House of Commons
Tuesday 16 March 2010
The House met at half-past Two o’clock
Prayers
[Mr. Speaker in the Chair]
Oral Answers to Questions
Treasury
The Chancellor of the Exchequer was asked—
Government Holdings
As you will be aware, Mr. Speaker, the Chancellor of the Exchequer is at a meeting of European Finance Ministers in Brussels today. However, he and the Treasury hold frequent discussions with United Kingdom Financial Investments Ltd on a range of topics related to the Government’s holdings in financial institutions, in line with the UK Financial Investment’s framework document and investment mandate.
Given that the Government have reduced competition among high street banks, does the Minister not recognise that many small and medium-sized businesses will be frustrated by an economic recovery, because they will be unable to access finance on the terms that they need for expansion and recovery? Is it not the Government’s responsibility to ensure that they can do that, so will he do something about it rather than being passive on the sidelines?
We are certainly not being passive on the sidelines. As the House is well aware, the Government have negotiated binding commitments with RBS and Lloyds Banking Group on lending to businesses, as well as mortgage lending. We have taken further actions to help small, growing companies, through the enterprise finance guarantee, which has been a big success in lending to small businesses, and through intermediate lending by the European Investment Bank. We have also seen EIB loans at cheap rates to help companies through the recovery, which is what we all want to see.
Like many hon. Members, I have probably spoken to more constituents over recent months than I would normally, and there is still a huge amount of anger among my constituents—and, I suspect, many others—about bankers’ bonuses. They feel that, as the Government have a stake in a number of such institutions, perhaps they should have taken a lot more action to curtail the amount that bankers are still being paid.
The whole House will have had representations from constituents on the issue of bankers’ bonuses. My hon. Friend will be aware that UKFI manages the Government’s interests in RBS, Lloyds Banking Group, Northern Rock and Bradford & Bingley on an arm’s length basis. It is not in the interests of shareholders, including the taxpayer, for banks to lose key profit-making staff, but we have to ensure an appropriate balance. As she will be aware, RBS made a commitment to pay the minimum possible, to protect the banking franchise, and it is in investment banking where that issue is most apparent. On behalf of the Government, UKFI took independent analysis and looked at sector averages in coming to its conclusions, and it was entirely appropriate that it showed that due diligence.
On lending banking, has the Chancellor yet modified his opposition to Mr. Paul Volcker’s view, which is strongly supported by President Obama, that it is a mistake for commercial banks to allow their depositors to run the risk of their money being handled by investment banks?
No, I do not think that the Chancellor has changed his views on that. Indeed, he has clearly expressed the view to the House on a number of occasions that he does not believe the causes of the current financial crisis to have been brought about as a result of a failure to implement Glass-Steagall and split investment banking from ordinary commercial banking. Both types of banks have got into difficulty over the past couple of years. What is important is that we pay due attention to ensuring the effective regulation of the banks. That is the approach that we have adopted, which is why we have introduced recovery and resolution plans, for instance, as part of our new legislative programme.
Budget 2009
Since the Budget more than 3.5 million people have been helped off jobseeker’s allowance—
Order. I think that the Chief Secretary was seeking to group this question with Question 12.
Yes, I was.
In the past year more than 3.5 million people have been helped off benefits and back into work, while more than 300,000 people have been helped to stay in their homes and more than 160,000 businesses have been helped to defer more than £5 billion in taxes. Together, those measures have helped our economy return to growth.
Will my right hon. Friend join me in congratulating the partnership of Yorkshire Forward, the local authority, West Yorkshire MPs and local businesses, which has been so successful in saving the Halifax brand, as well as the maximum number of jobs in my constituency? Can he also tell the House what further he can do to support jobs in my constituency?
I am pleased that because of the measures that we have taken over the past year, unemployment in my hon. Friend’s constituency is not only lower than the UK average, but lower than the average for Yorkshire and the Humber. Thanks to the Government help that has been put in place, the partnerships to which she referred have now delivered more than 350 jobs to the local community. We have no plans to take away that support, which is helping to get people back into work. We still provide the young person’s guarantee which helps young people to obtain jobs when they have been out of work for six months, and extra help is also available to those aged over 25 who are in that position.
May I stress the importance of capital expenditure to the Merseyside and Cheshire area, and, in that context, the importance of a decision on the proposed Mersey gateway bridge, which will create hundreds of construction jobs and many thousands of jobs thereafter? Will my right hon. Friend talk to his colleagues in the Department for Transport about the need for an early decision?
I congratulate my hon. Friend on the consistency with which he has championed that project over the past few years. It will make a great deal of difference to the local economy: I understand that it is worth 4,000 or 5,000 jobs to his area. As he will know, the Government have brought forward some £3 billion of capital expenditure to help fight the effects of the recession. I understand that the Departments for Transport and for Communities and Local Government have received an inspector’s report on the bridge, and I will continue to press my colleagues for an early decision.
If last year’s Budget decisions were right, why did the Chief Secretary rule out a VAT increase last week only to rule it in again this morning? Will he clear up the confusion, and tell the British public categorically whether or not an increase in VAT is being considered?
The hon. Gentleman has been in the House long enough to know that tax decisions are matters for the Chancellor, who presents them to the House in both the pre-Budget report and the Budget.
We will not cut support for the economy this year, unlike the Conservative party. Once growth is locked in, we will take action to halve the deficit over the next four years. What we will not do is make the commitment made this morning by the shadow Business Secretary, the right hon. and learned Member for Rushcliffe (Mr. Clarke), to bring down the deficit to 3 per cent. by 2014-15—a step that would take another £20 billion out of public spending over the medium term.
Does my right hon. Friend share my concern about the impact of continuing low interest rates on people who rely on savings income, especially pensioners? What measures to support that group were taken in the last Budget?
Over the past year, steps have been taken not only to increase the basic state pension, but to increase the support available through pension credit. We have increased the disregard in the pensions system to put more money into pensioners’ pockets, and they will also have benefited from VAT cuts over the past year which have put about £1 billion into the pockets of consumers throughout the country.
At a time when economic confidence is crucial to Britain’s recovery, the assessment of the policies in the 2009 Budget that matters is not the Chief Secretary’s assessment or mine, but that of the international investors who have to buy our debt and the business men who will invest in that recovery. Their verdict is clear, and it is getting louder. It is summarised very neatly by the European Commission’s view that the Government’s plans are “not sufficiently ambitious” and that “additional fiscal tightening” is necessary. Is not the simple fact that the Government’s deficit reduction plan is not designed to restore confidence in markets, not designed to kick-start business investment and not designed in the long-term interests in the British economy, but designed to postpone the tough decisions until the other side of a general election?
The argument that the shadow Chief Secretary seeks to advance is one that he has rehearsed over the past year. In his opinion, it would be right to start to cut public spending now, before the recovery is locked in. If he is so interested in the views of business leaders and others, let me quote a couple. Richard Lambert has said:
“I think the Government is right to say that it would be a bad idea to slam on the brakes right now because the economy’s still… fragile.”
The Institute for Fiscal Studies has said:
“it doesn’t make sense to announce more tax increases or spending cuts that would take effect over the course of the coming year.”
That argument has been reinforced by the International Monetary Fund. If the hon. Gentleman does not wish to listen to those organisations, however, perhaps he will listen to his own economic adviser, Alan Budd, who has said:
“If you go too quickly, then there is a risk that the recovery will be snuffed out and we will go back into a recession. I mean, what do the Americans say? ‘Remember 1937.’”
I hope that the shadow Chief Secretary will heed that advice.
Order. May I say to both the Chief Secretary and the shadow Chief Secretary that what I do not want is for Back Benchers to be “snuffed out” by excessively prolonged exchanges between the Front Benches. Mr. Hammond, I know that your second question will be shorter than your first.
Yes, Mr. Speaker, and we hope it will elicit a shorter reply, too.
The fact is that the Chief Secretary is not listening. In particular, he is not listening to the people whose assessments really matter, such as Sir Martin Sorrell, who says:
“If Labour win we may well have a sterling crisis.”
I might also mention Fitch, which says that
“halving the deficit over four years is frankly too slow”,
and the CBI, which says that
“the Government has no credible plan.”
The truth is that whereas the Conservative party is willing to roll up its sleeves and take the tough decisions that are necessary for Britain’s future, Labour still has its head buried in the sand and is merely hoping that the problem will go away. When will the Chief Secretary start telling the British people the truth about the challenges that lie ahead?
We could carry on trading quotes from business leaders, but the International Monetary Fund, the Bank of England and respected economists such as the chief economist of UBS have all made it clear that this year would be the wrong year to start making cuts. The hon. Gentleman is, I think, reaffirming the argument made this morning by the shadow Business Secretary, which is that another £20 billion should be cut from public spending. Will the hon. Gentleman deny that today? [Interruption.] Will he issue a statement denying that today? It appears that the shadow Chancellor and the shadow Business Secretary are now auditioning for the same job, but the problem is that they are using a different script.
Small Manufacturing Business
The annual investment allowance of £50,000 is particularly helpful for small manufacturing businesses. The business payment support service allows firms with cash-flow difficulties to spread tax payments over a period. My right hon. Friend the Chancellor will set out our plans in his Budget statement next week.
Is my right hon. Friend aware that many businesses, such as manufacturing businesses in Yorkshire and especially Huddersfield, very much value the range of incentives that they have, particularly the research and development tax credits? Does he also understand that they are very worried? One business man said that he could not sleep at night because of thoughts of a naive new Chancellor sweeping all this away.
My hon. Friend is absolutely right. There is a great deal of concern among manufacturers about the Conservative party’s proposals. I agree with the Engineering Employers Federation, which has described the proposals as a disaster for manufacturers. The Institute for Fiscal Studies said that the proposals
“would help companies that make large profits with little investment, at the expense of businesses that are investing heavily in the UK”.
What we should be doing is supporting investment.
The Financial Secretary told the hon. Member for Huddersfield (Mr. Sheerman) that he would have to wait for further announcements in the Budget, but why does he have to wait until then when the Chief Secretary is merrily going around ahead of the Budget telling the world there will be no tax increases? Is the purdah rule now selectively applied, or is the Chief Secretary just gaffe-prone?
As my right hon. Friend the Chief Secretary has made clear, tax announcements are made at the time of the Budget. Like my right hon. Friend, however, I am very interested in what the shadow Business Secretary has been saying this morning, apparently committing the Conservative party to a 3 per cent. deficit by 2014.
Order. The Minister is being very cheeky—anybody would think an election is on the way. The Minister does not need to preoccupy himself with the policies of the Opposition, and I know that in a moment he will want to return to the policies of the Government.
In recent evidence to the Treasury Committee, Lord Turner told us that
“the tax deductibility of interest is creating a bias in the tax system”.
That bias is towards debt, rather than equity. For the sake of all manufacturing industry, is it not time that we had a real debate on this issue, so that we correct the tax system in favour of people who are involved in manufacturing and creating jobs in the country?
My right hon. Friend is right. We will need to reflect on this, but I think that he will agree that it would be a mistake to make changes now that undermine the incentive to invest in manufacturing. That is what the Conservative party is proposing, however.
Budget Deficit
With your permission, Mr. Speaker, I will answer Questions 4 and 23 together. The Chancellor will provide an update on the Government’s—
Order. Far be it from me to rain on the Chief Secretary’s parade, but I have received no such request, and I regard both the request and its timing as deeply irregular. I think we will treat the questions separately.
I am very grateful for your judgment, Mr. Speaker; I shall answer Question 4 directly.
The Chancellor will provide an update on the Government’s fiscal position, including forecasts for public finance, at the Budget. The Fiscal Responsibility Act 2010 puts a legal obligation on the Government to more than halve the deficit over four years and have debt falling by 2015-16.
The Government’s fiscal plans have been criticised by the Governor of the Bank of England and the European Commission in the past week. A few moments ago, in response to my hon. Friend the Member for Sevenoaks (Mr. Fallon), the Chief Secretary said that this was the wrong year to make cuts. Last week, the Chief Secretary told us that there was no need for tax rises, but this week he has changed his mind. Following the Chancellor’s reprimand of him, is he now going to tell us that this is the right year and that this Government will be increasing taxes this year?
We were clear in the pre-Budget report about our belief that £19 billion-worth of tax increases need to be secured over the next few years. We have not caveated our language with the kind of dissembling that we have seen in some quarters about whether proposals on national insurance contributions will be reversed or implemented. Alongside those proposals, we have said that £38 billion-worth of cuts and efficiency savings also need to be secured. We have been clear about our plans to halve the deficit—I hope that the Conservative party will match that clarity.
At a time when we need to make savings, is my right hon. Friend aware that Gloucestershire has seven local authorities? There are too many councillors and too many local authorities, so in the run-up to the Budget will he consider allowing us to bring in unitary authorities in places such as Gloucestershire? We could save £16 million a year by reducing the number of authorities from seven to two, by cutting the number of councillors and by reducing the amount of duplication. If we took a similar approach across the country, we could save half a billion pounds a year.
I will listen carefully to all sensible proposals to save money.
Is the Minister not mildly embarrassed that the Government claimed to be leading the international debate on recovery from the financial crisis but have now been chastised by the European Commission for a lack of clarity in their plans for tackling the fiscal deficit? Although the Government have been clear about when to make cuts and how rapidly to do so, they have been massively unclear about what they propose to cut—when are we going to hear that?
I think that the European Commission made the wrong decision by saying to the United Kingdom that we should reduce the deficit to 3 per cent. of GDP by 2014-15. That would entail a cut of well above £20 billion in public spending or commensurate tax increases. In the pre-Budget report we set out deliberately how we would save £20 billion of current spending over the next four years: £4.8 billion of that would come through savings on pay and pensions; there would be £5 billion of cuts to departmental expenditure limits; and £11 billion of it would come through the reorganisation of Whitehall and doing things more efficiently in the future. We set that out clearly in chapter 6 of the pre-Budget report.
Does this European report not also relate to a deeper argument within Europe about whether recovery should be led by countries such as Germany widening their deficit—that is the French argument—or by the weaker countries, such as Greece, Ireland, Italy, Spain and probably Britain, taking action on their deficits? Where do the Government stand on that debate?
We are very clear that what is in the interests of the United Kingdom economy—I believe that the hon. Gentleman has made this argument before—is rebalancing our economy in the years to come and having an investment and export-led recovery. No one country can secure that policy acting on its own, which is why international trade reform is part and parcel of our approach to the agenda for the G20 over the year to come. The truth is that if American savers carry on saving at today’s rates we will not be able to rely on them to drive growth in the global economy in the way that they have done in the past.
Will my right hon. Friend confirm that there could not be a more bizarre sight than the Tory Front-Bench team joining unelected European Commissioners to call on the British Government to carry out a policy of creating mass unemployment by postponing the attempt to halve the deficit in four years? And the Member for the Liberal party ought to know better than to join these unelected people who want to throw workers on the scrap heap.
My hon. Friend is absolutely right. Over the past year, 22 million people have benefited from tax cuts because of measures we have introduced. Up to 500,000 jobs have been protected, more than 160,000 businesses have been helped with their cash flow and 120,000 jobs have been provided through the future jobs fund. That has all been possible because of the measures that we took over the course of the past year. It would have been impossible to sustain those steps had we followed the advice of the Opposition.
Given that the Chief Secretary’s pronouncements on tax policy last Thursday were overruled by the Chancellor on Sunday, will the Chief Secretary tell the House whether he speaks on these matters with the authority of the Chancellor, or is the relationship between the Chief Secretary and the Chancellor as dysfunctional as the relationship between the Chancellor and the Prime Minister?
What a non-question. What I did last week was set out very clearly proposals for how, over the next four years, we will increase taxes by about £19 billion. They are difficult decisions that no Chancellor wants to implement, but none the less they are decisions that we have faced up to. Alongside that, we have said that we will reduce spending on day-to-day public services, but we will not take precipitate action as proposed by the Opposition. We will lock in the recovery, not put it at risk, as proposed by the Opposition.
If John Maynard Keynes were alive today, he would agree absolutely with my hon. Friend the Member for Bolsover (Mr. Skinner) and would have contempt for the views of the Opposition. May I suggest to my right hon. Friend that cutting now would be about as intelligent as burning witches in the middle ages?
Not just my hon. Friends agree with our approach. My hon. Friend and others may convey it in different language, but that approach is supported not only by the International Monetary Fund but by the Institute for Fiscal Studies, UBS, the CBI, two Nobel economists, the hon. Member for Twickenham (Dr. Cable) —on occasion—and the independent fiscal forecaster for the Conservative party, Sir Alan Budd.
Crown Estate Commissioners
The Crown Estate has delivered good financial returns over the past 10 years, with capital up 66 per cent. and revenue paid to the Exchequer up 70 per cent., reaching £226 million in the last full financial year. Over the past 10 years, the value of the portfolio has increased by £2.3 billion and the Crown Estate has paid a total of £1.8 billion to the Exchequer.
The Minister is—I hope—aware of the announcement made this morning by the Crown Estate on licensing sea bed areas around Orkney and the north of Scotland for the development of marine renewables. May I tell her, however, that many in the renewables industry, although they welcome the announcement, have serious concerns about the process that the Crown Estate has used in getting to this point? Will she use the powers that are given to her in the Crown Estate Act 1961 to have a look at what has been done to ensure that the Crown Estate becomes a facilitator rather than a hindrance in the development of green renewables?
I have to disagree with the hon. Gentleman; I do not think that the Crown Estate is a hindrance. I have had it from the Crown Estate that it wishes to be involved in that process and recognises the importance of the sea bed around Scotland. I am having a meeting with the Crown Estate commissioners in the next couple of weeks and I intend to take various issues to that meeting, including the marine issues to do with renewable energy in Scotland and other matters that have been raised by hon. Members.
This question reminds me of how, soon after I was elected, I had to do battle with the Crown Estate commissioners on the foreshore of the Thames for putting in jeopardy the 1,000-year-old ferry route between Tilbury and Gravesend. It is rather sad that, as I come to the end of my life in the House of Commons, that ferry is again in jeopardy. I do not know to what extent the Crown Estate commissioners are involved, but I ask my hon. Friend to look into that in her discussions. The real problem is that work, employment and school opportunities for my folk are being put in jeopardy by the Conservative borough council, which wants to cut the subsidy. That was not mentioned to the hon. Member for—
Order. We have got the thrust of the question, but councils are not the responsibility of the Minister.
I certainly agree with my hon. Friend that there are frustrating Conservative councils. If the Crown Estate is involved in that decision, I will be more than happy to raise it at my meeting.
Value of Sterling
As stated in the previous pre-Budget report, the depreciation of sterling is expected to help contribute to recovery in the UK economy. It should give a competitive edge to UK exporters, and encourage UK consumers to switch to domestically produced goods and services.
I thank the Minister for that reply. However, given the faith that Ministers have placed in a weak sterling supporting export growth, does the drop in the previous quarter’s export figures not demonstrate again both the complacency of Ministers about the recovery, and the extent of the damage that has been done to the UK’s manufacturing and export base under this Government?
We are certainly not complacent about the recovery. That is why we have taken the fiscal judgments that we have taken, and why we have said explicitly that we need to make sure that we lock in the recovery. We have taken actions to help exporters through UK Trade and Investment, which helps some 20,000 exporters every year. I happen to believe that there is more to be done: perhaps it is because I come from one of the UK’s manufacturing heartlands that I believe that we will not have a successful economic future unless we export goods and services. So, yes, I think that there is more to be done, but this Government have a good record in supporting UK exporters.
Is not the implication of the fact that a more competitive exchange rate has not produced greater exports that we may need to do more to reflate the world economy?
Pretty much any economist will say that there is a time lag between depreciation occurring in an economy and its visible effects in both exports and import substitution. I am confident that the normal laws of economics still apply to the UK and the global economy. Because of the financial crisis that has hit the world economy, I have concerns about the effectiveness of banks as a transmission mechanism for supporting growth in our exporters and businesses. However, I have every reason to believe that the exchange rate as it is will help UK firms.
Order. We really must have sharper questions and answers. Progress today is lamentably slow and it needs to get better.
Every time that this discredited Government make any kind of recovery, sterling falls sharply. That is due to their lack of credibility when it comes to the deficit. Does the Minister think that it helps the Government’s credibility with the markets and sterling for the Chief Secretary to make promises on tax that he has to retract five days later?
The hon. Gentleman must have been reading one of the reports in The Times today, which said that sterling was on the slide as a result of recent announcements. That might have been true between 6 am and 11.40, but then it changed round, and apart from a blip at about 7.40 to 8 o’clock this morning, the pound has gone up again. It has been within a trading range for a considerable period of time.
Capital Allowances
We receive representations from a number of public and private sector organisations as part of our policy development and delivery. More than 500,000 businesses that invest are able to claim tax relief on their qualifying investment expenditure under the capital allowances regime. In 2010-11, it is estimated that £62 billion of capital expenditure investment will be made and supported by these allowances.
Does my hon. Friend recall that the polices of the Conservative Government of the 1980s and 1990s meant that it was far more tax-efficient to distribute what should have been retained profits for investment than to retool and re-kit our industry? That was especially true in the west midlands, where we lost a great deal in terms of modernisation. Will she tell us this afternoon that the policy of this Labour Government, which encourages investment, will continue?
I assure my hon. Friend that we believe that investment is crucial for the UK economy’s long-term success. That is why we acted to support business investment during the recession by temporarily doubling the main rate of capital allowance. We support capital allowances—unlike the Opposition, who wish to cut allowances for investment.
Listed Places of Worship (Grants)
The Government’s plans for the listed places of worship scheme beyond 31 March next year will be announced in the spending review later in the year.
I hope that it will be good news. The Minister will know that the scheme involves money given to help defray the cost of value added tax on repairing listed buildings. Many communities up and down the country are trying to keep their churches in good repair, and either the scheme has to be extended or the Government must restore heritage as part of national lottery funding. Does he agree that we cannot expect this important element of our built heritage to be done on thin air?
The hon. Gentleman raises an important point. This scheme has now generated some £100 million for 10,000 buildings since it was introduced in 2001. We have recognised that listed churches are a special case. Our long-term aim is that a lower rate of VAT should be agreed at European level for instances of that kind, but in the meantime the joint English Heritage/Heritage Lottery Fund scheme is providing £25 million a year. We will look at that particular scheme again in the spending review.
Tax Credits
Tax credits have supported the economy in the downturn, responding quickly when household income falls. Last October, 400,000 households whose income had fallen since the start of the year were receiving, on average, £37 a week more in tax credits.
