in those settings.
To give our children the best start in life, we have invested more than £3.5 billion in each of the last three years on our early education entitlements for two to four-year-old children and more and wider offers. We know that the sector is facing economic challenges, similar to the challenges that people are facing up and down the country. We have already announced additional funding of £160 million in 2022-23, £180 million in 2023-24 and £170 million in 2024-25, compared with the 2021-22 financial year. I assure everyone that improving the cost, choice and availability of childcare for working parents is very important to this Government and very important to me.
As well as providing support for families, the sector is facing difficult challenges. That is why we want to give providers help to continue what they do best—educating and developing young children. One of the things we are doing is making sure that we are investing in the workforce.
I am not entirely familiar with that figure. Perhaps we can discuss it after the debate and I can come back to him with a fuller answer. As I have said, over the last five years, we have spent £20 billion on early years. Not only are we supporting the sector with the money that I have set out today but we are also supporting it with energy support. I know from talking to lots of people in the industry that one of the things they are worried about is energy bills. We have set out significant relief over the winter to help with that issue.
Funding increases are taking place across England. In the constituency of the hon. Member for Slough, I am glad to say that the hourly funding rate for two-year-olds will increase by 62p to £6.87 an hour, and the rate for three and four-year-olds will increase by 6p to £6.27. We have also already announced an additional £10 million for maintained nursery schools supplementary funding from 2023-24. We are introducing a minimum and maximum hourly rate that a local authority can receive for their maintained nursery schools supplementary funding, to create a fairer distribution of that funding. The minimum rate will be set at £3.80 in 2023-24. Slough is one of the local authorities that will benefit from this new minimum hourly rate.
As well as increasing our support to providers, we also want families to benefit from the childcare support they are entitled to, saving them money and helping to give their children the best start in life. We know that childcare is a key concern for parents and recognise that cost of living pressures are impacting families across the country, which is why we are committed to improving and refining the offers that we have in place. We have also put many direct cost of living measures in place, from furlough to energy support relief, and direct family household support this year as well.
One of our key areas of support is the 30 hours free childcare entitlement, a Conservative commitment introduced in 2017, which has helped hundreds of thousands of working parents get back into the labour market, with nearly 350,000 children registered for a place this year. The entitlement saves those families up to £6,000 per child per year. That offer of 30 hours of free childcare is making a real difference to the lives of eligible working families. In our 2021 childcare and early years survey of parents we found that 73% of parents reported having more money to spend since they used their 30 hours and 38% thought that without the 30 hours they would be working fewer hours.
I acknowledge the huge benefit that has for parents, especially those getting back into work, but we have a real issue with providers, because the gap between the funding and the cost to providers is around £2 per hour for those voucher places. Nurseries in Leeds have closed because of that funding gap and others are under severe pressure. What will the Minister do to ensure that those nurseries can survive and thrive, not just at a price to the provider because the vouchers are in place?
As of last year, we had set out half a billion pounds of extra funding to go into the sector. We have also set up energy support, as I mentioned, which will help with the increased costs, which we know lots of providers are facing this winter. Of course I will continue to look at everything that I can do in this area and I am committed to ensuring we can make this work.
The last year for which we have figures available shows that a total of £62 million in unspent funds was ringfenced within the dedicated schools grant for early years. That is money that the Government have made available that cannot be spent because the funding formula means that a council, for example, cannot reallocate it to increase the funding rate to its local settings and it can be spent only in accordance with the constraints of the national funding formula. While that would not go all the way towards bridging the gap, will the Minister consider looking again at the funding formula regulations, so that local discretion could allow funds that are already allocated to be redistributed in a way that might help address some of the policy issues that she has outlined?
As ever, my hon. Friend makes a detailed and interesting point that I will take away. I will look at the underspend and see what can be done, and I will come back to him as soon as I can.
In addition to the 30 hours, we remain committed to continuing the universal 15 hours of free early education, which this year helped over 1 million children get a positive start to their education.
Government support for childcare is not limited to three and four-year-olds. In 2013, the Conservative- led coalition Government introduced 15 hours of free childcare for disadvantaged two-year-olds. Some 72% of disadvantaged two-year-olds were registered for a free early education place in January 2022, and over 1.2 million children have benefited since its introduction.
Following a consultation in May 2022, we extended eligibility for this entitlement to children in no recourse to public fund households; that was first implemented in September this year. I urge all hon. Members to encourage families from lower income backgrounds to take up that generous offer. Children who take it up do better at school and it gives them vital skills that set them up for life.
I recognise that childcare must be accessible to parents as well as affordable. That is why the Government continue to monitor the sufficiency of childcare to ensure that childcare places are easily available. The key measure of sufficiency is whether the supply of available places is sufficient to meet the requirements of parents and children. Ofsted data shows that the number of places offered by providers in the early years register has remained broadly stable since 2015.
Under section 6 of the Childcare Act 2006, local authorities are responsible for ensuring
“that the provision of childcare…is sufficient to meet the requirements of parents in their area”.
The Department has regular contact with each local authority in England, and if a local authority raises concerns about sufficiency issues we will, of course, support it with any specific requirements. We are currently seeking to procure a contract that will provide reactive and proactive support to local authorities in fulfilling their childcare sufficiency duties.
The majority of early years childcare places— 68% in England—are provided by private, voluntary and independent group-based providers who continue to provide high quality childcare for families. The number of places, as I said, has remained broadly stable, and 96% of those early years childcare providers are rated good or outstanding. That is testimony to the many people who work in that brilliant sector.
Once again, I thank the hon. Member for Slough for securing the debate. The early years sector is an integral part of our economy and education, so my Department treats any changes to the system carefully. Our childcare offer is co-ordinated with other Departments to allow parents a range of options, depending on whether they want their children to receive childcare in a formal, nursery-style setting or from a childminder in a home.
Finally, I reassure the hon. Gentleman, and all hon. Members present, that my Department continues to evaluate what more can be done to help parents access a childcare place that not only suits their working arrangements or family circumstances but gives their child a positive start to their education. I look forward to working with him in future to hear his further thoughts on making our childcare system the best it can be.
Thank you, Mr Hosie, for your expert chairing of today’s debate. I thank all the Members who have participated for their excellent interventions. I particularly want to thank the hon. Member for Ruislip, Northwood and Pinner (David Simmonds), especially given his knowledge and expertise of the area as a former elected councillor and cabinet member for children’s services and, like me, as a parent. He highlighted the various technical issues that need to be addressed.
I thank the Minister for her promises to parents, and also the shadow Minister, my hon. Friend the Member for Dulwich and West Norwood (Helen Hayes), for the first-class work that she is doing to hold the Government to account and for highlighting the increased importance of the role that grandparents and family members play as they try to plug the gap to help parents, and in particular for helping to delineate the problems of the recruitment of nursery staff.
We have heard in today’s debate how important affordable and high quality childcare is, and about the difficulty that families face today in accessing childcare and all the consequences that follow on from that to children, parents and businesses. Fixing the problems with childcare provision should be far more of a priority for the Government than it appears to be, so I look forward to seeing what the Minister implements to support families in the coming year.
This is the last day of the school term for many, just as it is for parliamentarians here today, so I want to put on the record my thanks to all nursery nurses, daycare centre staff, breakfast club providers, teachers and everyone else in the childcare sector for the really important work that they do for our children.
Finally, as this is the last Westminster Hall debate of 2022, I want to put on record my thanks to all the staff of the House who support these important debates. I wish all the staff of the House and everyone here a very merry Christmas. I look forward to seeing everyone in the new year.