Tax credits have helped more than 9,000 families in my constituency by supporting them through difficult times and helping to reduce child poverty. Will the Minister reaffirm his commitment to that policy, in contrast to the two main Opposition parties, which are looking to cut tax credits for those on very modest incomes?
My hon. Friend is absolutely right. I can reaffirm our commitment to the policy. Under the last Government, child poverty more than doubled, to the highest rate in Europe. We have been able to reverse that rise, and indeed reduce the number of children below the poverty line by 500,000 on the most recent data. I can confirm to my hon. Friend that we will maintain that policy.
My right hon. Friend makes an important point about the impact of tax credits on family poverty. Can he give any guarantees that if there were to be a change in political fortunes, those tax credits would still go into the pockets of families in need?
Yes. Our view is that the tax credit system has played a very important role in supporting the economy, particularly in the past year, when a lot of people have seen their income fall—for example, because their hours have been reduced—and it has been possible for their tax credits to increase very quickly in response. I noticed that in my hon. Friend’s constituency more than 500 families have benefited, by an average of just over £41.
I wonder whether the Minister can tell the House how many people have been in his constituency surgery in tears because of the way in which the tax credit system operates.
I do not think that I have had people in tears over that in my constituency surgery. The hon. Gentleman might be pleased to note that in April to December 2009 the number of complaints about the operation of the tax credit system was 40 per cent. down on the year before, so we are making good progress.
Youth Employment
The Government have introduced a significant package of support to help young people into work quickly. This includes the £1.3 billion young person’s guarantee of a job, and up to £1,000 for businesses that recruit unemployed young people.
In Stockport, more than 4,000 young people are not in education, employment or training and many employers are ready to help them. Is it not time for the Chancellor to increase his support for employers, so that they can give the young people in my constituency the break and the start that they need?
I will take that as another Budget submission, but just to be clear with the hon. Gentleman, the young person’s guarantee is already providing jobs and work experience and training for those aged 16 to 24 who have been out of work for six months. From April this year, if a young person has been out of work for 10 months, they need actually to take that job or that training opportunity, or the community service on offer. We have already provided access to 120,000 jobs for young people through the future jobs fund, paid at the national minimum wage, together with 120,000 pre-employment training places.
Will my right hon. Friend ensure that special help is given to those young people recovering from either mental health problems or addiction difficulties, given that there seems to be a disproportionately high number of such people among the young unemployed?
We can, and partly because of the extra resources that have been put in place in jobcentres, many thousands more people have been added to the strength of that particular front line. That obviously increases the personalisation of the service that jobcentres can offer, and it is part of the reason that 3.5 million people have been helped off jobseeker’s allowance and into jobs over the past year.
Last week, before he was forced to make his humiliating climbdown on tax increases, the Chief Secretary was boasting about the difficult decision to increase national insurance. Will he tell the House what the impact of that difficult decision would be on unemployment?
Experience suggests that general national insurance cuts and wage support have very limited impact on employment. Of course, taking those national insurance contributions out of the forward programme for tax would leave a £7 billion hole in the tax base. The Conservative party has yet to come clean with the public about how it intends to fill that gap.
Credit Rating
As the House would expect, Treasury Ministers and officials have meetings with a wide variety of organisations.
I thank the Minister for his conclusive answer. With a Budget deficit higher than that of the Greeks, is it not a matter of some embarrassment to the Government that after 13 years of their being responsible for the economy, serious figures—from the CBI, to the Bank of England, to credit rating agencies—are raising questions about this country’s credit rating in the manner of some disreputable pyramid scheme salesman who has finally been caught out?
I do not think that the hon. Gentleman’s words are representative of how a vast majority of informed commentators look at these issues. They certainly are not representative of the credit rating agencies, all of which recognise the UK’s strong funding flexibility. They continue to judge the UK as having the highest possible sovereign credit rating. I point out to him that average debt maturity in the UK is 13.5 years, which is twice that in France, Germany and Italy, and is more than three times that in the United States.
Is it not the case that the credit rating agencies take account of the real economy, that Britain is the world’s sixth largest exporter of manufactured goods and the world’s second largest exporter of services, and that there is no possibility of the credit rating agencies downgrading our rating?
My hon. Friend is absolutely right to point to the strength of the UK as a manufacturing nation and our strength in exporting services. Rather than speculate about credit ratings when it is very clear from all that the credit rating agencies have said that there is currently no risk to the UK’s credit rating, we should focus on a strategy for growth and jobs for the future. We will hear more about that next week.
Government Holdings (RBS)
The Treasury holds frequent discussions with UK Financial Investments on a range of topics related to the Government’s holdings in RBS, in line with the investment framework and investment mandate.
Does my hon. Friend accept that it is very difficult for me to convey the absolute anger of a number of my constituents, especially small businesses, many of which have been forced to the wall because of the lending policies of those institutions? Does he accept that that is all the more repugnant given that RBS found £1 million to pay 100 executive bonuses last year? Clearly, something has to be done.
My right hon. Friend will be aware of my comments on bonuses and what RBS has said on the matter. It is certainly the case that some businesses have, sadly, gone to the wall as a result of the global recession. The Government have always been consistent in pressing to make sure that lending continues in the UK economy. He might be aware that RBS recently announced a £1 billion manufacturing fund for providing flexible long-term loans to businesses. I am sure that that will be welcomed by businesses in Scotland and throughout the UK given RBS’s role right through the UK economy.
Does the Minister accept that the question of the RBS debt is central to the question of public sector debt generally? Does he disagree with the Office for National Statistics that the total amount of debt is between £2.65 trillion and £3.15 trillion, or between 185 and 215 per cent. of gross domestic product when financial sector interventions are included?
I do not have the figures from the ONS to hand, but I have no reason to doubt the hon. Gentleman. It is established practice when reporting on Government accounts to exclude financial interventions in RBS and Lloyds Banking Group. In the same way, the German Federal Government tend to exclude KfW and their investments in banks. I do not think that anything we are doing is particularly unusual and, as we have discussed before, there are different methods of accounting, which are at issue. I do not think, however, that party politics should be part of that. We are clear and transparent about the overall financial situation.
Economic Growth Forecasts
I am on a roll. The Chancellor and the Prime Minister have regular discussions on a range of issues, including the prospects for the UK economy.
It would be good if the country was on a roll, too. Exports are absolutely vital for our future economic growth, so why during the Government’s stewardship has the UK’s share of world trade fallen by 31 per cent., when Germany’s has gone up by 5 per cent.?
My right hon. Friend the Chief Secretary says that the hon. Gentleman might have noticed the rise of India and China over the past 10 to 15 years, which probably explains why the UK has slipped down to being the sixth largest manufacturing nation in the world. However, we are still the second largest exporter of services, and our manufacturing performance is strong. I believe that it will become stronger over the next 12 months to two years, and a competitive exchange rate will help a great deal.
Topical Questions
The Treasury’s responsibilities remain as the Chancellor has set out on previous occasions.
I appreciate that the Chief Secretary is pretty embarrassed about his U-turn this morning. Last week, he ruled out VAT increases, presumably to curry favour with the Prime Minister and undermine the Chancellor, so can he simply explain to the House when and why he changed his mind?
I have merely set out the statement made by my right hon. Friend the Chancellor at the pre-Budget report about how we plan to halve the deficit over the next four years by raising taxes by £19 billion. We will do so in a fair way, unlike the Opposition, if they ever get into power, by ensuring that half the taxes that we raise fall on the shoulders of the top 5 per cent. of earners. Alongside that, we will cut capital and current spending by £38 billion. In that way, we will halve the deficit over four years, as set out by the Fiscal Responsibility Act 2010. What we will not do is pursue the Opposition’s approach, which is to introduce cuts now and put the economy into a double-dip recession. We will not follow the approach set out by the shadow Business Secretary this morning by reducing our deficit to 3 per cent. of GDP in 2014-15, because that would require taking out something like an extra £20 billion to £30 billion of public spending—a strategy that has not been renounced by the Opposition Front Bench this afternoon.
As right hon. and hon. Members know, topical questions and answers are supposed to be shorter— a fine example, I know, will now be provided by Mrs. Madeleine Moon.
Boiler room scams are completely unacceptable. It is the responsibility of the Financial Services Authority to take action in this area, and it has increased its surveillance capacity quite substantially. My hon. Friend is right to make the point about the importance of savers. People need to have confidence in the savings products in which they invest, and it is the responsibility of the regulatory authorities to ensure that that confidence is not misplaced.
The Valuation Office Agency is directly responsible for the matter. For the past two and a half years it has been involved in discussions with representatives from the industry and their agents. There must come a time when negotiations stop. There are three aspects of the model. They are not exceptional, but I agree that some of the rating valuations appear to be very high. The VOA continues to work on the matter.
Order. I know the Chief Secretary will be well aware, because he is a clever fellow, that the responsibility of the Government does not extend at Question Time to the costing of the policies of other parties, so I know he will not comment on that.
If I were asked to take £25 billion out of public spending, I would merely point out that that would involve halving the education budget or increasing VAT to 23 per cent.
I said this morning that we think the European Commission is wrong to say that we should be trying to reduce our deficit to 3 per cent. of GDP by 2014-15, which is the timetable proposed by the Commission. I look forward to members of the shadow Front-Bench team confirming that that is their position, too.
What progress is being made with the G20 in making the international banking industry more responsible by introducing such measures as a Tobin tax?
I welcome the campaign for the Robin Hood tax, as it has been described, for the energy that it has generated and the interest in this important area. Any changes in that direction would need to be made on a global basis, not just on a UK basis, and the IMF will look at that option with others to see how the balance of risk and reward between the banks and taxpayers can be changed for the future.
I thank the hon. Gentleman for his kind words, which are typically generous of him. I do not think the Prime Minister needs any lectures in economics. He was an outstanding Chancellor of the Exchequer and is a very effective Prime Minister, as I am sure the Opposition will recognise in the course of the upcoming election campaign. I will happily watch it from the sidelines.
Why, in the current economic climate, do we allow the salaries of senior managers in the public sector, such as vice-chancellors of universities, chief executives of local authorities and chief executives of housing associations, to rise way above the rate of inflation, while those same managers are encouraged to keep the salaries of the public sector workers whom they manage at a very low level?
We have repaired the salaries of public service workers in this country. Over the past decade, public sector wages have risen by about 25 per cent., but at a time like this we think it is important that senior leaders in the public sector show an example, which is why, in our evidence to the Senior Salaries Review Body, we recommended a pay rise of 0 per cent. That was the rise that we implemented across the board last week.
I do not want to pre-empt any announcements that will be made by my right hon. Friend the Chancellor in the Budget next week. We recognise that alcohol duties play an important part in fiscal consolidation, but we also recognise that the alcohol industry creates many jobs. We will get that balance right.
When the time comes for the Government to sell off their shareholdings in the banks that they rescued last year, what steps will they take to ensure that the taxpayer gets best value for money?
My hon. Friend is absolutely right to raise that as an issue. The Government have made substantial investments in institutions such as Royal Bank of Scotland, Lloyds Banking Group, Bradford & Bingley and Northern Rock, and we need to ensure that we get best value for the taxpayer. We will not be giving these away, and it is the responsibility of UK Financial Investments to manage the Government’s interests in these matters. We do not want to own these for the long term. We do want to make sure that they go back into the private sector. But it has to be done at a price that works for the taxpayer.
These matters are the result of lengthy application of the law. We have said that the current concession, which applies only to freehold holiday lets in the UK, may not be consistent with European law and therefore we will withdraw the concession from 2011. But the definitions are very well established and familiar in tax law.
The announcement recently by the Treasury to extend the offshore new field allowance to developments west of Shetland, will, I hope, allow the Laggan-Tormore development to go ahead. Has my hon. Friend worked out how much the development of the west of Shetland province could be worth to the British economy in the years that follow?
We certainly wish to assist in the development of fields where it is more difficult to get out the natural resources, not only for the security of supply for the UK but for the benefit of the whole economy. I do not have the exact figure to hand, but I will be more than happy to write to my hon. Friend.
At the risk of repeating myself, we said that over the next four years we will halve the deficit—we have not seen a plan as clear as that from the Conservative party—and we said that we would do that in a fair way. We said that in part we would need to raise taxes, and we set out very clearly how £19 billion of taxes needs to be secured, alongside spending cuts. I hope that during the next week or two we will see a plan of equal clarity from the Conservatives, and I hope that as part of that plan they will renounce the proposal that the shadow Business Secretary set out this morning to take another £29 billion out of public spending by 2014.
I put it to my right hon. Friends that cuts in public spending are not the only way to reduce the deficit. We could, for example, raise the basic rate of income tax, not to as much as it was under Mrs. Thatcher, but by a penny or two.
Our view is that those with the highest incomes should bear the largest share of the burden of consolidation. That is the reason we have announced the introduction of the 50p rate of income tax on the highest incomes, and the restriction of personal allowances also for people with high incomes. We think that that is the right place for the consolidation to start.
That just shows what would happen if the Liberals held the balance of power in a future Parliament.
The Chief Secretary to the Treasury referred to the budget deficit. Is the UK’s budget deficit as a proportion of GDP higher or lower than that of Greece?
We have the highest budget deficit, pretty much, in the G7, but the reason why we have a high budget deficit is that we chose to act to protect jobs, to protect homes and to protect businesses over the course of the past year. As the International Monetary Fund has recognised, the reason why we had that flexibility to act was that we went into the recession with the lowest debt of any country in the G7 apart from Canada.
The Minister prays in aid EU legislation to change the basis of furnished lettings. Will it apply to French gîtes as well?
The proposal that we have announced is to withdraw the concession, so it would not apply to furnished holiday lets outside or inside the UK.
Last week Sutton council granted planning permission for a new patient wing to be built at St. Helier hospital, removing the last obstacle to Treasury approval for the necessary investment. Will the Minister today give my constituents and NHS workers the good news that Treasury approval is coming and coming very soon?
I thank the hon. Gentleman and my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) for the consistent way in which they have championed the need for a new hospital in their area. The hon. Gentleman knows that I am in close discussion with the Secretary of State for Health, and we hope to make an announcement on that matter shortly.
British Airways Strike
Before I call Theresa Villiers to ask the urgent question, I should inform the House that an appeal has been lodged in the court case related to the British Airways strike action. This matter therefore falls within our sub judice resolution. I have exercised my discretion to allow this matter of public importance to be discussed, because I do not consider that there is a substantial risk of prejudicing the court proceedings.
(Urgent Question): To ask the Minister of State for Transport if he will make a statement on the current situation relating to the BA strike.
Passengers will be seriously inconvenienced if a strike goes ahead. The Prime Minister and my right hon. and noble Friend the Secretary of State for Transport have both urged the union to call off the strike and both sides to seek to reach an agreement. However, British Airways is a private company, and the resolution of the dispute is a matter for the company and its staff. The Government have no powers to impose a settlement.
Since before Christmas the Conservatives have been urging Unite to cancel the strike, which will inflict huge misery on passengers and serious damage on BA. Why did it take the Prime Minister so long to condemn the strike? Has the Prime Minister spoken directly to Unite officials to urge them to call off the strike? Will the Minister admit that Labour accepted £300,000 from Unite on the very same day that the Christmas strike dates were announced; and that the party was able to get its accounts signed off in 2008 only after the union gave a written guarantee of future funding? How can the Government stand up for the interests of passengers when one quarter of Labour’s funding comes from the—
Order. I am genuinely sorry to interrupt the hon. Lady, but there is for parliamentary purposes a distinction between the Labour party on the one hand and the Government on the other, and it is in relation to the responsibilities of the Government that she must focus her remarks and questions. I know that that is what she will now do.
Yes, Mr. Speaker. Will the Minister join me in urging cabin crew to work despite the call for strike action? Will he ensure that the Government are going to stand up to the unions? How can Labour propose to do that when one quarter of its funding is provided by the very same union that is holding passengers to ransom and threatening to wreck their holidays?
You always, Mr. Speaker, impress on people who speak in the Chamber the need to think about how the public will view them, so I ask the public to ask the question about how a party that seeks to form a Government tries to politicise what is an industrial dispute. Some serious allegations have been made about the motives of the trade union and the Government, and, rather than trying to encourage both sides to reach a resolution in a calm and less emotive manner, one party is seeking to politicise an industrial dispute. I urge both sides of the dispute to start talking again to try to reach a settlement, so that the thousands of passengers who would otherwise be inconvenienced will not be. I would have hoped that there would have been agreement around the Chamber on that wish; given that an election is imminent, I am afraid that that has not been the case.
I am disappointed that British Airways and the Unite union are acting like two badly behaved children and seem to be paying little attention to the needs of their passengers; macho management from BA and intransigence from the union help nobody.
May I ask the Minister what steps in particular he has been taking since November, when the dispute first appeared imminent, to try to stop it occurring? Clearly, the strike has had a long period of notice. We could legitimately expect the Government to have taken action to try to prevent our reaching the stage that we have got to now. The Minister will understand why without any clear indication of what action has been taken, some feel that there has been some influence from the trade unions.
May I ask the Minister about compensation for passengers who are not able to get their flights but will nevertheless be significantly out of pocket—through holiday tours that they have booked, for example? Will there be any compensation for them, from the airline or elsewhere?
Does the Minister believe that when they voted for industrial action, the union’s members understood that they were voting for seven days or more of such action, or did they think, as many appear to have done, that it was a one-day strike?
Lastly, what further steps does the Minister intend to take now to knock heads together? Would it not be sensible for the BA offer to be retabled now—if necessary, at the same time as Unite withdraws its strike action, as it ought to do immediately?
As ever, I thank the hon. Gentleman for his questions. Ministers have been in close contact with all parties from the outset and continue to be so. It would be unhelpful to give a running commentary on the steps taken to try to resolve the matter. What is important is that there is willingness in some parts of the Chamber for there to be a resolution; clearly, however, it is in some parties’ interests for the dispute to carry on.
It is important that BA should provide as much information as possible to the thousands of passengers who would otherwise be inconvenienced. I checked its website before I came to the Chamber; it does provide lots of advice to passengers who may be inconvenienced, and it has a phone number that can be rung by people who do not have access to a website.
The hon. Gentleman’s final point was about balloting. It is not for me to look into whether the balloting was fair. He will know from history that when BA thinks that there has been unfair balloting, it seeks to challenge the trade union in the courts. It has not sought to do so in relation to this ballot.
rose—
Order. Some 14 Members are seeking to catch my eye, and as always I should like to be able to accommodate everybody. However, I require brevity, a legendary example of which will now be provided by the right hon. and learned Member for Folkestone and Hythe (Mr. Howard).
Is there not a very simple way in which the Government can demonstrate that they are sincere when they say that they disapprove of this strike? Why does the governing party not refuse to take any more money from Unite until the dispute is resolved?
There is one party that has been clear and transparent in how it receives donations—[Interruption.] It is an insult to the 6 million hard-working trade unionists, all of whom pay taxes, who have chosen to give money to a political party. I remind the right hon. and learned Gentleman that parties have stayed within laws made by Tory legislation. One big donor to the Conservative party, I am afraid, has breached both the spirit and the word of the law.
Does my right hon. Friend agree that the trade unions have stuck within the law during the whole of this dispute and the one thing that we do not want is politicians interfering? This is an industrial dispute, not the political dispute that the Opposition are trying to orchestrate to make the situation worse, not better, for the passengers.
It is noteworthy that while a Member of Parliament is trying to urge both sides to get together and resolve the issue, other Members are hectoring him. The public will not be fooled by the politicisation of an industrial dispute.
Will the Minister now answer the question about why the Prime Minister took four days to condemn the strike? Does it have anything to do with the fact that Charlie Whelan, the political director of Unite, is now back at the heart of Downing street?
If evidence were required of some people’s desperation to try to politicise a dispute, it has been provided by the tone and substance of the questions that have been asked. This is a private dispute between BA and Unite, the trade union. It is important that both sides should get around the table and resolve the issue. I am disappointed that there is not agreement in the House that the dispute should be resolved sooner rather than later.
May I declare, as a member of T & G and Unite for some 36 years, that I genuinely feel that stuck in the middle of all this, as my right hon. Friend the Minister has indicated, are the customers of BA, the work force, and the company itself and where its future lies? Does he agree that cheap political point-scoring plays no part in where this company and its work force should be going?
It is worth comparing and contrasting the questions by the Liberal Democrat spokesman, who was concerned about customers and the work force, and the questions from Conservative Front Benchers and Back Benchers—evidence, if ever it were needed, that they believe that this is a political dispute, and that rather then trying to resolve this in an amicable, calm and temperate manner, they are trying to use emotive language to raise the temperature.
The Prime Minister said yesterday on “Woman’s Hour” that the strike was
“worthy of effort to try and prevent it.”
Given, however, that we have been made aware by the Unite union since 14 December last year that a strike would happen, exactly what has the Prime Minister been doing for the past three months?
I have already answered that question. One of the problems when someone is given a question to ask by their Whips is that they often do not hear the answers that are given before they ask it. To put the answers that the Prime Minister gave on “Woman’s Hour” in context, he said:
“It’s the wrong time. It’s unjustified. It’s deplorable. We should not have a strike. It’s not in the company’s interest, it’s not in the workers’ interest, and it’s certainly not in the national interest, so I hope that this strike will be called off”.
Do the Conservatives agree with that?
Is my right hon. Friend aware that of the approximately 40 per cent. of BA flights that will not go ahead during the dispute, the overwhelming majority are on the domestic routes, primarily to Glasgow, Edinburgh and Aberdeen, which means that travellers to and from Scotland, and businesses in Scotland, will be disproportionately affected by this industrial action? Does not that underscore the need for a grown-up attitude towards this and for all sides to get back around the negotiating table to solve what is primarily an industrial dispute, which is not being helped by partisan point-scoring?
I thank my hon. Friend for his comments. He is absolutely right. Cool, calm heads are required now, not dossiers about perceived links between a trade union and a Government being unfurled at press conferences. I really hope that British Airways and the trade union will listen to some of the debate in the Chamber today and get round the table to resolve this so that my hon. Friend’s constituents, big businesses, small businesses and ordinary residents of this country are not suffering unnecessarily.
Following the previous question, with Aberdeen airport in my constituency and as a regular user of BA, I welcome the fact that BA has protected some of the services at Aberdeen because it recognises how important it is, but the situation is still inadequate.
May I follow up the point made by my hon. Friend the Member for Lewes (Norman Baker) about compensation? I am told that people who have discounted tickets are being told that no refunds will be provided following industrial action. Will the Government intervene to ensure that that issue is addressed, and will the Minister do everything he can to ensure that this strike does not destroy British Airways, because the union does not seem to understand that?
It is a private dispute; BA is not a nationalised company. BA has said on its website, and made it clear in all its press announcements, that it will allow passengers who are inconvenienced to rebook or to cancel and be refunded. If there are particular issues that the right hon. Gentleman wants to raise with me, I will be happy to raise them with BA.
Will my right hon. Friend rise above the smokescreen of party funding and use all his energies, and those of his ministerial colleagues, to get a satisfactory conclusion to this bitter dispute? Does he agree that any inflammatory statements are counter-productive? Will he find out where Mr. Walsh is, because we have not heard from him, or from any of BA’s senior management, for quite a long time?
My hon. Friend is absolutely right. What is required at this time are cool, calm heads, and for British Airways to meet the trade union to try to resolve this dispute. I am afraid that sending out press releases, doing press conferences and using emotive language is not the way to reach a resolution, and nor are sending one’s pit bull to press conferences and using dossiers to try to muddy the waters.
The Minister spoke of clarity and transparency, so he will not mind being reminded that Messrs. Whelan, Dromey and Woodley all have passes to the House of Commons provided by members of the Labour party. Does he agree that this is a question of the Labour Government being bankrolled by Unite while Unite bankrupts British Airways in Britain?
Let us be clear. The Labour party has been fully transparent about how it is funded by 6 million hard-working trade unionists, all of whom pay taxes, and by many other individuals. One political party relies on a small number of individual donors, and only because of the Freedom of Information Act did it reveal how it was funded. At least those who contribute to the Labour party pay their taxes.
Will my right hon. Friend confirm that it is not in the interests of British Airways or the travelling public for this matter to be turned into a party political football? Does he agree that what would help is if Willie Walsh put the offer that was made previously back on to the table as a basis for both sides getting into serious renegotiations?
My hon. Friend raises a really important point. What is required is not for British Airways, the huge work force or the thousands and thousands of passengers to be used as political footballs in the lead-up to a general election. What is required is for British Airways and the trade union to sit around a table and resolve any differences that still exist. My understanding is that they were close to agreement last week as a consequence of the terms to which my hon. Friend referred, and I am disappointed that they were unable to reach a resolution. I am optimistic still that cooler heads will prevail, but what is important is that we must not allow what is an industrial dispute to be politicised. The question that must be asked is this: why do some people wish to do that?
The reality, though, is that this is a political dispute, because Unite gives Labour money, and it is one of the key stakeholders pushing for the expansion of Heathrow, which is the policy of this Government. Will the Minister therefore condemn Unite in going ahead with this strike? It puts not only passenger services at risk, but Heathrow jobs and local communities.
The history is that a Conservative Government passed legislation on how political parties should be funded. Unite, like other trade unions and individuals, gives money to political parties, and does so in an open and transparent manner. Some individuals decide not to abide by the rules, and only because of a freedom of information request are funding sources revealed. I am disappointed that undertakings are not respected and that deputy leaders are hoodwinked. I am keen to see whether the deputy leader of the Conservative party and its deputy chairman will come to give evidence on Thursday to the Select Committee.
Order. I have operated a very considerable latitude in these brief exchanges, and there have already been several—frankly, too many—references to the issue of party funding. The matter upon which we need exclusively to focus is that of the BA strike. I feel sure that a fine example of that focus will now be provided by Mr. Dennis Skinner.
In any industrial dispute, it takes two sides to cause a row. Will my right hon. Friend draw the distinction between the clean money that is given by the trade union movement to the Labour party, as opposed to a man who refuses to pay tax on £127 million and bankrolls the Tory party?
Order. The hon. Gentleman has placed his point firmly on the record, but the Minister requires only the—[Interruption.] Order. The Minister requires only the briefest of replies.
Why do you only stop me and not these others?
Order. [Interruption.] Order. The House needs to let me address this. I must say in fairness to the hon. Member for Bolsover (Mr. Skinner) that I did not stop him. He made his point, and I have no objection to his doing so. To be fair, I did not interrupt him. He had his say.
You do plenty of interrupting.
Order. I do do some interrupting when it is necessary for me to do so.
Over the years, trade unionists have understandably campaigned for bank holidays and public holidays. Does the Minister not agree that there comes a time when there should be an understanding or convention so that we do not always have disruptive strikes over bank holidays? They destroy the holidays for many working families, people who want to go and see relations, and kids who want to get back from university. I understand that there is also a suggestion that the National Union of Rail, Maritime and Transport Workers is going to go on strike over Easter. It is very unfair—not to employers, but to working families—when other trade unionists strike, so disrupting their lives.
Clearly, any industrial dispute causes a huge inconvenience, but when families have planned holidays or to visit loved ones, and saved money to do so, a strike looming over them and their plans is a huge source of discomfort. That is one reason why I hope BA and the trade union will sit around the table, and why they should not allow emotive language to affect the possibility of reaching a resolution to what is an industrial dispute.
Does the Minister believe that the union leaders behind the BA strike should set an example and forgo some of their £150,000 a year pay packets? Is not that another example of the arch hypocrisy at the very top of the Unite union?
Order. I am sorry—[Interruption.] Order. Leave me to deal with this. I have to say to the hon. Gentleman that his question does not remotely relate to the issue that we are considering, and that is why—[Interruption.] Order. I do not require any comment or signalling from the hon. Gentleman. I am giving a ruling: the hon. Gentleman can listen to it and he can like it or lump it. I intervene—[Interruption.] Order. I require no gesticulation from the hon. Gentleman—[Interruption.] Order. His question was out of order. That is the beginning and the end of the matter.
Clearly, the holidaying public and business need to see this strike called off and an end to the dispute. May I specifically ask the Minister to reinforce to British Airways the point that Aberdeen is a long way from London? It may be a domestic route, but there is no viable alternative for getting business done. Therefore, can he reinforce to BA the need to maintain as many vital services to Aberdeen as possible despite any disruption to services?
I am happy to do just that.
Points of Order
On a point of order, Mr. Speaker. Is the expression “verbal diarrhoea” parliamentary language? I have not heard it used in this House before, and certainly never about yourself or another occupant of the Chair, as it was just now.
I did not hear the offending expression to which the hon. and gallant Gentleman refers. There is a certain amount of gesticulation now from a sedentary position both from him and from the hon. Member for Gainsborough (Mr. Leigh). The written record will tell us all, and I am happy to await it. The hon. Gentleman, who came into the House in 1992, knows—not least from his smile—that what he has just said does not amount to a point of order.
On a point of order, Mr. Speaker. May I seek your guidance? As I understand it, there are 112 Members who are also members of the Unite union. When we are discussing matters that relate directly to the conduct of that trade union and hon. Members who are members of it seek to take part in that discussion, should they declare their membership of that union at the time of their participation in the debate?
The straight answer is that that is not a point of order because the declaration of interests is a matter for individual Members: it is not a matter for the Chair.
On a point of order, Mr. Speaker. On Thursday 11 March, the Secretary of State for Children, Schools and Families visited my constituency without notifying me. He visited a local primary school where he made comments of a highly political nature to the local press. He then went canvassing for his party and, as a school visit is within the subject matter of his portfolio, I am given to understand that that may be in contravention of section 10.9 of the ministerial code. I seek your guidance on this matter.
Certainly, if it was an official visit, the Minister in question should have given notice of the intention to visit the constituency. This is the first I have heard of this particular case. However, at this relatively febrile time, perhaps I may simply reiterate the overriding point that there is a long-established courtesy in this place that when one Member visits another Member’s constituency on public business—as opposed to a private visit—the Member visiting has a duty to notify, suitably far in advance, the Member whose constituency he or she is visiting. I hope that that courtesy will be observed across the House. On the whole it is a respected and valued courtesy and we should uphold it.
On a point of order, Mr. Speaker. I have raised a lot of points of order over the past 20 years, and I do not think that any of them have been in order, but I hope that I will be successful this time. Last Thursday a statement was made in the House of Lords by the Secretary of State for Transport. It was 40 minutes before that statement was made here. I went to the Table Office to get a copy of that statement after the Secretary of State had sat down, but I was told that it would not be available until it had been made in this place. I then went to the House of Lords and got a copy of the statement. Surely that cannot be right, and surely it cannot happen again in future.
It would give me great pleasure if I were able to satisfy the hon. Member for Carlisle (Mr. Martlew), but I fear that I cannot. I entirely understand why he and others might have been frustrated by this; however, it results from the simple fact that the Secretary of State—[Interruption.] Order. The hon. Member for Peterborough (Mr. Jackson) should be quiet when I am ruling on the point of order that has been raised. What happened arises from the fact that the Secretary of State for Transport is a Member of the other place, and although there are arguments about accountability to this place and so on, that is the situation.
Further to that point of order, Mr. Speaker. I do not have any disagreement with that; in fact, I have advocated that the Secretary of State should come to this Chamber. However, statements should be made available to Members of this House after the Secretary of State has sat down, because they are available to noble Lords and the general public.
Those Members are in another House. I entirely understand what the hon. Gentleman is saying, but it is not clear to me that an immediate resolution of the issue is available. However, I will reflect, as I always reflect on what he has to say, and if I have anything further to report, either to him or to the House, he and the House will be the first to learn of it.
On a point of order, Mr. Speaker. Some moments ago you rebuked me—I think unfairly, but I stand by your ruling. However, after my question there was a pause, whereupon I saw the Minister of State—he appeared to prompt you, Mr. Speaker. I am sure that was not the case, because of course you can rebuke me in your own right—
Order. Let me deal with this point of order very clearly and conclusively. [Interruption.] Order. The hon. Gentleman will sit and listen to the response and not gesticulate while I am offering that response. I saw no sign whatsoever, from any Member on the Treasury Bench, and for the hon. Gentleman to suggest that I would be prompted—in this House, from the Chair—by another Member to make a comment or response is quite wrong, and it is also an unacceptable observation on his part. Let me very politely suggest to the hon. Gentleman, whose behaviour was untoward, that it would be sensible and rational of him simply to accept the rebuke, to call it a day and to move on. That is the end of the matter.
On a point of order, Mr. Speaker. Last week I raised a point of order about two unanswered questions to the Department for Work and Pensions. Since your kind intervention on my behalf, one of those two questions has been answered. The other is now five weeks overdue, and it concerns the administration of jobseeker’s allowance up and down the country, an important matter for a great many of our constituents. The question number is 316962, and I repeat: it is five weeks late. Could I please ask you, Sir, for your kind intervention a second time to get the Department to do what it should have originally done within five days?
I am grateful to the hon. Gentleman for his point of order, of which, as he knows, I had no advance notice whatever. He has taken the opportunity to air—and very properly to air—his concern about the excessive tardiness of ministerial replies. I feel sure that his point of order will have been heard by those on the Treasury Bench, and I hope that, as a result, a reply will come to him extremely quickly. I hope that it will not be necessary for him to raise his point of order again. I simply say to Members on the Treasury Bench, including the Deputy Leader of the House, that these matters must be taken seriously by Ministers. Indeed, it looks to me as though the Deputy Leader of the House would like to say something, and I think that the House would welcome that.
Just to be clear, I have said on a number of occasions, as has my right hon. and learned Friend the Leader of the House, that we will take representations from Members and put them to Departments, and I think I said that last Thursday at business questions. I am happy to do that for any Member who has similar issues, and will do so now if the hon. Member for South-West Bedfordshire (Andrew Selous) wants to give me the details.
I am grateful.
On a point of order, Mr. Speaker. The Debt Relief (Developing Countries) Bill, which was tabled as Government business yesterday, is not on the Order Paper at all today. Can you assure me, Mr. Speaker, that it will be tabled again tomorrow? We want Government time in which to debate the remaining stages of the Bill, and to vote on it.
Unfortunately I cannot reassure the hon. Lady, for the simple reason that—although I understand the background to, and concern about, this matter—the tabling of Bills is not a matter for the Chair. I think that she will have to have discussions with people other than me. She indicates from a sedentary position that she has already done so, but I know of her dedication and persistence, and I think that they may be required in this case.
Bill Presented
Council Tax Benefit (Change of Name) Bill
Presentation and First Reading (Standing Order No. 57)
Mr. Paul Burstow, supported by Mr. David Heath, presented a Bill to change the name of Council Tax Benefit to Council Tax Rebate; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 26 March, and to be printed (Bill 88).
Illegally Logged Timber (Prohibition of Retail, Wholesale and Distribution)
Motion for leave to bring in a Bill (Standing Order No. 23)
I beg to move,
That leave be given to bring in a Bill to prohibit the retail, wholesale and distribution in the United Kingdom of timber and wood products that were obtained or produced illegally in their country of origin; and for connected purposes.
The earth’s rain forests are not only one of the greatest wonders of the natural world; they are the green lungs of the planet. They are also the source of the forest resources that help to support the livelihoods of nearly 1 billion of the world’s poorest people. Moreover, the carbon dioxide emissions that arise from the annual burning and destruction of rain forests account for about 17.5 per cent. of global greenhouse gas emissions, more than the whole global aviation and transport sector put together. Without urgent action to halt deforestation, we shall have no chance of beating global climate change. Even if there were no threat from man-made climate change, we could not stand by and see the forests destroyed, because of the vast and unique ecosystems that they support and the livelihoods that depend on them.
Saving the rain forests is something that we can achieve if we can find and summon the necessary political will, and it is certainly something that fires the imagination and support of my constituents. Like all good climate policy, however, urgent action to save the world’s forests is a good thing in itself. Ultimately, we need to continue to find ways in which to create an economic value for tropical forests in particular, so that they are worth more standing than as timber.
There is no magic solution to saving the rain forests, and good progress was made at Copenhagen on support mechanisms for forestry, but one measure that we can take now is to choke off demand for illegal timber here in the UK market. In a speech before the Copenhagen summit, my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), the shadow Foreign Secretary, made plain the strength of the Conservatives’ commitment to halting deforestation, and in particular to addressing illegal logging. He gave the clear commitment that a Conservative Government would make it a criminal offence under UK law to import and possess illegal timber.
Three weeks later, during Prime Minister's Question Time—and during the Copenhagen summit—my right hon. Friend asked the Government to support that proposal, and in January, during the first Energy and Climate Change questions after the summit, I repeated his call for the Government to match our commitment to action. The Government’s own Back Benchers have mounted concerted and considerable efforts and campaigns to secure a measure to criminalise illegal timber activity, yet, despite encouraging rhetoric, the Government themselves have refused to legislate, choosing instead to hide behind the slow and indecisive process taking place in the European Union.
Conservative Members have supported, and remain committed to, a strengthening of the draft EU regulation
“laying down the obligations of operators who place timber and timber products on the market”.
I pay tribute to my colleagues, and indeed members of all political parties, in the European Parliament who have also pressed for a more ambitious regulation. However, it is clear that action at European level will not go far enough.
On 1 March, the EU Council adopted a common position on the regulation, which lays down only the minimum requirement that companies trading in timber and timber products should exercise due diligence to minimise the risk of placing illegally harvested timber and timber products on the internal market. It lacks an explicit overarching prohibition on illegal timber in the EU market. With no explicit prohibition, there is no incentive to exclude illegal timber from entering the market; there is only an incentive to prove that the company concerned has tried to prevent it. Furthermore, the regulation applies only to those companies that place timber and timber products on the market for the first time, rather than all operators involved in the distribution chain. Loopholes are therefore created whereby all downstream companies—the majority of EU traders—are exempt from even the bare minimum of due diligence requirements. A prohibition on illegal timber needs to apply to all companies that make timber available to the market, whatever their position in the supply chain.
Unlike the EU, the USA has shown real leadership on this issue. In 2008, the United States amended the Lacey Act and made it illegal for a person or company to import, export, transport, sell, receive, acquire or purchase illegal timber or illegal timber products. The Lacey Act amendments are widely seen as a historic breakthrough and are already leading to changes in practices among US retailers and importers, and manufacturers and logging companies. There is no reason why that legislative change cannot be replicated here in the UK with the creation of an offence of selling or distributing imported wood illegally harvested in its country of origin, or, indeed, of importing such wood into the UK. The Environment Secretary himself has said
“illegal timber should be just that—illegal”
but to date his Department has stubbornly refused to legislate to that effect with the introduction of simple and specific domestic legislation to make the sale of timber produced illegally an offence in the UK.
The effectiveness of the Lacey Act lies in its simplicity. It defines in law what companies must not handle, but gives companies the freedom to find ways to meet that obligation. My Bill is intended to replicate the Lacey-style approach in the UK. It would apply equally to all operators in the UK supply chain and prohibit illegal timber in the UK market. Agreement at the European level and tough action by individual member states is now no longer a matter of either/or, given that there is not an agreement at Council to go any further than a due diligence system. The clarity of this Bill would complement the due diligence approach in the EU and, given that the UK is the third largest importer of illegal timber in the EU, measures taken in the UK would have more than merely a token status: they would have a significant impact on illegal logging and on the EU market.
This Bill is endorsed by not only environmental groups such as the WWF and the Environmental Investigation Agency, but by the certification bodies the Forest Stewardship Council and the Programme for the Endorsement of Forest Certification schemes, and also by major retailers such as B&Q and Timbmet, the UK’s largest hardwoods importer, which already proves that it is possible to be both kind to the environment and deliver real value and choice to customers. It is also endorsed by the Coalition for Rainforest Nations, an umbrella organisation that accounts for the majority of the world’s rain forest nations. This Bill is also directly consistent with the “legislative principles on forestry” adopted by 120 legislators from the world’s major economies at the GLOBE Copenhagen legislators forum last October.
In conclusion, without urgent action to halt deforestation we do not have a chance of beating man-made climate change. In January, I gave a commitment that if this Government do not act to make the sale of illegal timber a criminal offence, a new Conservative Government will, and, moreover, a Conservative Government will work with other EU states to do the same. However, I hope that after the election, if it falls to the Conservatives to form the Government, we will have the opportunity to bring forward this measure on the back of a new consensus that recognises the part that Members from across the House have played in the campaign. I should like to note that this Bill is co-sponsored by colleagues not only from the shadow Cabinet, but by distinguished Labour Back Benchers and former Labour Ministers. I particularly want to pay tribute to the huge body of work on this issue by the hon. Member for Brent, North (Barry Gardiner)—the Prime Minister’s former special envoy on forestry—and the efforts of the hon. Member for Hendon (Mr. Dismore), but it seems that it will require a new Conservative Government to take this vital step forward on to the statute book and send a message to the rest of Europe that the UK is ready to change and to take the lead on the campaign against illegally harvested timber.
Question put and agreed to.
Ordered,
That Gregory Barker, Mr. William Hague, Greg Clark, Nick Herbert, Mr. Oliver Letwin, Charles Hendry, Barry Gardiner, Alun Michael, Mr. Peter Ainsworth, Bill Wiggin, Mr. Hugo Swire and Mr. Nick Hurd present the Bill.
Gregory Barker accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 7 May, and to be printed (Bill 87).
Opposition Day
[6th Allotted Day]
Equitable Life
[Relevant documents: The Second Report from the Public Administration Select Committee, Session 2008-09, on Justice Delayed: The Ombudsman’s report on Equitable Life, HC 41, and the Government response, HC 953, and the Sixth Report from the Public Administration Select Committee, Session 2008-09, on Justice denied? The Government’s response to the Ombudsman’s report on Equitable Life, HC 219, and the Government response, HC 569.]
I inform the House that I have selected the amendment in the name of the Prime Minister.
I beg to move,
That this House notes that the Ombudsman published her report on Equitable Life in July 2008, that the Government did not make its response until January 2009, and that its rejection of some of her findings was successfully challenged in the High Court; believes that the delays caused by the Government since the publication of the Ombudsman’s report have led to further and unnecessary hardship for Equitable Life’s policyholders and have done further damage to the UK’s savings culture; and calls on the Government to set a clear timetable for implementing the Ombudsman’s recommendations and remedying the injustice suffered by policyholders.
It is hard to believe that nine years after Equitable Life’s policyholders saw the value of their policies slashed, six years after Lord Penrose identified regulatory failures, 18 months after the ombudsman’s damning report on the regulation of Equitable Life and more than a year since the Government’s response, policyholders are still no nearer to knowing what the outcome of their fight for justice will be. They have been given no timetable for payments and no certainty as to how much they will receive. That is the tragedy of Equitable Life for its policyholders, many of whom will not live to see justice done.
The truth is that it did not need to be this way. The Government deliberately chose, at each turning point on the road to justice, to take the longer and more difficult route— there were no short cuts for the Government, because the delays suited them—and from the outset they sought to block the campaign. The pattern of the Government’s behaviour is clear. They wanted to block, frustrate and then delay the fight for justice. They could have chosen a better, quicker route to justice, but they dogmatically chose a different path: one that has delayed justice. Who has paid the price for that? The answer is Equitable’s policyholders, the people who have faced an uncertain future, the people who are struggling to make ends meet because their pension is not as much as they expected, not because of the market, but because of actions taken by the management of Equitable that were not picked up by regulators over the course of a decade. Every Member in this House will know from their postbag the personal cost of this to their constituents, but whatever the outcome for policyholders we know that more than 30,000 will not see justice. We also know that as every day goes by, more and more policyholders see the prospect of justice disappear.
May I cite the case of a constituent of mine, Mr. David McKeever, who has been particularly critical and believes that the Government are doing all they can to delay payment to the victims of the Equitable Life collapse? He told me that, since 2002, 10,000 of the 54,000 annuitants have died. Does my hon. Friend believe that the Government want to wait until all of these people die?
My hon. Friend makes an important point, because there have been huge delays during this process—I shall detail some of those that the Government have engineered—and, as a consequence, many of the policyholders have died and will not see justice delivered.
The fight for justice has united Members from all parts of the House, and I commend the creation of the all-party group on Equitable Life policy holders, which is chaired by my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) and the hon. Member for Leeds, North-East (Mr. Hamilton), a Labour Back Bencher. I pay tribute to the work that they have done within this House to ensure that Equitable remains on its agenda. Tribute must also be paid to the Equitable Members Action Group—EMAG—which has galvanised policyholders into an effective campaigning body. EMAG’s members have not been slow in making their views known to Members of Parliament and their lobbying has been effective in maintaining the profile of this issue for many years.
I am following the hon. Gentleman’s remarks closely. Does he agree that as a gesture of compassion, given that 10,000 pensioners have already died unpaid and waiting, the Government should instruct Sir John Chadwick to make an interim tax-free payment—as advocated by EMAG—equivalent to two years on account to alleviate some of the hardship and stress that pensioners are facing now?
The hon. Lady raises the plight of a very important group of Equitable Life’s policyholders. It was noticeable that in the third interim report that Sir John published last week he highlighted that one group to have suffered a disproportionate impact from the failures at Equitable Life and from the failure of regulation was the so-called trapped annuitants. We are all mindful of the suffering that they face and of the fact that they have faced a loss of income. However, the challenge is this: if we make an interim payment now to the trapped annuitants, how much will that leave for the other policyholders? Surely the best thing to do is to move as quickly as possible to resolve the entire problem and then to consider how we prioritise payments, perhaps, once that settlement has been reached, so that the with-profits annuitants receive a fair deal then.
Stepping back from all this, does the hon. Gentleman agree that we all know what the common-sense answers are? The obfuscation does not disguise them at all and if we are to see justice, the Government need to prove that they are not trying to save money by waiting for more people to die. Instead, they need to accept the clear guidance that we have already seen, which the hon. Gentleman is outlining and with which those on the Liberal Democrat Benches and the majority of the Government’s Back Benchers agree—they should pay out, sort it out and put an end to this utter tragic travesty.
The problem is that this process has dragged on for far too long. All groups of policyholders have lost out as a consequence of the delays and we need to see a clear timetable setting out when payments will be made to them. It is very disappointing not just to Members of the House who have been part of this long fight for justice but to policyholders that the Government seem to be no closer to producing a clear timetable for payments to policyholders.
My hon. Friend spoke about the good work done by the action group. Many of its key executives live in my constituency and I have worked with them for nearly 10 years now. Is he aware of their frustration at the progress made by Sir John Chadwick, who they feel is doing nothing but repeating the Government line?
I understand the frustration that EMAG’s members feel about the process and the time that has been taken. The group announced earlier today or late last night that it had chosen to withdraw from further discussion of Sir John Chadwick’s work. I have some sympathy with its frustration about the process, but it is important that a strong voice on behalf of policyholders is party to the finalisation of Sir John’s report. Speed is of the essence because, as hon. Members have said in a number of interventions, the longer the process is strung out, the fewer the policyholders who will see justice.
The hon. Gentleman rightly makes the point that time is ticking on. Some 2,500 policyholders might die in the coming year and is that not the reason why my hon. Friend the Member for Solihull (Lorely Burt) is right that we need interim payments to be made, which would, after all, represent a small fraction of the overall compensation that we expect to be paid eventually and could be deducted from any final rewards? That would at least give people such as the Rev. and Mrs. Littlewood, in my constituency, some hope of seeing some money in the near future.
Of course, the truth is that we do not know how much compensation will be payable to policyholders. We will not know that until Sir John has completed his final report and his conclusions have been applied to the data supplied by Equitable Life. We need to bear it in mind that we do not yet know what the bill will be.
I am grateful to the hon. Gentleman, who is being very generous, for giving way. I wanted to clarify one point that comes from his answer to an earlier intervention. Is he proposing that the Government drop the John Chadwick process and revert to the process set out by the ombudsman?
I did not make that sort of comment at all. I am not quite sure what the right hon. Gentleman is referring to. I know that over the past few weeks he has adopted a habit of flip-flopping on a range of issues, but I am not going to flip-flop on this. We need to ensure that the process is completed as quickly as possible so that we get the right outcome for policyholders who have had to wait too long for justice. They have had to wait so long for justice because the Government have sought to block, frustrate and delay the progress on that report.
I agree with everything that my hon. Friend has said so far. Does he agree that this debate is rather like watching paint dry but without the paint? According to the action group’s spokesman today, more than 1 million people have lost £4 billion, but it is estimated that only several hundred million pounds, at most, will be recovered. In those circumstances, it is a question not only of those who have died, of those who will continue to live. Under present arrangements, they will not get anything realistic.
As I said earlier, we will have to see what the outcome of Sir John’s work is, and how his recommendations are applied to the information supplied to the Treasury by Equitable Life, before we can work out what the total compensation bill will be.
I thank my hon. Friend very much for giving way. Does he agree that the extent of the problem is even greater than the statistics show? The policyholders who have died and not benefited have left behind widows and dependants who will never benefit from the investments that their husbands and spouses made over many years.
My hon. Friend raises an important point. We need to think carefully about how we deal with the widows, widowers and dependants who have been left behind, and about the compensation scheme that they need.
I am very grateful to my hon. Friend for giving way, as he has been most generous. Following on from the previous point, is it not all the more important that the Minister give the House two assurances today? First, he must assure the House that the full detail of all the actuarial reports and background material that have been made available to Sir John Chadwick will be published. Secondly, he should rule out, clearly and unequivocally, that any compensation will be subject to means-testing. I hope that he is moving in that direction, and that he will make it clear today that there will be no means-testing. For people who have suffered a great deal of delay already, even the thought that compensation might be means-tested would really add insult to injury.
My hon. Friend makes an important point about the transparency of the process. We must make sure that Equitable Life’s policyholders have confidence in that transparency, and that requires a reasonable degree of disclosure about the basis for some of the judgments that have been made. That would help to reassure people that this is not a stitch-up but a proper and rigorous process.
I thank the hon. Gentleman for giving way. I am listening very closely to his explanation of the process and the history of this matter. Many hon. Members have made excellent interventions, but is not the real shame of this the fact that this House has been completely unable to support the independent ombudsman against the Executive and so ensure that the matter was dealt with several years ago, as it should have been?
The hon. Gentleman makes an important point. There is a quite a lot of frustration across the House about how the ombudsman has been treated. The hon. Member for Cannock Chase (Dr. Wright), the Chairman of the Public Administration Committee, has made comments along those lines—
In fact, I think that he is seeking to intervene on me at this moment.
I am very grateful to the hon. Gentleman. As he says, I have been critical of the Government on this issue on behalf of the ombudsman, but I have never understood what the Conservative position is.
The hon. Gentleman should read the motion.
Having read the motion, I am even less clear. When the ombudsman’s report came out, it was widely estimated that it would cost about £4 billion to implement. I have never been clear as to whether the Conservative party was saying that that was a bill that it was prepared to meet. If the hon. Gentleman is not saying that, there will be a suspicion that what we are hearing is some kind of electoral noise.
The hon. Gentleman refers to the bill for compensation, but no one knows how big it will be. That figure will be part of the outcome of the process that the Government launched back in January last year. He will know, from reading the ombudsman’s report, that her recommendations on compensation had two important caveats—that payments to policyholders should reflect relative loss but that the impact of any compensation bill on the public purse should also be borne in mind. That position was accepted by the hon. Member for Twickenham (Dr. Cable) in a debate last year, and I think that the Government also accept it, as do the Opposition.
What we need to do is find out what the compensation bill is. The sooner that that happens, the easier it will be to put a scheme together. However, people need a clear timetable for when they can expect to receive compensation payments for the losses that they suffered as a consequence of maladministration.
I really appreciate the hon. Gentleman giving way again, as he has done so a great many times already. Is he aware that Sir John Chadwick’s third interim report raises a number of real issues, such as the assumption that the regulator would always do the absolute minimum of minimums? That suggests that the report and the final decision will be very heavily disputed, and that that dispute could drag on for a long time. Under those circumstances, does he agree that interim payments become more important, and that there should be a willingness to look beyond the exact words of Sir John Chadwick’s report?
The willingness to look beyond the words of the report will depend, of course, on who is in government at the time and their approach; but whoever that is and whatever their approach, we want resolution of this process. It has been going on for far too long, and the longer the disputes are about Sir John’s report, the longer it will take for compensation to be paid to Equitable’s policyholders. We need to bear that in mind. I shall now return to my speech, because I am conscious that many hon. Members want to take part in the debate.
From the Penrose report onwards, it has been clear that one factor contributing to the problems of Equitable Life was the action of the regulator. In the concluding paragraph of his report, Lord Penrose said:
“Principally the Society was the author of its own misfortunes.”
Normally, Ministers stop their quotation at that point, but Lord Penrose went on to say that
“it may be appropriate to comment that the practices of the Society’s management could not have been sustained over a material part of the 1990s had there been in place an appropriate regulatory structure”.
From that point on, it was clear that the failures of the regulator over a decade played a key role in the crisis at Equitable Life.
The Government could have responded to the Penrose report by accepting that there was regulatory failure and acting upon that failure then. If those findings had been accepted and acted upon, it could have led to justice being delivered to the policyholders many years ago. The crisis at Equitable Life could have been put to bed then. But the Government chose to ignore those findings, and then sought to block any further inquiry by the ombudsman into Equitable Life.
The Government said that the ombudsman could not investigate the Government Actuary’s Department—the Department that played the key role in the day-to-day regulation of Equitable Life—and therefore there could not be a second inquiry into the regulation of Equitable. The right hon. Member for Bolton, West (Ruth Kelly), the then Financial Secretary, stood firm on that until my hon. Friend the Member for Chichester (Mr. Tyrie) identified that the ombudsman’s remit could include the Government Actuary, thus clearing the way for the ombudsman’s second inquiry. That was a pivotal point in the process which led to the opportunity for the second inquiry into Equitable.
With the start of the ombudsman’s work, policyholders might have thought the end was in sight, but they did not take into account the ability of the Government to frustrate the ombudsman’s work. Documents previously thought lost were suddenly found, further complicating the ombudsman’s inquiry. The new documents were not the only barrier that the Government put in the ombudsman’s way. One might have thought that it was enough for the ombudsman to be bombarded with those documents, but then the Treasury decided to shower her with legal arguments on her findings.
When the ombudsman’s report was published, however, its conclusions were clear. There were 10 findings of maladministration in her report, and her recommendations were clear too: because the maladministration had caused injustice, there should be a scheme to make payments to the policyholders. That was where she added the two caveats that I mentioned in my answer to the hon. Member for Cannock Chase. The first was that the compensation paid to policyholders should be based on relative losses rather than the absolute loss. That means that market conditions at the time should be taken into account when calculating the losses suffered by the policyholders—an approach that Sir John Chadwick has adopted in his work. The second caveat was that the impact on the public purse needed to be considered when determining any compensation scheme. That is an important caveat, and it is accepted by all parties. The second recommendation called for the issue of an apology from the Government to policyholders.
We accepted the recommendations immediately. It was the right thing to do. Indeed, we made a commitment to respect the ombudsman’s findings during the cross-party campaign to force a second inquiry. But one voice was absent from the acceptance of the ombudsman’s findings. One voice remained silent: that of the Government. One would have thought that the Treasury would have known exactly what the ombudsman’s findings would be, given the arguments and debates between them. One would have thought that it would be prepared for her findings, prepared to give a response, but there was no immediate response—just silence.
The hon. Gentleman just said that the Government—whichever Government—must take account of the impact on the public purse of compensating Equitable Life’s pensioners. Is that not a simple get-out for the Conservatives, and is there not very little difference between those on the Government Front Bench and the Conservative Front Bench on this? Is there not a moral obligation to pay the pensioners, whatever the cost to the public purse? It will not be in excess of the gross domestic product. But actually, if we collected a little more tax, we might be able to pay them quite easily.
As I said earlier, we need to see what the bill is. There is a big difference between the Conservatives and Labour on this. In the past few years, the Government have sought first to block the second inquiry, then to frustrate the work of the ombudsman and then to delay their response and the payment of compensation to policyholders. The Conservatives have been clear from the outset, when the ombudsman published her report, that we accepted her findings and wanted justice to be done. That is the difference between the Conservatives and Labour, and that is why Labour Back Benchers should be wary of the Government’s amendment to the motion.
When the Government did not give an immediate response to the ombudsman’s report, we saw the third stage of their strategy on Equitable Life—delay. Despite the commitment that the Prime Minister gave to my hon. Friend the Member for Shrewsbury and Atcham that there would be
“a statement before the House rises at Christmas”—[Official Report, 3 December 2008; Vol. 485, c. 38.]
nothing happened until the middle of 2009, nearly six months after the ombudsman’s report was published. That is when we finally got their response, and we must ask why they did not respond more quickly to the report.
There was a time when the Prime Minister would have been very quick to criticise delays in responding to reports. In 1989, he said:
“I must ask why we have had to rely on the ombudsman to confirm the mismanagement, maladministration and incompetence that was widely known about more than one year ago.”—[Official Report, 19 December 1989; Vol. 164, c. 204.]
When he was in opposition, the now Prime Minister made his name by championing the cause of Barlow Clowes’ shareholders and investors. He made that statement calling for action when the then Government had announced their compensation scheme, but here we are, 18 months after the ombudsman reported maladministration in the regulation of Equitable Life, still awaiting the details of a scheme as well as a timetable.
Will the hon. Gentleman give way?
Let me just finish this point.
How times change for the Prime Minister: where he would once have urged quick action, he now seems happy to string things out for as long as possible. When he could have taken a decision, as Chancellor, to sort out Equitable Life, he chose to stand in the way of a solution. When, as Prime Minister, he could have put his foot on the accelerator to get a rapid solution, he found the brake instead. He has let the policyholders of Equitable Life down. I hope that the hon. Member for Coventry, South (Mr. Cunningham) can tell us why he decided to do that.
I am not going to answer that question, but I will say that we have attended a number of debates on Equitable Life, yet the whole thing does not seem to be going forward as I am sure the hon. Gentleman will agree. The important point to make is that many people are utterly frustrated with our rehearsing the arguments over and again but never taking matters forward. I have some sympathy with the comments of the Liberal Democrats that some form of payment should be made as a demonstration of good will.
I think that many people, including some of the hon. Gentleman’s Back-Bench colleagues, share his frustration that no real progress is being made despite policyholders having suffered a cut in their policy values in 2001 and despite Penrose having said in 2004 that regulation was a contributory factor to the problems at Equitable Life. We need to see some progress.
The reality is that the Government simply did not want to lift a finger to help those who had lost out because of the regulation of Equitable Life. They sought to block the second inquiry and they tried to deny that the ombudsman had the power to investigate the Government Actuary. When that tactic failed, they sought to frustrate the ombudsman with a barrage of documents and legal arguments, and when all that failed, there was delay. It is no wonder that we are not making the progress that the hon. Gentleman and many other hon. Members want.
Even when the Government published their response to the ombudsman’s report, their first act, after apologising for failing policyholders, was to reject a number of the ombudsman’s findings of maladministration. Perhaps, they had spent that six months of delay trying to wriggle out of their responsibilities to policyholders and finding loopholes to evade the course for justice. Of course, they were challenged by EMAG, and the High Court partially overturned the Government’s rejection of some of the ombudsman’s findings—another delaying tactic.
The Government’s response triggered a further delay, with the commissioning of Sir John Chadwick to advise on a number of areas such as calculating relative loss and establishing which groups of policyholders suffered disproportionate loss and what proportion of the losses could be apportioned to other bodies. Hon. Members will know that Sir John published his third interim report last week and that he expects to publish his final report in May. That is quite convenient is it not? There will be no formal response from the Government before the general election, no commitments and no guarantees.
Last month, at the meeting of the all-party group on Equitable Life policy holders, the Chief Secretary gave some hints of what he might do if the Government were re-elected, but there was no commitment to a clear timetable for making payments. There was no indication of when policyholders might see justice delivered or when they would know for certain just how much money, if any, they would receive from the Government. There were lots of hints but nothing specific—just like in their amendment today.
I will give way to the Chief Secretary in a moment. Labour Back Benchers, who have been seduced by the warm words of the Government amendment, might like to ask themselves a simple question. After years of standing by and letting policyholders suffer, can people trust the Government to do the right thing by policyholders once the election is over? Perhaps the Chief Secretary can answer that.
I will address that point in my own contribution, if that is okay with the hon. Gentleman. Before he concludes, what policyholders will want to hear from him is a clear statement about whether he supports the John Chadwick process or whether he wants it to be stopped, and the Government of the day to revert to the approach proposed by the ombudsman. It is a very simple question—it is imperative that policyholders know the Opposition’s position.
The risk of stopping the process undertaken by Sir John Chadwick is that we further delay the payment of compensation to policyholders. I think that Members in all parts of the House want justice to be delivered to policyholders as soon as possible. The problem over the past few years is that, every step of the way, the Government have sought to frustrate that process and delay it. People want justice to be seen to be done. It is important that we make sure that we do all that we can so that the process on which Sir John Chadwick has embarked enjoys the confidence of Members in all parts of the House and, in particular, has some support from the policyholders who are most directly affected.
It is no longer practicable to bring the Chadwick procedure to an end—a decision which is what the Government would like us to fall into—but that does not necessarily mean that it was a good idea to disrespect the ombudsman’s position.
We are, as is often said in politics, where we are. The process could have been handled far more efficiently by the Government, and we could be in a better place if the Government had not sought to delay their response to the ombudsman’s report. If they had not waited six months, we might know just how much policyholders could expect to receive and when. The delays are a significant let-down for policyholders. We need to make sure that we move ahead with all due speed, and make clear the timetable so that policyholders know when they are going to get justice.
The hon. Gentleman said that he would support the continuation of the Chadwick efforts. Would he add two further comments? Would he say whether he is committed to doing anything additional that might reflect the situation had the ombudsman’s report been able to continue. Would he also state his own timetable, to give policyholders a clear view of what a Conservative Administration would mean for them?
The hon. Gentleman makes an important point about the timetable. My right hon. Friend the Member for Witney (Mr. Cameron) said last month:
“If we win the election, we’re going to sort out Equitable Life very early on.”
That is a clear commitment to make rapid progress on this issue. The other aspect is that Sir John Chadwick is advising the Government, who are in a position to take on board the concerns that have been expressed about the way in which the Chadwick process will reach a final conclusion. It is important that the Government listen to those concerns.
There is a demand, which has been voiced very clearly in today’s debate, for a clear timetable from the Government. We have to ask ourselves what the Government did last year to establish a clear timetable for payments. Has any work been done by the Government on how they might make payments to policyholders, or to determine how long it might take to make such payments? If it has, the Treasury should be in a position to set out an indicative timetable. If the Chief Secretary tells us that no work has been done along those lines, policyholders will have to wait even longer for certainty as the Government work through the mechanics of compensation.
Such failure to be up front with policyholders about a timetable is a reminder that throughout this process the Government have sought to avoid responsibility and tried to delay resolving the problems for as long as possible. If the Government had responded to the ombudsman’s report more quickly, policyholders would have known by now what the outcome would be.
Our response has been clear. We accepted the ombudsman’s findings at the outset, and we said that if the Government did not put a scheme in place, we would do so. I reiterate the comment of my right hon. Friend the Member for Witney last month, when he said;
“If we win the election, we’re going to sort out Equitable Life very early on.”
That is the right approach. The Government’s actions have delayed justice for far too long. If we form the next Government, Equitable’s policyholders have the commitment that we will sort out the mess that the present Government have left behind.
We need to act quickly not only to help Equitable’s policyholders, but to restore confidence in savings. The long drawn-out process for dealing with Equitable Life has helped to erode such confidence. The message that people hear is that the regulator failed and the Government have sought to wriggle out of their responsibility to Equitable’s policyholders. It is no wonder that five times as many people prefer to save for the long term by putting their money into their house, rather than into investments. We are not going to rebuild the savings culture in the UK and put the economy back on the right track until people are confident that the regulators are doing their job and the safeguards that are in place to protect consumers work when they are needed. The Government’s failure to deal with the aftermath of Equitable Life has undermined confidence in savings.
Equitable Life has been a tragedy for many thousands of policyholders who have been condemned to hardship through a cut in policy values, let down by the regulators and failed by this Government. At every step of the way, rather than doing the right thing by policyholders, the Government and the Prime Minister have tried to evade responsibility. They have tried to deny policyholders the second ombudsman’s inquiry and tried to frustrate that inquiry. Now, 18 months after the ombudsman has reported, policyholders are no closer to knowing when they will receive compensation. A problem that could have been resolved after Lord Penrose had highlighted the regulatory failings in 2004 remains unresolved six years later because the Government failed to act.
The Government’s handling of Equitable Life has caused misery to hundreds of thousands of people, and financial hardship to people who should be enjoying their retirement. The Government should be ashamed of themselves. The Government amendment today is no damascene conversion. It is a cynical attempt to fool Equitable’s policyholders in the weeks running up to the election. They are treating policyholders like fools and it is our responsibility to stand up for them, clear up the mess that the Government will leave behind, and ensure that after their long fight, Equitable’s policyholders receive the justice that they have been denied for so long.
I beg to move an amendment, to leave out from “House” to the end of the question and add:
“recognises the vital role the Ombudsman plays in public life; reaffirms the duty of Parliament to support the office of the Ombudsman; notes that the High Court ruled that the Government’s response to the Ombudsman’s recommendations on Equitable Life, its establishment of an ex gratia payment scheme, and the terms of reference given to Sir John Chadwick were a rational response to the Ombudsman’s report; notes that Sir John expects to produce his final advice in May; welcomes the Government’s commitment to respond with details of a payment scheme within two weeks of receiving this advice; welcomes the Government’s determination to establish a scheme administratively quicker and simpler to deliver than that envisaged by the Ombudsman; further notes that to abandon the Chadwick process so close to completion would add delay and hardship for policyholders; welcomes the Government’s view that, while it cannot prejudge Sir John’s final advice, there is a strong case for policyholders who have passed away to be included in the scheme and that it is neither desirable nor administratively feasible to means-test every individual policyholder; and recognises the impact and significant distress that maladministration and injustice have caused in respect of Equitable Life.”
I, too, welcome the chance to debate Equitable Life today. I am grateful for some—not all—of the remarks that the hon. Member for Fareham (Mr. Hoban) made. In particular, I am grateful for his clarification that it is the position of the Opposition at this stage to support the Chadwick process. Perhaps later contributions will help me to reconcile that with the sentence in the motion that he moved, in which he seeks to set a clear timetable for implementing the ombudsman’s recommendations, rather than acknowledging support for the John Chadwick process. Perhaps we can return to the matter over the course of the afternoon.
I think I have an interest to declare as a former Equitable Life policyholder. How can the Chief Secretary promise to give a response to Chadwick in two weeks, when it took more than 10 times that long to give a response to the ombudsman? Is it because he has 10 times more confidence in the Government to be formed in May?
The ombudsman’s report is pretty substantial. It involved four years of work, and it was right that the Government considered it carefully. I wanted to give a commitment to respond to Sir John Chadwick’s final report within a couple of weeks because of the sentiment that has been expressed in the House, which I have witnessed at close quarters since I became Chief Secretary.
Since the debate last October, I have laid two written ministerial statements to keep hon. Members up to date with the progress of Sir John Chadwick’s work. Last month, Sir John Chadwick and I had the opportunity to discuss the issues, some of which I hope will be aired this afternoon, with the all-party group on Equitable Life Policy Holders. I should like to record my thanks to my hon. Friend the Member for Leeds, North-East (Mr. Hamilton) and the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) for organising such an excellent event.
This afternoon, I want to set out the Government’s approach and put on the record in Hansard my response to some of the questions that have already been flagged up by right hon. and hon. Members.
I thank the Minister for the letter that he sent to each member of the all-party group, which I found quite useful. In that response he states:
“I am currently of the view that it is neither desirable nor administratively feasible to means test every individual policyholder.”
Does that mean that the payment, whenever it comes, will directly relate to the pension that policyholders paid for and expected but did not get, or can we anticipate some other artificial reshuffle of the moneys paid?
I will come to that point directly slightly later in my remarks.
First, I want to repeat the apology to policyholders for the delay. This was an apology first made by my predecessor, now the Secretary of State for Work and Pensions. I would also like to repeat what I put on the record in our first debate in October, which was a word of thanks to the parliamentary ombudsman for her work. It is right and appropriate for the Government to record our gratitude for her work. Her report was substantial, careful and sympathetic, and it contained a weight of analysis that reflects the complexity and scale of the issue. It took the ombudsman four years to put together, but it demonstrated a commitment to get to the heart of a difficult issue.
It is also fair to say that we did not wholly agree with the ombudsman’s conclusions, although on many things we did agree. In nine out of 10 of her findings we agreed wholly or in part with the charge of maladministration, and in five areas we said that we believed that injustice followed. So it was not to provide a compensation for regulatory failure, but to answer an ethical demand for help that the Government proposed an ex gratia scheme be set up.
I am grateful to the Minister for reiterating his apology and it is accepted in the spirit that it is offered. He will know that sadly some policyholders will have passed away, so they will not hear that apology. Will their estates be in receipt of any compensation that is eventually given?
Again, if the hon. Gentleman bears with me I will come to that point directly.
If the Government accept that there has been maladministration, surely the victims of that maladministration are entitled to compensation. Yet instead the Government have gone down the route of a simple ex gratia scheme, with no right to compensation for that maladministration.
There is a principle, long accepted and indeed long debated in the House, that there is not an automatic right or an entitlement to compensation for regulatory failure. That was a characteristic of the compensation scheme that was put in place for failures as far back as Barlow Clowes. None the less there is an ethical demand to have a compensation scheme set up. I have sought to deliver a payment scheme that meets the imperative to act, to deliver it swiftly and to ensure that the right people are included.
I want now to say a word or two about the approach that the Government have pursued and the rationale for it. All hon. Members agree that we need to establish a fair payment scheme as quickly as possible. The ombudsman suggested a scheme that in her view could be up and running and complete its business within two and a half years, but her proposal relied on looking at regulatory returns. That has two consequences. First, it would entail a case-by-case review to understand who lost what and why. That would involve looking at 30 million investment decisions by 1.5 million people over 20 years.
Secondly, and to my mind more problematically, individuals would have to prove that they relied on regulatory returns. As the ombudsman said:
“I find that injustice was sustained by any policyholder who relied on information contained in the Society’s returns for 1990 to 1996”.
The Government simply did not think that such an approach would work. We therefore wanted Sir John Chadwick to look at a more expeditious and less risky way of setting up a payment scheme. Rather than a case-by-case analysis, Sir John has proposed that we look at different classes of policyholder—about 20 in total—and then, for each class, assess relative loss with a comparator on which he has gone out to consultation.
The Government’s amendment states that
“Sir John expects to produce his final advice in May”.
When did the Government discuss with Sir John the likely return date of his report? Surely it would have been a better and more just result had his report been produced well in advance of May, so that the public could have studied it in the run-up to the election, rather than in the confusion after the election.
I am not sure that I accept that there is confusion after an election, but the hon. and learned Gentleman will accept that Sir John’s approach must be faster and simpler than looking at 30 million different investment decisions. In my conversations with Sir John Chadwick, when we discussed his timetable and, indeed, the resources that he needed, I wanted to ensure that he had the time and space to do a thorough job, so that once a scheme was set up it could be completed as rapidly as possible. I do not think that I met Sir John without asking him whether he had all the resources that he needed.
Some right hon. and hon. Members will be much more familiar than I am with compensation schemes that have been set up over the years, whether for Icelandic fishermen—a scheme that dates back two or three decades—or for injuries sustained in the coal mining industry. What characterises many of those schemes is that they take years and years—sometimes decades—to run all the way through to a conclusion, and that sometimes they cost billions of pounds to administer. I wanted to ensure that we had a payment scheme that was up and operating quickly, and got through its business as fast as possible.
I understand all that, but the Government stand charged with cynicism over the whole Equitable Life saga. Surely, however, they could have avoided that charge at least in relation to the date on which Sir John reports. It is no secret that there is likely to be an election in early May, and Sir John’s proposed report date is likely to be after the election. The Government are falling into their own trap: if it can be shown—and the suspicion must exist—that they have deliberately decided to push back Sir John’s report until after the election, they are going to land themselves with further accusations of cynicism.
I understand the hon. and learned Gentleman’s point. I have not approached the question with cynicism. I have approached the exercise, which has been one of the hardest I have had to confront since I have been at the Treasury, with only one concern: how we get a payment scheme up and running quickly, in a way that minimises risk and allows us to complete the exercise as rapidly as possible.
I had two policies with Equitable Life, and I am dismayed at the delay by the slothful ombudsman and the Government’s delay. In seeing the matter through, however, I am resigned to the Chadwick process and, as such, will vote with the Government tonight. I am pleased that the process is likely to include deceased policyholders, but will my right hon. Friend indicate by what date he expects the first payments to be made, and by what date he expects the scheme to have been concluded and all the payments to have been made?
Again, I shall come on to that point in a moment.
I shall make a little more progress before I give way.
On the question of speed.
I shall come on to the question of speed and say a few things that will provoke a few more—
Will the right hon. Gentleman give way on the question of the method adopted?
indicated assent.
I am grateful, because the right hon. Gentleman said that he had decided to adopt a different route from the method proposed by the ombudsman—that is to say, the route proposed by Sir John Chadwick. Given that, and if there is to be no suggestion of cynicism, is it not all the more important that the right hon. Gentleman takes on board the comment that several people made when he was present at the meeting of the all-party group on Equitable Life Policy Holders—namely, that there should be the maximum transparency in disclosing the report’s methodology and the other working documents that were made available to Sir John Chadwick? If there is to be less than full recompense, it is important that people know the basis on which the pay-out—whatever it is—is ultimately arrived at.
Of course. Along with his third interim report, Sir John has published some detailed actuarial studies. In some quarters—EMAG in particular—there is concern that that is not enough detail. If there is a demand among right hon. and hon. Members for more information, I will discuss with Sir John how we should make that available. Obviously, he and I will be legally obliged to protect personal information, but I am sure that there is a way to accommodate the hon. Gentleman’s point.
If we compare the two approaches that the ombudsman and Sir John Chadwick are taking, we understand why Sir John concluded that the approach suggested by the ombudsman was at best unsatisfactory and—more likely—impossible. On that basis, I am unable to agree with the ombudsman’s assessment that her scheme would take only two and a half years to deliver.
I think that Sir John’s approach will be better and faster, but his task is still difficult. He has to analyse about 2 million policies, to look at information dating back two decades on about 20 different types of policy and to review about 200 different financial products. None the less, his approach avoids some of the more difficult aspects of the ombudsman’s proposal and it will lead, I think, to a simpler and administratively quicker scheme.
My right hon. Friend has estimated that the ombudsman’s report would have taken two and a half years to implement. What is his estimate of the time it will take to implement Sir John Chadwick’s report?
Let me come directly to that point. I do not think that we can estimate when the first payments will begin to arrive, or when the process will be completed, until we have Sir John’s final report in May. I say that for a simple reason. Until we are able to estimate, and hear from Sir John about, the total bill and what the right kind of compensation looks like, it will be difficult for us to know or guess—and it would be wrong for us to attempt it—whether the right kind of compensation is cash or a different kind of financial services product. Equally, until we know who Sir John thinks it is appropriate to include in the final design of the scheme, we will not know whether the scheme that we are running will be paying out to hundreds of thousands of people or to millions.
The answers to these two questions have important consequences for how delivery arrangements should be set up. A smaller scheme could probably be delivered quite quickly—through the Department for Work and Pensions, for example. A more complicated scheme that involved, for example, distributing financial services products to Equitable Life policyholders, could require the Government to secure a delivery partner in another financial services company. That is why the answer to my hon. Friend’s question is difficult.
Is not the Minister himself making the argument for an interim scheme, at least as soon as Sir John Chadwick’s report is laid? When it is, at least some groups will be clearly identified as covered.
Surely the Minister also recognises that Sir John’s conclusions are likely to be challenged, as some are extremely contentious. I point again to the assumption that, having opened a can of worms, the regulator would have taken only the lightest-touch action, that the society would respond only in the lightest way and that most of the mess would have been left in place. Many of the assumptions are likely to be challenged through judicial review, but people’s essential payments, at least, should not be delayed for that process.
As I promised, I asked Sir John Chadwick’s advice on interim payments following our October debate. The difficulty is that when a scheme is produced there will be a cap on it—to cap liabilities to the public purse more generally. The difficulty with making interim payments is that it is impossible to estimate, until the final scheme is designed, whether the person has too much, too little or about the right amount. I would not want to embark on an exercise where people were being overpaid, because it would be impossible, and quite wrong, to ask them for money back; that would be seen as reprehensible by all Members of this House. Sir John Chadwick therefore examines in his report a proposal for potentially expediting payments to particular groups once the scheme design is finalised, and suggests two such groups, as the hon. Lady will have seen.
I was pleased that when the Minister came to see the all-party Equitable Life Policy Holders group, he said that the election date would not delay the proceedings that are going on in the background. However, the all-party group also heard from some of the victims, who asked why no work was being done in parallel to clean up the data, as that would speed up delivery once the decision was made on the criteria for who was going to be eligible. Could he give us a little more information about why that work is not being done? That work would ensure that, having stopped one set of proceedings, we do not then come up with another lengthy procedure that needs to be gone through before anyone gets a penny.
That is an excellent point, and I will try to ensure that we respond to it over the course of the debate. Some preparatory work is ongoing—for example, discussions with the DWP about possible delivery options. I have also asked the Treasury to ensure that any clearing of the ground that is required for a procurement process is undertaken.
Has the DWP talked to the Financial Services Compensation Scheme, which has enormous experience of data cleansing and rapid processing of large volumes of claims, as with the Icelandic banks?
Let me seek to provide an answer over the course of the debate.
I want to turn to two important points that hon. Members raised earlier. The first, which also came up in the all-party group, is whether payments should be made to the estates of policyholders who have passed away. As promised, we have reflected on this. Based on the evidence that I have seen to date, I feel strongly that they should be included in any scheme. I cannot see any rationale for treating their estates differently from those of any other policyholders. I think that is a view that the House will share. We cannot pronounce on this categorically until we see the final design of the scheme, but I thought it important for the House to know the direction of travel.
Secondly, several hon. Members have asked about means-testing. My assessment so far is that means-testing would be neither administratively feasible nor desirable. It would be an unwelcome complication that cannot, at this time, be seen in a positive light. Again, a final conclusion has to await Sir John’s final report, but I do not think that means-testing should be our direction of travel.
I am grateful to the Minister for having gone as far as he has. However, given that the Public Accounts Committee said that compensation was not a matter of charity but a matter of justice to rectify a wrong, would it not be right for him to rule out means-testing at this stage instead of giving qualifications about awaiting Sir John’s report?
I am being a realist about it. Having contemplated what kind of administrative procedure would have to be put in place to go through means-testing, I cannot see how in the world we would do it.
The third question, to return to the point raised by the hon. Member for Richmond Park (Susan Kramer), was about urgent payments. In the final scheme design, we should prioritise payments to those who have been particularly severely impacted by what has happened. In his latest report, Sir John Chadwick provisionally identified two groups: trapped annuitants and late joiners.
That is all that I wanted to say by way of response to the hon. Member for Fareham.
Before I conclude, I will give way one last time.
The Minister has nicely said, as far as I can tell, that he is not interested in means-testing. However, does he envisage a payment that is directly related to that which the policyholders anticipated but did not get, even if it is a proportion of the amount, or does he have some other artificial way of changing it?
The answer is yes—Sir John Chadwick has tried to compare the relative losses of different classes of policyholders.
Let me conclude by saying that all Members of this House will have constituents who have been affected by the injustice of Equitable Life, which now stretches back almost two decades. We are committed to acting urgently and fairly, even in the current fiscal climate. That approach is reflected in the Government’s proposed amendment to the motion.
Before I finish, I will give way one final time.
Forgive me, because I may have missed it, but can my right hon. Friend say when he expects payments to start and when he expects them to be finished?
As I said a moment ago, I cannot this afternoon set out when payments will start, or when they will finish, but I can commit to ensuring that the Government’s response to the John Chadwick report, which will be published within two weeks of the report being handed in, will include a delivery timetable, which will answer that question.
We have drafted the proposed amendment in a way that reflects the debt that we owe to the ombudsman and accepts the obligations of the Government, but that none the less reaffirms our commitment to an approach that we think will remedy this injustice as rapidly as possible.
rose—
Order. Before I call the hon. Member for Twickenham (Dr. Cable), I had better advise the House that the 15-minute limit on Back-Bench speeches is no longer appropriate in the light of the numbers of hon. Members seeking to catch my eye, so I give notice that it will be reduced to nine minutes.
I will try to make your task a little easier, Mr. Deputy Speaker. I had the privilege of introducing a debate on this subject on 21 October 2009, when I set out in considerable detail the Liberal Democrats’ views on how the problem should be dealt with, and I do not need to rehearse those arguments and the history again. There is a fair degree of consensus, which was summed up by early-day motion 1423 in the last Session. The motion was signed by 351 Members, from all parties, which I believe is the largest support for any such motion. On my quick arithmetic, that means that 70 per cent. of Members who are not on the Government payroll supported it. A considerable amount of work has been done since by the all-party group to reinforce that.
I shall first discuss the practical issues raised by the exchanges between the hon. Member for Fareham (Mr. Hoban) and the Chief Secretary. Since October, as the Chadwick process has ground on—we have now had the third interim report—and in the past few days, there has been a breakdown in the relationship with the policyholders group, which has consistently defended the interests of policyholders throughout the process. Initially, it worked in a constructive and positive way with Sir John Chadwick despite having reservations about how the process was being conducted, but that relationship has now broken down. I do not believe that the Minister addressed that problem.
I have two suggestions for the Minister. First, nobody is suggesting that we now go back and throw the work of the Chadwick commission into the waste-paper basket and start all over again. To be fair, as the hon. Member for Fareham said, we are where we are and we have to operate from the current position. The legitimate concern of policyholders is the lack of independence in the process and the role of the auditors, which I believe are appointed and paid for by the Treasury. If there were greater confidence that that process was genuinely independent, much of the lost confidence could be restored. Will the Minister consider how independent auditors who have the confidence of the policyholders can be introduced to the process, perhaps alongside those already designated by the Treasury, to bring the policyholders group back on board in the process?
We can argue whether it would have been better to have gone down the tribunal route than the ombudsman report route, but the policyholders group vehemently denies that matters are as complicated as the Minister made out. We can go over the history, but—given where we are—the key need is to establish the independence and integrity of the process. Confidence has broken down, and we need to find a simple way in which that can be remedied.
The other issue that has arisen—and it is an immediate and practical one—is that of interim payments. All three of my colleagues who have intervened—my hon. Friends the Members for Cheltenham (Martin Horwood), for Richmond Park (Susan Kramer) and for Solihull (Lorely Burt)—made that point, and I heard the Minister’s reply. I can understand the theoretical problem—that the interim payments might collectively be greater than a cap that might be imposed—but it is a rather academic objection. We are, after all, talking about a narrow category of people whom we all agree should be compensated—the trapped annuitants and the late entrants. Nobody is now disputing that. It also concerns a modest part of the compensation to which they will ultimately be entitled. So it is not clear why this relatively modest but rapid intervention of making interim payments should hit the financial ceiling, unless the Government envisage a ceiling that is ridiculously and unreasonably low. I hope that the Government will take a fresh look at the interim payment issue, because the objection advanced is not very credible.
If those two steps could be taken—a greater degree of independence in the auditing process, which is very complex and which no hon. Member is equipped to deal with technically, to restore the confidence of the policyholders, and the introduction of an interim payments scheme—much of the current suspicion about what is happening would be defused, and we would be back on track. That is the substantive point that I wish to make, but I shall briefly summarise the two overriding concerns that Members have expressed throughout the debate.
The first is the cumulative delay. We can argue about whether a particular step was reasonable or not, but it is the cumulative impact of a decade of delay that has caused so much anxiety and anger. The second is the integrity of the ombudsman process and our responsibility as a House for upholding the ombudsman’s authority.
On the first issue, it is worth—without going into the long and sordid history—recalling the milestones in this decade-long process. We had the four years to Penrose, who indeed criticised the delays in establishing his report. Then there were the three years to the ombudsman’s report and then the 18-month delay in the publication of the ombudsman’s report through the Maxwellisation stage, followed by the Government’s response, which was not satisfactory. Then came the ombudsman’s response to the Government, then the various challenges, including judicial review and the Public Administration Committee’s report. Then we had the six-month delay until the Chadwick process got under way, and the next series of steps that we are now encountering. Any one of those delays could be excused and explained, but the cumulative effect of the Treasury foot-dragging is great ill will and is the reason why Members on both sides of the House keep returning to this issue. It is also why the 1 million people affected by this issue are so frustrated.
The second overriding issue is the authority of the ombudsman. It is worth recalling that 351 of us said, when we signed the early-day motion, that this House
“reaffirms the duty of Parliament to support the office of the Ombudsman; believes the Government should accept the recommendations of the Ombudsman on compensating policyholders who have suffered loss”.
We can argue about whether the ombudsman’s process was the best, but its principles were clear, and one of them was that compensation was right, and that it should take place according to the principle of remedies: we are not talking about arbitrary compensation with figures plucked from the sky, but about a carefully thought out procedure. The ombudsman also made the specific recommendation of an independent tribunal-like process. We know that the Government have rejected that, but the key point was independence, and that is what is lacking from the present proceedings. We then had talk about “rapid”, “transparent” and “simple” solutions to compensation, but again, we have not had “rapid”, we probably have not had “transparent”, and we certainly have not had “simple”. The question is: how do we get past that stage?
I will leave the Minister with the thought that introducing an independent element into the actuarial process at this stage may restore some of the confidence that has been lost. If the Government are now willing to look at interim payments through the Chadwick process, that would go some way—probably a limited way, but some way at least—to stemming the anger and frustration that a lot of policyholders feel.
We are here again to debate Equitable Life because we all have constituents who continue to suffer, as hon. Members have said throughout the debate. However, I am a little dismayed and disturbed that the issue is becoming a party political football, although I suppose that that is inevitable with a general election fast approaching. I remind all right hon. and hon. Members present for the debate—instigated, I accept, by the Opposition—that we are here today for one reason: to ensure that those who have suffered as a result of the Equitable Life scandal are properly compensated and that they stop suffering. For the 15 policyholders a day who are dying— 15 policyholders who will never see justice—we know that their estates are compensated, as I believe the Chief Secretary indicated, and as the Government amendment certainly indicates.
It is a real shame that the issue has become so partisan. I thank the hon. Member for Fareham (Mr. Hoban) very much for his kind remarks, but he said that the Government were trying to block, frustrate and delay the process. That might have been the case in the early days, and we all regret that. I certainly made it clear in my Adjournment debate last June that I regretted it, and my hon. Friend the Member for Cannock Chase (Dr. Wright), the Chairman of the Public Administration Committee, has done so too. However, we now have a process that perhaps many of us would not have wanted, but which is none the less approaching its conclusion. I am glad that the hon. Gentleman made it clear that the Opposition would see that process through, should they win the general election.
We had an Opposition day debate on 21 October last year, to which the hon. Member for Twickenham (Dr. Cable) referred. My debate, which was an hour and a half long in Westminster Hall, was held on 24 June last year. The all-party group on justice for Equitable Life policyholders held a meeting on 24 February —less than a month ago—which Sir John Chadwick was able to attend, thanks to a little pressure from me and the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), co-chairman with me of the all-party group. Chadwick answered some questions—some Members got some answers—but I share the view expressed by the hon. Member for Twickenham that the lack of independence of which EMAG has been so critical was quite evident in Sir John’s remarks on 24 February. It was a shame indeed—we have already made our view clear—that the room was so inconvenient that not all Members who wanted to ask questions were able to do so.
As hon. Members know, I have been very critical, but the aim of my criticism—I hope that this is the aim of everybody’s criticism of the Government—is to improve the chances that those who have had justice denied as a result of what happened at Equitable Life will get that justice. That is what we are here to do, and we must not forget that.
I am grateful to the hon. Gentleman for giving way, but after 10 years of obfuscation and delay, which have caused mass injustice to so many people, is it not right that, as we approach a general election, people should be able to look at Labour’s record on this issue and come to the same conclusion that we do, which is that if people want justice, they need to vote for a change? We have had 10 years of a failure of justice, and the hon. Gentleman has been honourable in pointing that out, but it is also worth pointing out that it is his party—the Government—who have carried out that injustice.
We now have a chance to put things right and do what we have not done so far. I think that that is finally happening on this side of the House, and that is why I want to see the Chadwick process completed. The question about timing that my hon. Friend the Member for Wolverhampton, South-West (Rob Marris)—who has now left the Chamber—put to the Chief Secretary is critical.
I thank the hon. Member for Fareham for his kind remarks about the work that the hon. Member for Shrewsbury and Atcham and I have been doing in the all-party group. I also commend the Chief Secretary on his openness. I think all Members will agree that he tried hard when he attended a meeting of the group. He listened to what we had to say, but it was clear that he was also attempting to make up for the years in which nothing had been done—although we should bear in mind that it took the ombudsman four years to complete her report.
I strongly support what the amendment says about compensation. It states that
“there is a strong case for policyholders who have passed away to be included in the scheme”.
That point also arose when the Chief Secretary addressed the all-party group. However, one word is missing from the amendment. It ends with the words
“and recognises the impact and significant distress that maladministration and injustice have caused in respect of Equitable Life”.
The missing word is “policyholders”. We seem to be forgetting that individuals are involved, and we should not do so.
I thank EMAG because although—as the hon. Member for Twickenham reminded us—it has pulled away from the process following Sir John Chadwick’s third interim report, it has constantly reminded every single Member that this is an issue for his or her constituents and is crucial to many of them. As I said during my Adjournment debate, EMAG told the Public Administration Committee that
“the majority of Equitable Life's policyholders had modest sized pensions and were not ‘fat cats' who ‘risked their money to get above average returns'. In particular, the average investment of the half million individual policyholders amounted to £45,000 each, which in today's money would buy a pension paying around £75 per week”.
That is why it is so important that EMAG continues to support, lobby, push and, ultimately, try to obtain justice.
The hon. Gentleman has praises EMAG. Does he share its concern about the way in which the Chadwick process is evolving? That is underlined by its submissive language, which refers to
“what factors the Government may wish to take into account when considering which policyholders have experienced disproportionate impact”.
That does not sound as directive as we would wish. We may end up with a process that will not lead to the quick resolution that we all seek.
I hope that the hon. Gentleman is wrong, and I hope that EMAG is wrong. I was about to say that I did not approve of EMAG’s recent action in pulling away from the Chadwick process. I think that many Members share my belief that, however much we regret the fact that the Treasury introduced the process, the fact is that we have the process now and we must see it through to its conclusion. I believe that that is the only way in which we can secure the compensation that policyholders need and deserve as quickly as is humanly possible from this moment onwards, whatever has happened in the past.
I asked the Chief Secretary why there was not a parallel process of cleaning up the data, but I did not receive an answer. The hon. Gentleman praises the Chief Secretary for trying to put things right. Cleaning up the data would be a simple way of trying to put things right. A Labour Member—the hon. Member for Northampton, North (Ms Keeble)—asked whether the Treasury was liaising with the Department for Work and Pensions, but again there was no answer. There are more things that could be done. Let us be critical about this, in a cross-party way.
I entirely agree. I am not suggesting for a moment that everything that the Chief Secretary has done is perfect. The cleaning up of data was raised at the all-party group meeting, but we have not received a definitive answer, and we need one. I hope that we will be given that answer in the winding-up speech, because it is important that the data is cleaned up so that the people who need and deserve compensation receive it when we finally have a scheme. The issue today, however, is what resolution we secure in the House, what debate we engage in and what decisions we make will best achieve our common aim, which is to ensure that compensation is paid as rapidly as is humanly possible from this day forward.
We have not yet had an answer on when the scheme will begin and end. The Chief Secretary made it clear that he could not answer that question until he had seen Sir John’s final report, which is a great shame.
The hon. Gentleman says that we do not know when the Chief Secretary will be able to give an answer, but the Government’s amendment contains a commitment that they will
“respond with details of a payment scheme within two weeks of receiving this advice”,
and we are due to receive that advice at the end of May, are we not, whatever the failings of the process?
I apologise if the hon. Gentleman has misunderstood the point I was trying to make. I am very pleased that the Government are committed to giving a response within two weeks, but my point is that we do not yet know when the payments will begin—indeed, we will not know that until they begin—or when they will be completed.
I recently met Chris Wiscarson, the new chief executive of Equitable Life, and I know that other Members have also met him. I thank him for his engagement with Parliament and hon. Members in order to ensure that, as leader of Equitable Life, he is focused on the policyholders and on trying to reduce his overheads and what he calls the bottom line—the expenses involved in running the organisation—to the absolute minimum, so that the maximum amount is available for policyholders. I commend him for that.
Turning to the Chadwick process, Sir John will give his final advice to the Government in May. He is looking into the details of 2 million policies, so he has to get this right. As we are dealing with about 2 million policies, the data must be clean. The Government said they will respond to Chadwick within two weeks of receiving his report, but a literal interpretation of the ombudsman’s findings would mean excluding at the very least trapped annuitants, which—
Order. I must interrupt the hon. Gentleman’s speech now. He was, perhaps, a little too generous in allowing interventions.
I shall endeavour not to use up my nine minutes, but let us see how we go.
First, may I declare an interest? I am a current Equitable Life policyholder, and also a former one, in that I held other policies that I managed to extract from that bottomless pit and move to other pension providers. Like so many other Members, I also represent a large number of constituents who have been grievously affected by this saga. Although I speak with a degree of disappointment on my own behalf, I speak with a great deal of anger on behalf of my constituents, many of whom have very little apart from their defunct Equitable Life pensions and other small pension entitlements from either the state or company pension schemes. They are on their uppers. They are really struggling to make ends meet, and they are having to do so at a time when interest rates are historically low and therefore such other savings that they have are producing a very low return. That is the backdrop against which my constituents are having to watch the Government continually delay this process.
This entire episode is not only bad in respect of the facts of what has happened, but it stands as a metaphor for the way in which this Government behave. We have a Government who appear not only to be prepared wholly to ignore or sideline the decisions of the ombudsman, an office set up by Parliament to protect the interests of the citizens of this country. They are also prepared to suggest in their amendment that the Government recognise—although they pretend that it is the House that recognises this—
“the vital role the Ombudsman plays in public life”
and reaffirm
“the duty of Parliament to support the office of the Ombudsman”.
If that were actually true—if the Government actually believed what they had written in the motion—we would not be where we are now, as this matter would have been resolved, if not in exactly the same way that the ombudsman suggested, at least through something a little more similar to it and many years ago.
Not only are we left waiting for Sir John Chadwick’s final review to report—I appreciate that a number of interim reports have been published—but, as I said to the Chief Secretary to the Treasury, the Government have cynically adjusted the timetable so that the review will be published or will apparently at least come to be considered by the Government after the likely date of the general election. Nobody is in any doubt as to the likely date of the election, nor have they been for many months. I have no doubt that the Treasury, at both official and political level, has so adjusted Sir John’s timetable and so constrained his remit to enable the Government to shuffle off into opposition after 6 May with a view to washing their hands completely of this terrible saga.
Meanwhile, my constituents and those of many other hon. Members will have to deal with the human problem: the loss of their pension rights and their investments, which they so carefully placed into Equitable Life. These people are not spendthrifts; they have deliberately attempted to save for their old age. These are the people this Government have let down. One again places this issue in the context of the first decision made by the then Chancellor of the Exchequer when he arrived in No. 11 Downing street in 1997 to adjust—I put that neutrally—the whole matter of advance corporation tax. That, together with what has happened in this case, illustrates this Government’s view of the private pensions sector.
When one looks at our motion, which I wholly support, one sees a collection of facts, at the end of which one sees a conclusion based on those true facts. The conclusion is that an “injustice” has been done and it needs “remedying”. The Government seem to be reluctant to do anything practical about it. The anger, frustration and the slow process that the public suffer as a consequence of the Government’s cynical attempt to delay things until after the election is not just something that comes out as a rhetorical flourish during the debate—it is real. I suggest that those on the Treasury Bench should acquaint themselves with what the public actually feel. Given the all-party concern about this issue, I suspect that plenty of these poor Labour Members of Parliament who represent the governing party but who have the honour to represent people whose Equitable Life investments have been completely scythed are having to describe to their constituents what the Government are doing in words in which they have little faith.
The Chief Secretary, in his usual way, spoke quietly and with apparent understanding of the plight of policyholders, but if one analyses what he said during the 20 or 30 minutes of his speech, one finds that he said nothing. A proper deconstruction of his speech will lead one to the conclusion that he was almost playing a game with the public and policyholders; it was as if somebody was reaching for a prize only to see it pulled a little further away each time they got within six inches or so of it. Likewise, we see the outcome of the Chadwick review being pushed and pushed further away from not only resolution, but from this Government’s responsibility. I suggest to the House that the Government’s conduct is not just cynical, but irresponsible, and deliberately so.
There is no question but that much of what the Government say in their amendment is deeply questionable. I have already referred to the cynical way in which they have attempted to support the ombudsman, despite the fact that their actions demonstrate an entirely different motive. However, the amendment goes on to state that the House
“notes that Sir John expects to produce his final advice in May”
and
“welcomes the Government’s commitment to respond with details of a payment scheme within two weeks of receiving this advice”.
My suspicion—I have some knowledge of the workings of government—is that Sir John’s recommendations will be known to the Government in advance of the general election. They will be preparing their response—probably now, in advance of Sir John’s recommendations being produced—but they will stick it in a cupboard and wait to see what the result of the election will be. If they win, they will further delay the Government response and produce a timetable for implementation that will take us still further away from May. If they lose, they will be able to say, “Well, we are no longer the Government. It is up to the Conservative Government.” It will be up to my hon. Friend the Member for Tatton (Mr. Osborne) to sort this out, and the Government will swing quietly off into the distance. The Government kindly state that they note that
“to abandon the Chadwick process so close to completion would add delay and hardship for policyholders”.
We know that that is impractical. There is no way an incoming Conservative Government could in fairness or in practical terms do away with the Chadwick process.
This whole saga demonstrates to me a lack of good faith, a lack of planning and a lack of appreciation of the plight of innocent policyholders. It is utterly shaming.
This Government have done many, many things of which I am immensely proud. They have done nothing of which I am more ashamed than their handling of, and prevarication over, Equitable Life. The problem with Equitable Life was always to balance speed with fairness and to ensure that the scope of the compensation was correct. The hon. Member for Fareham (Mr. Hoban), who spoke for the Opposition, was correct to criticise the Government’s failure adequately to grasp the urgency with which the Government ought to have responded to the ombudsman’s report in July 2008.
The Government amendment states that the
“establishment of an ex gratia payment scheme, and the terms of reference given to Sir John Chadwick were a rational response to the Ombudsman’s report”.
How weak. They were a “rational” response. They were not appropriate, or sympathetic, or moral, but they were rational—if the end that one wished to achieve was to minimise the cost and delay the payments. Rationality is always important and necessary, but it is scarcely ever sufficient in matters of public policy.
In 2002, I believe, I spoke in the first debate on Equitable Life and urged swift action then. In 2008, when the ombudsman presented her report, the Government were wrong to consider that it was reasonable to delay a further six months before responding and then to challenge her findings in the court. The Government acted as though they believed that the clock started when the ombudsman produced her report in July 2008. In fact, for policyholders the clock had started in 2001. It has now been running for nine years and during that time many policyholders—some 40,000, according to Treasury advice—have now died. The Government have suggested in their amendment that
“there is a strong case for policyholders who have passed away to be included”.
It is of course right that the estates of the deceased should benefit, but that is of little comfort to those who each month draw closer to the end of their lives without the financial means for which they had prudently planned and saved.
The hon. Member for Fareham has indicated that he accepts that we are, in his words, “where we are”. He also made it clear that an incoming Conservative Government would accept and continue with the Sir John Chadwick process. Insofar as that is the case, I find the Opposition motion as it stands to be somewhat confused, because it refers to implementing “the Ombudsman’s recommendations”.
Earlier, I asked the hon. Member for Fareham to clarify the matter by saying whether his party intended to do anything in addition to Chadwick, perhaps by implementing elements of the ombudsman’s recommendations on top of Chadwick. I also asked what the timetable might be. The answer that I received was that it would be Chadwick, and that implementation would occur early in the life of the next Government. That strikes me as the common position of both the Government and the official Opposition. That being the case, I would simply press for additional steps to be taken, and in particular for interim payments to be made to surviving policyholders as soon as possible after we have all seen the Chadwick report.
Many of my constituents in Shrewsbury who are Equitable Life policyholders have come to see me in my surgery. Their sheer frustration and misery as a result of what has happened led me, together with the hon. Members for Leeds, North-East (Mr. Hamilton) and for Richmond Park (Susan Kramer), to set up the all-party group for justice for Equitable Life policyholders. I am very grateful that various people have referred to the work that we have tried to do on a cross-party basis to bring this issue to the forefront of parliamentary debate. I am particularly pleased that we are having this debate today, and that the Conservative party should have used one of its Opposition days to enable us to discuss these issues still further.
To begin with, I was extremely concerned that Sir John Chadwick would not come to see us and interact with us. I was appalled that a person in his position could disregard Parliament and parliamentarians and behave in such a way, but we finally managed to get him and the Chief Secretary to the Treasury to speak to the all-party group on 24 February.
I have never seen a room more crowded than on that day. It was standing room only. It was so encouraging to see how many Members of Parliament, from all political parties, tried to attend the meeting on behalf of their constituents. They wanted to put questions directly to the Minister and Sir John Chadwick, and I am very pleased that we have been able to distribute to every Member of Parliament copies of the questions posed and of the replies that we received from the Minister.
What concerned me profoundly is that, when the Minister left the meeting, we then interviewed the current chief executive of Equitable Life, Mr. Chris Wiscarson. He said, in front of all of us, that he had written repeatedly to the Minister asking to interact with him and his Department. He wanted various forms of communication to take place between Equitable Life and the Minister’s Department, but he told all of the MPs assembled that not only had he received no reply, he had received no acknowledgement whatsoever.
The Minister stood at that Dispatch Box this afternoon and said repeatedly how important the process is, and how passionately he believes in trying to resolve it in a speedy and timely manner. However, if those are his genuine views, he needs to sit down with Mr. Wiscarson very soon: he must afford the current chief executive of Equitable Life the opportunity of a meeting to put forward his concerns and suggestions.
Does my hon. Friend agree that that only adds to the anger, frustration and increasing cynicism of my constituents and many others around the country?
Yes, absolutely. Far more transparency is needed throughout the process.
We saw what happened when the Government decided to bail out the individuals, councils and other institutions who had invested in an Icelandic bank—Icesave. Huge amounts of effort went into supporting those individuals and organisations. I simply do not understand why that level of urgency and commitment has not been forthcoming on this issue.
I pay tribute to Mr. Paul Braithwaite of EMAG. He is a gentleman with whom I have interacted repeatedly on this issue and I pay tribute to his hard work and dedication in pursuing this matter. He has sent me a few points which I should like to raise in the debate. EMAG issued a press release, explaining why
“we are walking away in disgust, after active engagement for months acting in good faith, from ‘The Chadwick process’.”
I would highlight the phrase,
“walking away in disgust”.
The word “disgust” is critical.
“Careful evaluation of his convoluted 109-page third interim report…demonstrates he’s not listening to any representations other than those of the Treasury—his paymasters—and he’s merely re-trying the case which was done independently and well by the parliamentary ombudsman. It’s as if the judicial review hadn’t happened.”
There Mr. Braithwaite makes a critical point. We have had the adjudication of the parliamentary ombudsman. As various hon. Members have stated, we have repeatedly rehearsed the arguments as to what should be done, and yet in my opinion the Chadwick process is a classic way of kicking things into the long grass.
Mr. Nick Bellord, an EMAG director, says:
“In summary, ‘The Chadwick Process’ has been a shameful charade to which EMAG is surprised that a retired Appeal Court Judge (albeit hand picked) has lent his name. The regulators allowed a Ponzi fraud to develop over nine years. The Treasury fathered and nursed a fraudulent reassurance treaty when the crisis arose in 1999 and ever since has not failed to stoop to every kind of cover-up, delay and low trick to escape the full truth being revealed—it is not just the failure to pay any compensation after a further decade—but the hiding of disgraceful behaviour by a major Office of State.”
Everyone who has spoken in this debate has spoken about the need to continue with the Chadwick process. The Minister challenged my hon. Friend the Member for Fareham (Mr. Hoban) as to what the Conservative party would do, should we enter office after the next election. Interestingly, it would appear that there is no alternative now, given where we are, but to continue with the Chadwick process. But so frustrated and demoralised are members of EMAG—the key words that I want to use are “frustrated” and “demoralised”—that Mr. Braithwaite says in his note to me:
“The right thing to do is to disregard the remit given to Sir John, although keeping the database developed by the Treasury’s actuaries, establish the independent tribunal as recommended by the parliamentary ombudsman and commit to the compensation process that the parliamentary ombudsman proposed. That’s an urgent priority for the next Parliament.”
So I am getting from Mr. Braithwaite a slightly different understanding of the situation, because I believe that he and other members of EMAG have lost so much confidence in the Chadwick process that even at this stage they may be prepared to throw it out and go back to the parliamentary ombudsman’s findings.
I am very heartened that my hon. Friend the Member for Fareham has stated that the Leader of the Opposition is determined to sort this matter out very quickly should we be elected to office. I suggest to my colleagues on the Front Bench that, should the Conservative party be elected to office in May, an urgent meeting be set up with EMAG at the earliest opportunity so that we can work with it constructively to sort the process out once and for all.
May I, too, declare a modest interest in Equitable Life, having made some additional voluntary contributions under the parliamentary scheme at the beginning of my time in the House? No doubt, I have made a small loss, but that is not why I am speaking today. I am speaking on behalf of the millions of people who have lost substantial sums and will be seriously affected. People in our position who have made small losses can bear them, but others cannot. We must all be aware that the difference between having a basic state pension and having a basic state pension plus £75 a week is equivalent to a real difference in living standards.
I am a member of the Select Committee on Public Administration, which is chaired so brilliantly by my hon. Friend the Member for Cannock Chase (Dr. Wright). We unanimously supported the ombudsman’s report and we wanted urgent action to be taken to respond to the needs of Equitable Life members who lost out. In retrospect, my reaction to these matters would have been to do the same as with Northern Rock. I would have taken Equitable Life into public ownership and underwritten all its pensions. That solution was not considered by either side of the House to be in the spirit of the times, but I am afraid that both sides have been wrong on this matter. We have subsequently reinvented the idea of public ownership in the financial sector. That is a good thing and I would like to see more of it in future.
There are wider lessons to be learned from this matter, particularly about regulation. The original apostles of deregulation were, of course, the Conservatives, but, regrettably, the Labour party followed in their footsteps. I disagreed with that approach from the beginning. Some of my left-leaning hon. Friends with more traditional socialist views were put on the Select Committee on Deregulation when they first came to the House and the first thing that they suggested was renaming it as the Select Committee on Re-regulation. I thought that a splendid idea, although it was said in jest.
The Equitable Life case concerns a failure of regulation. At first, it was regulated by the old Board of Trade and the Department of Trade and Industry, but its regulation was then passed to the Treasury and then to the Financial Services Authority. At each stage, the degree of regulation got weaker. I am amazed at the Treasury’s actions because it should have realised that if it did not regulate properly, it might, in time, have to pay the bill. That was one of the Treasury’s many failures of the past two or three decades of which I have been a severe critic. Those failures were passed on to the FSA, and who can blame it? It was told, “The mood and culture now is for light-touch regulation and deregulation,” so it did not push very hard. Of course, we have seen to our cost what has happened elsewhere in the financial sector. From the beginning, the bail-out costs might have totalled £5 billion. That does not seem like very much now, given what has happened with the banks, but at that time, £5 billion was, no doubt, a figure to make some Treasury officials and Ministers wrinkle their brows.
The root cause of the problem lay with regulation and the culture of deregulation. In some areas of regulation there is an inherent contradiction in that regulatory bodies have to regulate on one hand to make sure that lots of profits are made and on the other to make sure that they protect policyholders and consumers. The rail regulator has responsibility for making sure that the railways perform very well financially, but also for ensuring that they are safe. That presents a contradiction, and that is why I believe that certain areas of our economy ought to be in public ownership and accountable to this House, which can take all the factors into consideration and make sure that the public interest is properly represented. We would have to accept the cost to the public purse of doing that.
I am sad to say that, on this, there seems to be little difference between the Front Benchers on both sides of the House. I am sure that if the Conservatives had been in government at the relevant time, they would behaved very similarly to the Labour Government. Indeed, they might have delayed and prevaricated even more. The hon. Member for Fareham (Mr. Hoban) gave the game away when he said that we had to take account of the cost to the public purse. The Government’s failure to regulate led to the loss of billions of pounds of ordinary people’s money, and there was a moral obligation on the Government to put that right. It is interesting to note that the Public Accounts Committee said that it was not just about cost, but that a question of justice was involved. It was absolutely right about that.
The nonsense about market forces was another factor in the equation. The idea was that we were buying something from a market. If someone put all their money into an organisation that was meant to ensure that they could live a decent life in their old age, and the Government said that it was regulated, that person would expect the relevant moneys to be paid to them when they retired. If that money was lost, someone could not just say, “Well, I’ll change my provider and go to another organisation.” During the financial crisis a few years ago there was a surge of people trying to get their cash into national savings because they are underwritten by the Government. They wanted to get their money away from the private sector.
In future, we must look to ensuring greater public involvement in the financial sector in general terms, not just in respect of such savings policies. We must look towards having more certain public provision for pensions. I said in yesterday’s Work and Pensions questions that there will come a time when the Government will have to establish a compulsory SERPS—state earnings-related pension scheme—for all because occupational pension schemes are failing, declining and disappearing, and private savings companies are often of very poor value, with a third of the value of one’s savings going on administration, advertising and whatever.
That, of course, is why it is so important to get the Equitable Life payments out as soon as possible—to rebuild confidence in the belief that the moral question has at least been faced up to.
Indeed. I thank my hon. Friend for his helpful intervention.
There is a lesson for us all to learn. In future, there will have to be much more state involvement in provision for old age and much more certainty about what we do with our money. A state scheme would not only provide more security for our savings but would be much more efficient, with guaranteed returns at the end of the day. It would not be stock market related, or dependent on stock markets or interest rates, but would offer defined benefits for all who saved with it, which would in time be the majority of the population.
As I have said many times in recent weeks and months, the way to solve the cost problems facing the Government not only in relation to Equitable Life but in general is to start collecting the vast amounts of tax that the Treasury fails to collect. The gap between what the Government could receive and what they actually receive in tax is said to be at least £100 billion a year—this week, I saw the figure of £175 billion—which is a staggering amount of money. If we collected just a quarter of that money, we would solve all our problems very quickly. Most of that money would be paid by wealthy companies and wealthy people, not by ordinary people, and it would be enormously beneficial to the economy and to Government resources. Now that I have made my point about regulation and have used up my time, I shall sit down, but I am pleased to have had this opportunity to speak.
I think that we should record the sadness of the occasion in debates such as this. This issue is sad and tragic for all the Equitable Life policyholders who did the right thing throughout their lives. They were prudent and they saved, and they are exactly the sort of people whom we should support. We should not lose sight of the fact that they are all individual victims of what has happened. There is, understandably, a danger that we will simply debate the process and what the ombudsman or Chadwick should do and how the matter should be handled. We all have a large number of constituents, many of whom we have got to know personally as a consequence of the long time that this has taken, who have suffered considerably, and continue to suffer.
We should never forget the damage done to confidence in savings and the pensions system as a whole. Ten years ago, Britain’s pension system was considered a model for others to follow. The low state pension was supplemented by good employer and personal pensions, and the majority of workers seemed to be heading for a reasonable retirement. Equity markets were booming, interest and annuity rates were high, and actuaries and investment advisers believed that good pensions were easily affordable. Over the past decade, however, our pension system has disintegrated, workers’ retirement plans have not turned out as expected, and many people face the prospect of an impoverished old age if they do not keep working. Private sector employers have abandoned final salary schemes, and confidence has generally been shattered.
These debates are sad, because in the past decade we have witnessed the meltdown of our once-thriving retirement savings culture. We need to get back to a culture of savings and thrift. Of course, people who invested in Equitable Life could in no way be accused of being anything other than prudent. After all, Equitable Life was the world’s oldest mutual, established way back in 1762. Many people who invested in it were lawyers and professionals who had every confidence in its being a reliable, redoubtable institution, so it has been a really sad day for them.
This debate may, in some ways, turn on narrow points. On the process, the Government have said that they will respond within two weeks of the final Chadwick report. Pretty well everyone in the House is cynical about the fact that the final report will not be published until May this year. The Government have signally failed to say—and I did not think that the Chief Secretary’s explanation was very convincing—when payments will commence, and when they will be completed. It is not difficult for them to give an indication of when they hope that payments will begin and over what period they hope they will be made. Thousands of policyholders have died, and given that the average age is 79, payments have to be made quickly to the rest of them. I would therefore wish to support those who argue for interim payments. After all, EMAG estimates that of 54,000 Equitable with-profits annuitants in 2002—the year in which pensions were cut—10,000 have died. The surviving 44,000 have an average age of 79, so it is not unreasonable to call for an interim payment equivalent to two years’ pension to be paid to all of them. The sum, which EMAG estimates to be £214 million, could be deducted from the final settlement, so all those annuitants would receive at least some money.
Delay has characterised this whole sorry saga. As my right hon. Friend the Leader of the Opposition has said, the Government have repeatedly put this off. In a sick way, I think that they are waiting for people to die. If that is the Government’s policy, it is unbelievably depressing. The whole history is one of delay. As long ago as July 2008, the parliamentary ombudsman published a report on Equitable Life, which recommended that payments should be made to policyholders to reflect the relative loss resulting from maladministration, subject to the state of the public finances. The Government promised to respond on several dates in 2008, but did not reply until January 2009. For example, on 3 December 2008, the Prime Minister told the House:
“There will be a statement before the House rises at Christmas.”—[Official Report, 3 December 2008; Vol. 485, c. 38.]
No statement was made.
It is now a year since the Government made a statement to the House on 15 January 2009 responding to the ombudsman’s report. The then Chief Secretary to the Treasury, the right hon. Member for Pontefract and Castleford (Yvette Cooper), said that compensation would be paid to policyholders who had suffered “disproportionately”, but she did not set out a timetable or define what that word meant. That was in January 2009, but Equitable Life policyholders are no further forward, although she said:
“We agree that there has been maladministration in particular areas, and…that Government action is merited…I wish to apologise to policyholders on behalf of the public bodies and successive Governments responsible for the regulation of Equitable Life between 1990 and 2001 for the maladministration we believe has taken place…we also want to focus on those who have been hardest hit.” —[Official Report, 15 January 2009; Vol. 486, c. 377-78.]
Those who have been hardest hit are still waiting for something to happen. They keep being told that a new form of process is going to take place. If I were an Equitable Life policyholder, I would be concerned if the Government were returned at the election, because, although they might respond within two weeks of receiving the Chadwick report, they would find yet further means to delay payment.
Let us not forget that the Public Administration Committee labelled the Government’s approach
“constitutionally dubious and procedurally improper”.
It said that it was “morally unacceptable” that the ombudsman had to take the highly unusual step of publishing a special report as a result of her disappointment with Government inaction. The ombudsman concluded in that report:
“The Government’s response to my report was deeply disappointing. It provided insufficient support for the rejection of my findings of maladministration and injustice.”
The High Court upheld the view that the Government unlawfully rejected the ombudsman’s finding of regulatory failure.
This has been a saga not just of delay by the Government, but of prevarication, incurring the criticism and wrath of every single regulatory body, from the ombudsman to the Public Administration Committee and the courts. Here we are, all this time later, and those who have suffered as a consequence of the collapse of Equitable Life are no closer to knowing when they are going to receive any money.
I shall conclude with two points. First, I hope that a commitment can be made to provide interim payments and, secondly, I hope that the contribution of my hon. Friend the Member for Fareham (Mr. Hoban) and, I am sure, that of my hon. Friend the Member for Hammersmith and Fulham (Mr. Hands), who will conclude the debate on behalf of the Opposition, will reassure policyholders that an incoming Conservative Government will get to grips with this immediately and ensure that we make payments to those who have suffered as a result of the collapse of Equitable Life as speedily as possible. There is a Latin tag, sine mora, which means without delay, and I hope that, we can see, as soon as there is a Conservative Government—
Order. The hon. Gentleman’s time is up.
I am waiting to hear the Latin tag, and I shall try to get hold of my hon. Friend the Member for Banbury (Tony Baldry) to find out exactly what it was.
The sorry tale of what happened in Equitable Life is well documented and, depressingly, was accurately catalogued by the hon. Member for Twickenham (Dr. Cable). It has also been picked over by the House on countless occasions, and I think that we all feel a sense of deep disappointment and frustration that we are gathered here yet again to press for the Government to honour their duties to Equitable Life policyholders.
It is with great sadness that in preparing this speech I realised that I first spoke in this place about the debacle in November 2002 after the publication of the Penrose report. I said:
“I fear that we shall need to debate the matter again in the months and years ahead”.—[Official Report, 27 November 2002; Vol. 395, c. 73WH.]
I did not anticipate that there would be an eight-year delay. The Government’s caution, delay and penny-pinching approach to doing the right thing by Equitable Life policyholders stands in stark contrast to the way in which they have showered taxpayers’ cash on other groups in the past decade. To be honest, I have a nasty feeling that they consider middle-class folk who have diligently saved to provide a comfortable retirement as “them”, not “us”. If the gross negligence that has been established at Equitable Life had taken place at the Easington colliery welfare fund, I cannot help but believe that something would already have been done by the Government.
As a result, it is with unfortunate cynicism that I greet the news that Sir John Chadwick is now committed to giving his final report on Equitable Life in May, with the Government offering to respond to him within two weeks of that. Given that we all know that that is likely to be after a general election, I fear that the Government are once again playing politics with the lives of many of my constituents by extending the hope of a resolution but ducking the responsibility of its enactment.
Policyholders may be forgiven for not having much faith in this latest round bearing fruit, either. After all, the ombudsman published her report on Equitable Life back in July 2008, but it was not until January the following year that the Government finally responded, after which their partial rejection of her findings was overturned by the High Court. Many now suspect that Sir John’s review is little more than a Treasury stitch-up that seeks to negate the four years of work by the ombudsman. Paul Braithwaite, the general secretary of EMAG, has been mentioned a number of times during the debate. As he says:
“The Treasury is attempting to retry the case, using actuarial sophistry to distort the figures. . . The logical conclusion of this sham process is that the Government will deny all obligation to compensate policyholders for the damage done by serial maladministration and only paltry discretionary payments will be made on the basis of charity, not justice”.
I know from the desperate letters that I get from constituents that policyholders would be grateful even for the smallest of concessions, such as a time scale for delivery following Sir John’s final report, even if that means that they would not receive compensation payments until, say, the end of 2011. Indeed, given the sad history of this shambles, my constituents and those across the nation who have been affected by Equitable Life’s downfall have learned to be realistic. People no longer have any expectation that they will get a share of the proposed £4 billion windfall, yet so long as indecision remains regarding the formula by which to calculate compensation payments, the Government have decided that the safest option is inaction. In the current state of limbo, people are worrying themselves sick.
Let us never forget that although pensions may be a highly technical matter—I accept that the report is very detailed and needs to be properly analysed—the problems surrounding Equitable Life and other pension schemes are human. As my hon. Friend the Member for Banbury (Tony Baldry) rightly pointed out, policyholders are dying as we wait for this sorry saga to be tied up. Surely it is not beyond the wit of man for us to be putting together an interim payment for those hapless folk.
I have spoken before in the House about some of the policyholders in my constituency who are affected by these terrible delays, but I believe it is worth touching on a few again, simply to reiterate to Ministers the suffering that the hesitation is causing. Mr. MacDermott of Motcomb street in Belgravia wrote to me before, saying:
“I cannot claim poverty but I can safely say that at 77, I might well have been happily retired rather than continuing working so as to provide for my wife and two university-aged children.”
He is now 80 and sees no sign of change or resolution of the issue.
Mrs. Valerie Walsh of Bedfordbury in Covent Garden said to me:
“If I had received my full pension pot I would not now be struggling just above the poverty line.”
Because she earns a relatively modest amount, it is impossible for her to claim any of the housing help and benefits that are available to many other pensioners in the district where she lives.
Most of the people who have lost out do not have the option of returning to the workplace to make their way in life. They are often in their 60s, 70s or even 80s and the Equitable Life money was the most important part of what should have been a relatively relaxed and quiet retirement. They have been denied that. They have been denied justice, and with ever more delays, many will be denied ever seeing any of the money.
Other Members have spoken about the wider issues, which I shall deal with in conclusion. We would be foolish to underestimate the ongoing damage to confidence in the pensions industry that is being caused by the failure to draw a line under the Equitable Life affair. The breaking down of conventional middle-class job security has made ever more important the concept of trust in personal and company pension schemes.
Until its collapse, Equitable Life was widely regarded as the jewel in the crown of the retirement providers, but the failure of the regulator to intervene in the affair showed that existing rules to protect the consumer from unreasonable risks were not enforced. We can go through the catalogue of events. The FSA should have taken its role more seriously when it was the regulator and engendered a culture of collective responsibility that would have ensured universal public confidence.
I am worried for the future. We all know that it will be the next generation of taxpayers who pay for the borrowing that is taking place now. We are spending £4 for every £3 that we raise in tax this year, purely for consumption. There is no investment involved in that. Future generations will have to pay the bill for our national profligacy. That makes it even more crucial that in the decades ahead the youngsters of today—the middle-aged folk of tomorrow, who will become pensioners themselves—have enough faith in the financial system to put their hard-earned cash into a savings pot for the future. Unfortunately, it is an indictment of the Government that those who had already taken responsibility for their own destinies by investing in Equitable Life have been treated with such contempt.
The Equitable Life debacle will go down as one of the great shames of this Parliament. It appears that we could not even support our own independent ombudsman against the Executive. My hackles were particularly raised by the Government amendment, which would make the resolution state that the House
“recognises the vital role the Ombudsman plays in public life; reaffirms the duty of Parliament to support the office of the Ombudsman”.
That is exactly what Parliament has not done in this case.
The Chief Secretary was all reasonableness today, but the Government had to be dragged through the courts kicking and screaming before there was any action to do justice to Equitable Life policyholders. No one could have been in any doubt after the ombudsman’s report that the Government had a case to answer regarding the actions or inaction of the regulators, leading to the downfall of the company. The matter has now dragged on for almost 10 years—longer than I have been a Member of the House.
I do not intend to rake over the coals of what went wrong. Many others have mentioned that. What is needed now is urgent action to right a wrong. Like all Members, I have among my constituents a significant number of Equitable Life policyholders, most now elderly, who have suffered significantly. Sadly, some have died waiting for justice.
The problem goes much deeper than that, and it is a problem for the whole House. It has not gone unnoticed outside this place how policyholders have been treated, compared with the speed of action on the banks. As others have said, that has undermined the case for savings and private pension provision, which are important for the future and which will come back to haunt successive Governments unless something is done quickly to deal with the situation. I suspect it is too late to bring back confidence.
When the Government said that they were going to apologise, there was real hope that action would finally be taken to end the saga. It was therefore a considerable let-down, to put it mildly, when all that was announced was yet another investigation under Sir John Chadwick into how a compensation scheme would work. I recall that, in January last year, in a Westminster hall debate following that statement, I said:
“The more cynical among us might consider that statement as putting a decision beyond the next general election.”—[Official Report, 27 January 2009; Vol. 487, c. 36WH.]
It turns out that I was not being cynical at all. That is exactly what will happen. The final Chadwick report will not be available until May and, according to the Minister, an announcement on a scheme will be made 14 days thereafter. I find it strange that, after all this time and all the reports, there is to be a sudden burst of action within 14 days to produce a fully formed scheme to deal with the problems.
Even now, pertinent questions remain that are not being answered. We need to know when payments are to be made. Will there be another period of inaction or will they be made quickly after the Government decide what they are doing? Will they be made by the end of May, by the end of June, or by some other date? Perhaps the Exchequer Secretary can clarify that when she sums up. It was interesting that the Chief Secretary was unwilling or unable to give any indication of the time scale of payment. That is what people want to know. They have waited years, and many of them are suffering badly. They want to know what they will get, and when, in order to draw a line under the whole sad saga. It is not at all clear, at least to me, who will receive compensation. It may be only those who have suffered disproportionately. I note that, in its briefing for this debate, EMAG says:
“Ex-gratia payments, it is proposed by the Treasury’s remit, will be further limited to only those who suffered ‘disproportionate impact’—now defined as With Profit Annuitants and those late-joiners who put in new money after 1998.”
Will the Exchequer Secretary please clarify exactly what is meant by “disproportionate”?
Means-testing has been mentioned several times during the debate, but again we still do not have a clear picture of what is proposed. Both Sir John and the Minister have said that it would not be possible to look at the individual means of every claimant, but a means test is not being specifically ruled out. We need some clarity about how that will be done. If the Minister is to respond within 14 days, the Government must have some idea what they are going to do, whether or not they have received the final report. Moreover, we are not sure which losses are directly due to maladministration, which seems to be another anchor on the scheme.
Is it not doubly hard on Equitable Life to have seen the banks bailed out, the bonuses and the treatment and the public money that the state-owned banks have had compared with the treatment of Equitable Life?
It will stick in the throat of many Equitable Life policyholders to see how the Government have reacted to that situation compared with their own.
The scheme that is being talked about could keep the lawyers in business for years if not decades, because so many parts of it are unclear. For all that the Minister said about the Chadwick process being quicker, it does not seem to have proved to be quicker than what the ombudsman proposed all those years ago. Had the Government accepted their responsibilities at that time, a scheme could have been up and running, policyholders could have been compensated and this injustice could have been righted long ago.
The endless arguments will continue. I appeal to the Minister, even at this late stage, to give justice to policyholders quickly and to produce a scheme that is even-handed and simple—one that ensures that my ageing constituents do not have an interminable wait to see whether they are to be compensated and that they get some compensation before it is far too late for them.
This may be the last opportunity that I have to speak in this Parliament and it is an honour to follow so many thoughtful contributions today. I particularly want to put on record that, soon after I became a Member of Parliament in May 2005, one of the first groups to make representations to me was those of my constituents who had already taken up this matter with my predecessor—I think particularly of Mr. Roy England, Professor Bonn and others. Five years on, I want to do what a Member of Parliament should do, which is make representations on their behalf in the House tonight.
The joint chairmen of the all-party group made thoughtful speeches. The hon. Member for Leeds, North-East (Mr. Hamilton), who is not in his place, was absolutely right that the main focus of this debate should be the plight of those who still require justice and compensation, but he was wrong so easily to dismiss the point made by my hon. Friend the Member for Fareham (Mr. Hoban) that, by their inaction, the Government have undermined confidence in the savings system, as my hon. Friend the Member for Cities of London and Westminster (Mr. Field) also said. Thirteen short years ago, we had a state pension system that was working, which could be topped up by occupational pensions, excellent personal pension schemes and a savings culture that had been encouraged by personal equity plans, and the majority had certainty about their retirement age. Equity markets were starting to boom and the economic recovery had been in place in for three years. People had some certainty and were able to plan. The environment now is very different. Retirement plans are not living up to optimistic forecasts. The public and private sectors have abandoned final salary schemes, and we are moving to defined-contribution schemes, the returns from which are infinitely less certain, with higher charges and increasingly expensive annuity propositions. As my hon. and learned Friend the Member for Harborough (Mr. Garnier) said, the Government’s initial actions to alter advance corporation tax and the dividend tax credit have also played their part.
The Government have failed on any number of occasions to take the opportunity to sort out this injustice and so have engendered a lack of confidence in the system. “By your actions shall you be known” is a well known phrase, and the Government will be known by their actions in this place, even their response to the Penrose inquiry. Penrose did say that the company is the author of its own misfortunes, but pointed out that there was a general failure of regulators and the Government Actuary’s Department. It was seriously disingenuous of the Government at that time to try to hide behind that first remark, yet not acknowledge the mistrust and opprobrium that Penrose attached to the Government actuaries and the regulatory process. It was also seriously disingenuous of the Government at that stage to say that Penrose had not recommended compensation, because that was specifically excluded from inquiry’s remit.
Understandably, therefore, one or two colleagues tonight have commented with some cynicism on the contribution of the Chief Secretary, who was unable to give any details of the payment scheme. Yet I note that the Government, in their amendment to the motion, appear to be moving slightly from their initial position that they would react within two weeks to the Chadwick report. Now they say that they will
“respond with details of a payment scheme within two weeks of receiving this advice”.
If they could respond within two weeks, surely they must already know some of the dates. They must know now when they would start paying out. Either this is a failure of the wording of the amendment, or the Government have changed their position; if so, the Chief Secretary should be able to give us that information now.
The comments made in the House last year by the then Chief Secretary were extraordinarily crushing. It is understandable that my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) should have made the point about the frustration felt when the Chief Secretary said that there has been maladministration in several areas. It had been pointed out by Penrose eight years before that there was a general failure of the regulatory system, and the ombudsman’s report made that point as well. My hon. Friend the Member for Banbury (Tony Baldry) referred to the hardest hit, but surely all the policyholders have been hard hit. There has been speculation that, in today’s money, the pension might be £75 a week, but there is an opportunity cost, because a number of people were locked into the scheme in 2000 when they were told that penalty fees would be charged for withdrawal. For the Chadwick process not to look at losses incurred after 2001, when it was already known that a penalty charge would be incurred if the money was withdrawn, seems disingenuous of the Government. A number of hon. Members question whether Chadwick is a transparent and independent process. To limit compensation on those grounds seems spurious. That the scheme was already falling apart had to be known. The whole issue of penalty payments has to be taken into account.
The Government conceded the case for compensation some time ago. They conceded that it was not an ex gratia payment, but a payment for wrongs done—a payment for justice. By continually putting off the payment and not being able to tell us any details in this House tonight, even though their amendment says that they will produce them within two weeks, the Government are, at the very best, being disingenuous, so it is no surprise that there is considerable cynicism about their good intent on this matter.
I hope that when the Exchequer Secretary responds she is able to restore our confidence in that good intent by giving us details of the payment scheme; telling us why the Prime Minister said in 2008 that there would be a statement before Christmas, when it came only in January 2009; and telling us in detail that the Chadwick process is independent and transparent. If she cannot do those things, there will be real concern not only from Members, but from the people whom we seek to represent tonight—the people who require that compensation for the injustice done to them—about whether this Government really do intend to publish those details.
I shall try to avoid the more party political comments made by some contributors to the debate, partly because the Equitable Life issue is one of simple justice, not of ideology or of party, and partly because many of the mistakes relating to Equitable Life and the regulatory regime that governed it predate this Government, which underlines the time that many policyholders have been waiting for a resolution to the issue. Many Members have referred to the 10 years since the Court of Appeal judgment and since Equitable closed its doors to new business, but six years before that Equitable Life started cutting the size of final bonuses, and by what should have been the turning point, the parliamentary ombudsman’s report in 2008, the crisis had been brewing for about 14 years. Policyholders have therefore had to wait an enormous length of time.
I appreciate that some matters have been in gestation for some time and, therefore, should not be subject to party politics, but does the hon. Gentleman not understand the concern, which many of us feel, including the hon. Member for Angus (Mr. Weir) who spoke for the Scottish nationalists, that the treatment of Equitable policyholders has been so very different from the treatment of shareholders in banks, bank account holders and a range of others? As I said in my contribution, a whole lot of cash has been showered on such individuals, in stark contrast to the treatment of Equitable Life policyholders.
The hon. Gentleman makes a fair point, and it is incumbent on whichever Government happen to be in office when such wrongs are exposed to respond fairly and reasonably, and that responsibility lies fairly and squarely with this Government.
The ombudsman’s report was absolutely damning. It said that the Government and regulators were guilty of regulatory failure and recommended that an independent tribunal quickly and simply calculate compensation. The Government slowly accepted, and apologised for, maladministration, but they initially rejected many of the ombudsman’s findings, failed to offer immediate compensation and failed to set up the fully independent process that the ombudsman had asked for. That refusal was not only an injustice to Equitable Life policyholders, but a potential threat to the whole credibility of the ombudsman system. On many aspects of casework, many hon. Members might share my frustration that the ombudsman’s reports are often not properly acted on, and I am afraid that the response of the Government at the time and, to be honest, since then has helped to undermine the credibility of the ombudsman system. That is potentially serious, particularly in respect of the Chadwick process, which we now have instead, because there is now a real question about whether it will resolve the issues at all.
I am disturbed by the wording in the press release from Sir John Chadwick’s office on 4 March. It accompanied his third and final interim report and noted his provisional views as to what factors the Government
“may wish to take into account when considering which policyholders have experienced disproportionate impact.”
In other words, the report will be only a polite suggestion to the Government about what they might do, and it will leave them scope for what might be regarded as a wider and remaining injustice, which those representing policyholders might easily reject. If we have only those tentative suggestions, we face the awful prospect, 16 or 17 years after the first warning signs, of still no resolution for about 40,000 Equitable Life pensioners, whose average age as the hon. Member for Banbury (Tony Baldry) said, is 79. Certainly, many of them are elderly and many have sadly died while waiting for compensation, and, as I said in an intervention, it is estimated that as many as 2,500 could die in the next 12 months without ever having received compensation.
Policyholders were told to expect a final report from Sir John Chadwick in spring 2010. Well, the daffodils are out and my personal benchmark of spring, the Cheltenham gold cup, is imminent—the Cheltenham festival has started—but there is still no report. The real shame, as many Members have pointed out, is that in the end it will be a post-election report, and that adds to fears that the report will be controversial; that it might, as my hon. Friend the Member for Richmond Park (Susan Kramer) pointed out, use over-pessimistic assumptions and that, in the end, it will be highly contentious.
My hon. Friend is making dire predictions, but one feature of this case is that the pessimists have invariably been right.
Indeed, that is absolutely true, but let us hope that it is not true on this final—or what we hope will be this final—occasion.
The human impact of this fiasco has been absolutely terrible. Mr. and Mrs. Littlewood of my constituency wrote to me in 2008, describing that human impact. They said:
“Personally our pension payments have been sabotaged to the effect that we are now always, even more, conscious of the cost of daily expenses and costs… The annual payments we put into E. L. to achieve a modest pension out of our earnings have been ravaged.”
That is the effect. Like many others, their prospects of a happy and modestly prosperous retirement, reasonably free from financial worries, which is what most of would hope for at least, have been wrecked.
It is pretty difficult for many Equitable Life policyholders to bear that situation, for a number of reasons. First, as the hon. Member for Cities of London and Westminster (Mr. Field) pointed out, there have been bail-outs for those in cases such as Barlow Clowes, when the current Prime Minister championed the rights of investors. It therefore seems ironic that, on his watch, we have not been able to expedite similar compensation for Equitable Life policyholders. Secondly, in the Government’s view the bail-out culture apparently extends to wealthy bankers who have brought this country to the brink of economic collapse, but not to hard-working pensioners who have done nothing wrong. They simply and prudently tried to save for their retirement, but they have ended up in a much worse situation. Finally, because there is a clear risk that the Chadwick report may not lead to an agreed resolution, the prospect of an actual payment that helps people in their daily lives and with their current financial situation will recede still further into the middle distance.
I urge the Government to accept a couple of requests. First, they should urgently look at the prospect of an interim compensation scheme. Government Front Benchers gave a pretty feeble answer earlier, and the idea that the Government are not willing to consider such a scheme because there might be a small overpayment to some Equitable Life policyholders, many of whom have been waiting 10 years for any payment at all in compensation for their losses, will sound rather hollow to all policyholders, but that is a risk that the Government ought to be prepared to take. Indeed, there may not even be a real risk, because, as other Members have pointed out, EMAG’s estimate of the cost of that compensation scheme is £200 million—a fraction of the compensation that is likely to be paid in the final analysis.
Secondly, I urge the Government even at this late stage, to clarify urgently the remit given to Sir John Chadwick and express the hope that his recommendations will propose compensation in the spirit of the ombudsman’s report—in a way that rebuilds a level of confidence among policyholders and offers some prospect of justice at the end of this whole long-drawn-out and sorry business.
This has been a good debate, and I am delighted that we Conservatives tabled the motion for discussion today. It shows the importance that we attach to the issue of Equitable Life; after all, this is likely to be the last debate in Opposition time on Treasury matters before the election.
We could have called for a debate on the record-breaking deficit, on the longest recession of any G20 country, on the Government’s flip-flopping on ruling out rises in VAT or on the slide of the pound, but instead we chose to debate Equitable Life. The whole Equitable Life saga serves as an allegory for the Government Treasury team’s whole approach to the economy—saying that there are hard choices to make and then not making them. They are dithering rather than taking action; they promise that things will be sorted out, but put off paying the money until another day.
I should mention the many scores of my own constituents—51 in the past 18 months alone—who have written to me about their own difficulties as Equitable Life policyholders. I have read harrowing letters detailing lives blighted and retirement dreams dashed.
This is not the first time that we have debated Equitable Life in the House. I have gone through the various pledges made by the Government in the last debate on the issue, in October. To be fair, the Chief Secretary to the Treasury took a huge number of interventions during that debate, as he did this time. Frankly, however, he deserved his battering—so weak was his case and so unable or unwilling was he to answer any questions. I want to quote his response during the last debate to an intervention from my right hon. Friend the Member for Wokingham (Mr. Redwood), who asked whether the Government would go into this election
“having to say to Equitable Life policyholders, ‘We have not agreed any compensation for you’”.
He was told, weakly, by the Chief Secretary:
“I hope that we will not be in that position.”—[Official Report, 21 October 2009; Vol. 497, c. 934.]
But that is exactly his position as we go into this election.
Will the hon. Gentleman spell out for the House whether he is going to accept the Sir John Chadwick process or whether—as his motion suggests—he wants to replace the Chadwick process with the ombudsman process?
I thank the Chief Secretary for the intervention, but that is just not good enough. I will outline the position, but I thought that he was intervening to tell us what he told us in October he would be able to do—go into the general election campaign with a clear pledge on amounts and a timetable. I am afraid that he has failed on both counts. I will answer his question when the time is right.
It is pretty clear that the Chief Secretary’s position is as I have described, and it is a terrible position for him to be in. I agree with my hon. and learned Friend the Member for Harborough (Mr. Garnier), who said that the Chief Secretary is playing a game with the public on this issue. He tried to set up an artificial dividing line between following the Chadwick process and fulfilling the ombudsman’s recommendations. That is a false choice. We very much hope—[Interruption.] The Chief Secretary should listen for a moment. We very much hope that the Chadwick recommendations will comply with the ombudsman’s recommendations. The Chadwick recommendations will, we hope, deliver the principal recommendations made by the ombudsman—that payments should be made to policyholders to reflect the losses arising from the failure to regulate Equitable Life properly.
The Chief Secretary also considered the two issues of deceased policyholders and means-testing; it was noticeable that he did not rule in payments to estates and that he did not rule out means-testing. I am afraid that very little comfort was given there. His speech contained nothing about amounts or timing, both of which are of the utmost importance and were promised by him back in October.
The hon. Member for Castle Point (Bob Spink) made a notable intervention on the Chief Secretary; it left me confused about the hon. Gentleman’s status. After the Conservative Whip was withdrawn from him, he sat as an independent, then as a member of the UK Independence party, then again as an independent. Then last week, he was part of the Canvey Island Independent party. Last Friday, his local papers reported that he had set up his own party, the Save our Green Belt party. The House of Commons Library has listed him as an independent, but he seems to be following the Labour Whip as he votes in the Division Lobby on crucial matters. I shall be interested to see under which party Hansard records his intervention.
The hon. Member for Twickenham (Dr. Cable) outlined the cumulative effect of foot-dragging and we wholeheartedly agree with him on that. The hon. Member for Leeds, North-East (Mr. Hamilton) talked about the danger of the Equitable Life issue becoming a party political football. I have to disagree; in fact, the last Opposition motion on the subject, tabled by the Liberal Democrats, had our full support, and I assume that the same will apply in reverse this evening. Unfortunately, the hon. Gentleman was not one of the Labour Members who voted in favour of that Opposition motion last October.
My hon. and learned Friend the Member for Harborough pointed out the cynicism of delaying any compensation until after the election. He also rightly pointed out, as did the hon. Member for Leeds, North-East, that the vast majority of policyholders were or are of very modest means. The hon. Member for Brent, North (Barry Gardiner) said that nothing that the Government had done had made him more ashamed than the saga of Equitable Life. Let us bear in mind that the hon. Gentleman resigned from the Government in protest against his own party leader. Strangely, however, he did not support the Opposition motion on Equitable Life last October, when the chips were down.
I should like to praise the work of my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) as co-chairman of the all-party group on Equitable Life Policy Holders. He and I were elected for the first time in 2005; clearly, the Equitable Life issue predates that time. My hon. Friend has shown courage and done a great service to many people by taking on the co-chairmanship. He called for a better working relationship between EMAG and the Government and we wholeheartedly endorse that.
The hon. Member for Luton, North (Kelvin Hopkins)—who, to be fair, did vote for the Opposition motion last October—showed us yet again that whatever the question, his answer is always more public ownership. He criticised us for our pledge to take into account the cost to the public purse of any compensation, but it is worth pointing out that that was a key recommendation of the ombudsman herself.
My hon. Friend the Member for Banbury (Tony Baldry) made a strong and attacking speech, reiterating the powerful points made by my hon. Friend the Member for Fareham (Mr. Hoban) about the damage done to our savings culture. He also called for speed in the compensation process, saying rightly that not much apparent progress had been made since July 2008.
My hon. Friend the Member for Cities of London and Westminster (Mr. Field) pointed out that he first spoke about Equitable Life seven and a half years ago. Again, that shows how long this sorry saga of Government mishandling has lasted. As my hon. Friend put it, the safest course of action for the Government appears to be inaction.
The hon. Member for Angus (Mr. Weir) reminded us of the importance of respecting the role of the ombudsman, while my hon. Friend the Member for Wimbledon (Stephen Hammond) told us in a strong speech how he was ending where he started this Parliament: speaking up for his constituents about Equitable Life. He talked wisely about the importance of enhancing our savings culture in this country. The hon. Member for Cheltenham (Martin Horwood) also made important points about the speed of compensation.
This all reminds me of the last time the issue was debated in the House. A sizeable number of Labour Back Benchers rebelled against the Government, voting for a motion from the Liberal Democrats and Conservatives. I ask those Labour Members to make their voices heard again, on behalf of Equitable Life policyholders, and to vote for the Opposition motion tonight.
By refusing to take responsibility for the appalling delay in giving compensation, the Government are behaving once again like a soldier deserting his post. Their approach to this problem, like their approach to the deficit, is one of hoping that the problem will simply go away.
Will the hon. Gentleman give way?
I will not; my hon. Friend the Member for Fareham gave way 27 times, and I have only one and a half minutes left.
The Government have had the best part of a decade to get this matter right, and thousands have died with neither compensation nor justice. There may be only six weeks left in the lifetime of the Government, but it is still not too late for them to do the right thing. If they choose not to, we will make sure that justice is done.
The response from those on the Conservative Benches is absolutely clear: we accepted the ombudsman’s findings from the very beginning. My right hon. Friend the Member for Witney (Mr. Cameron) has stated clearly that if we win the election, we will sort out Equitable Life very early on. We make this pledge today: we will sort out the mess, and we will sort it out at some speed.
I thank all Members for their interesting and passionate contributions to this debate. I think that we are all agreed on one thing—the need to resolve this important issue quickly and fairly. I believe that we have been making good progress. Sir John’s recent interim report represents a significant step towards resolving the issue and, as the Chief Secretary said, he will submit his final report in May. As far as possible, the Government are progressing work on scheme design in parallel with Sir John’s work. We cannot prejudge Sir John’s final advice, and final decisions cannot be made until it has been received and considered. However, I want to reiterate what the Chief Secretary said in his opening speech: we recognise that there is a strong case for the estates of policyholders who have passed away to be included in the scheme; we recognise that it is neither desirable nor administratively feasible to means-test every individual policyholder; and we are able to commit to responding to Sir John Chadwick’s final advice within two weeks.
I shall now try to cover, as best I can in the time available, some of the points that hon. Members have raised. The hon. Members for Twickenham (Dr. Cable) and for Shrewsbury and Atcham (Daniel Kawczynski) referred to EMAG’s withdrawal from the Chadwick process. It is regrettable that EMAG has withdrawn from Sir John’s work. Sir John is a well-respected former Court of Appeal judge who carries out his work independent of Government, and I do not believe that his integrity is in question. Throughout the process, he has carefully considered representations from all interested parties, including EMAG, and has given equal time and weighting to the views of those parties. That is reflected in his latest interim report, which publishes all the representations that he has received. The independent panel appointed to peer review the work of Sir John’s actuaries comprises specialists in their field. They are all highly regarded and were selected on the basis of their professionalism and integrity.
Many hon. Members, including the hon. Member for Twickenham, my hon. Friend the Member for Leeds, North-East (Mr. Hamilton), and the hon. Members for Cities of London and Westminster (Mr. Field) and for Cheltenham (Martin Horwood), asked about interim payments. In order to make interim payments, we would be required to pre-empt Sir John’s advice, and we would have to make assumptions about a wide range of factors without having the full extent and analysis of the information required. I believe that it is important that all resources are directed towards ensuring that the final payment scheme is implemented as swiftly as possible, and at this point I do not want to divert resources that may, in turn, lead to delays in that implementation process. However, as the Chief Secretary said, we are investigating the possibility of prioritising payments within the scheme so that groups that have been the most disproportionately impacted would be paid first.
My hon. Friends the Members for Northampton, North (Ms Keeble) and for Leeds, North-East, and the hon. Member for St. Albans (Anne Main), who is not in her place, mentioned data cleansing. I would like to confirm that officials are in contact with Equitable Life on the issue of data, and the data cleansing process is part of the work that is being carried out in parallel with Sir John’s work. I am confident that data cleansing will not cause delay once Sir John reports.
Many Members, including the hon. Members for Angus (Mr. Weir) and for Wimbledon (Stephen Hammond), asked when payments will flow. At the moment, it is impossible to tell. At the very least, we will need to know who we are paying and how we are paying, and we will need to consider different delivery options. However, as I said, we are starting preparatory work so that we can move as rapidly as possible when Sir John reports. We have scheme design consultants on board who are developing options, and extensive work by officials has included discussions with Equitable Life and with stakeholder groups. This is potentially one of the largest schemes of its type and, as the Chief Secretary said, history tells us that extensive preparation is needed to get this right; its scale and complexity should not be underestimated.
In order for this process to be efficient and effective, I have absolutely no doubt—I am sure that the Minister will confirm this—that the Government will get sight of Sir John’s final recommendations well in advance of the published date noted in the amendment. Do the Government expect to get the report, either in draft or in its final form, before the end of April?
The hon. and learned Gentleman will be aware that we have received interim reports from Sir John during this process. [Interruption.] I believe that he just said that we have already seen the draft final report—I can assure him that that is absolutely not the case.
The hon. and learned Member for Harborough (Mr. Garnier) and the hon. Members for Shrewsbury and Atcham and for Banbury (Tony Baldry) expressed their cynicism about Sir John’s reporting in May. This is Sir John’s timetable. Sir John does not work to a parliamentary or a political timetable, and he is carrying out the work as quickly as he is able. Clearly, it would be irresponsible to rush to implement a scheme before the facts are established.
Many Members, including the hon. Member for Cheltenham, raised the question of Sir John’s independence. Sir John will come to his own views independently of Government. We have, of course, offered our own views and comments to the process, and they will be published along with all the responses, but they are representations, not directions. We have been very clear that we will take full account of Sir John’s advice.
Speaking of cynicism, does my hon. Friend share my view that the Conservatives are sitting on the fence? Their motion calls for the implementation of the ombudsman’s recommendations. Today, their spokesperson said that they hope that Chadwick will follow the ombudsman’s recommendations but did not say what would happen if the recommendations from Chadwick are different from those of the ombudsman: they are silent on that point.
Exactly. As my hon. Friend suggests, Sir John’s approach is already different from that of the ombudsman. Her approach was based on the scrutiny of individual cases, coupled with the requirement to prove that policyholders had relied on regulatory returns. Sir John has taken a flexible approach that already differs from that approach.
The hon. and learned Member for Harborough and the hon. Member for Angus said that we were wrong, as a matter of principle, to question the ombudsman’s findings. We do not accept this. To treat the ombudsman’s findings and recommendations as though they were binding would reflect neither the true nature and extent of her role, nor that of Government in their stewardship of public funds. Rightly, the Government cannot simply dismiss her findings and recommendations, and I assure hon. Members that they did not do so in this case, but they can depart from them in certain circumstances. To be clear, this was not indicative of any lack of respect for the office of the ombudsman; still less did it stem from any disregard for the plight of policyholders affected by the events at Equitable Life. It was simply grounded in the need to ensure that our response, and any actions that we might take, were based on a proper appreciation of the evidence.
The hon. Member for Angus asked what the disproportionate impact is. The concept of disproportionate impact is intended to help to ensure that payments made under the scheme are targeted at where they are needed most. Sir John will advise us on factors arising from his work. In his third interim report, he expressed his provisional view that holders of with-profits annuities and late joiners have been disproportionately impacted, in that the impact of maladministration was severe beyond the norm. However, the Government have not stated that only those two groups will receive payments. Final decisions on who will be paid will be made after Sir John submits his final report.
The hon. Member for Cheltenham asked about the comparator with the regulator in the 1990s and the possibility of that leading to delay. That was also raised in an intervention by the hon. Member for Richmond Park (Susan Kramer), who is not in her place. Sir John’s third interim report set out his provisional views on regulatory behaviour in the 1990s. He is considering various scenarios of regulation, whether stringent or loose, but he has not said which he prefers. He is open to all views on this—it is not fixed in stone—and input from everyone, now, will minimise dispute later. Sir John has not yet finalised the comparator.
The accusation levelled at the Government is that that we have consistently—some have even said wilfully—dragged our feet on this matter: even now, when Sir John is close to completing his work. That is simply wide of the mark and absolutely not the case.
In conclusion, we appreciate and share the genuine concerns that Members in all parts of the House continue to have on behalf of policyholders. We have before us a motion that exhorts us to set a clear timetable for implementing the ombudsman’s recommendations. However—
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Question put accordingly (Standing Order No. 31(2), That the original words stand part of the Question.
Question put forthwith (Standing Order No. 31(2), That the proposed words be there added.
Question agreed to.
The Deputy Speaker declared the main Question, as amended, to be agreed to (Standing Order No. 31(2)).
Resolved,
That this House recognises the vital role the Ombudsman plays in public life; reaffirms the duty of Parliament to support the office of the Ombudsman; notes that the High Court ruled that the Government’s response to the Ombudsman’s recommendations on Equitable Life, its establishment of an ex gratia payment scheme, and the terms of reference given to Sir John Chadwick were a rational response to the Ombudsman’s report; notes that Sir John expects to produce his final advice in May; welcomes the Government’s commitment to respond with details of a payment scheme within two weeks of receiving this advice; welcomes the Government’s determination to establish a scheme administratively quicker and simpler to deliver than that envisaged by the Ombudsman; further notes that to abandon the Chadwick process so close to completion would add delay and hardship for policyholders; welcomes the Government’s view that, while it cannot prejudge Sir John’s final advice, there is a strong case for policyholders who have passed away to be included in the scheme and that it is neither desirable nor administratively feasible to means-test every individual policyholder; and recognises the impact and significant distress that maladministration and injustice have caused in respect of Equitable Life.
Higher Education
I advise the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.
I beg to move,
That this House welcomes the contribution made to the economy and civic life by universities; notes the sharp increase in university applications for 2010-11; is concerned that the Government’s plans are likely to lead to a reduction of 6,000 undergraduate places for UK and other EU students in 2010-11; further notes that this fall in the number of places is likely to hamper efforts to widen participation in higher education; calls on the Government to improve opportunities for young people by providing 10,000 extra university places in 2010-11, paid for by offering a new incentive for the early repayment of student loans; further calls for more apprenticeships and training places; recognises that better careers advice could provide an important contribution to improving social mobility, and therefore commends initiatives which match prospective students to course places; and further calls for a new focus on higher education in further education colleges and other providers.
The amendment is significant because it is an entirely tendentious historical account of the past few years. It gives the Government gloss on what has happened, but mentions nothing about the crisis of equivalent or lower qualifications—ELQs—which has affected many people who are trying to return to study further. It also ignores the current crisis in the funding of universities and the issue on which we wish to focus, which is the sheer difficulty that prospective students face in finding a place this year—
I am just getting into my stride, but I will give way to the Chairman of the Select Committee.
The hon. Gentleman mentions being tendentious. Does he agree that the history of higher education over the past few years is important? Was it not tendentious of the Opposition’s motion to fail to mention the fact that when we really needed their support on top-up fees they did not have the bottle to vote for what they knew was right?
We were concerned about the effect of fees on participation, although so far it looks as though fees have not had the effect on participation that was feared. We are being consistent, because we want to focus on the effect on participation of the current pressures that universities face. Above all, and rightly, our motion focuses on the future. We are looking at how we can spread opportunities for young people to go to college, get apprenticeships or go to university. After all, Ministers and the Chairman of the Committee were elected on a manifesto in 2005 entitled “Britain forward not back”. But the amendment is entirely backward looking and contains nothing about the future. By contrast, our motion is forward looking. It looks at how we can spread opportunities and educational access to people across the country.
The background to this debate is the Government’s target of 50 per cent. of people going into higher education. The target was first set by Tony Blair in 1999, and the 2004 public service agreement expressed the aim of increasing participation to 50 per cent.—it was already sliding backwards. The target then became an aspiration, and eventually, as we see from the amendment, the aspiration subtly changed. It is no longer an aspiration for the Government; instead the amendment talks of the aspiration of more than 50 per cent. of young people to go to university. The Government have changed the definition of the aspiration yet again.
We on the Conservative Benches do not believe in top-down targets for how many people should go to university. We do not believe that to be the right approach. Rather, the number of people going to university should emerge from the decisions that well informed young people make about the different opportunities available to them and about how best they can take advantage of them. To us, that seems much more consistent with trusting young people than the Government’s approach.
My hon. Friend is making an extremely good start. In the light of the recession and the vital importance of ensuring that young people, and in particular those between 18 and 20, have the maximum opportunity to get work, does he agree that one of the most important things is for them to be given access to further education, and in particular education of a practical kind, if they are not necessarily attuned to the academic world? In other words, we want to help those young people to get into work.
I completely agree with my hon. Friend. Our approach is a properly balanced one, whereby those young people who would benefit most from going to university should have that opportunity. However, what many young people could benefit most from is work-based learning, notably apprenticeships. That is why we have proposed refocusing the Train to Gain budget on more apprenticeships, so that more young people have the opportunity for practical learning. We particularly salute the efforts of further education colleges, which are often an effective route into work, with practical experience linked in.
May I commend the work of the Open university? Does my hon. Friend accept that more and more young people are looking to study part time, so that they can go into higher education while continuing their work? Does it not seem odd that nearly two thirds of part-time students are unable to get any form of Government support?
Yes, and one of the things that we very much hope will emerge from Lord Browne’s inquiry into the funding of higher education is a fairer deal for part-time students. This relates to the previous intervention, but one of the ways forward is for people to combine working and part-time study at university.
May I congratulate my hon. Friend on including in the motion a mention of higher and further education colleges? If we examine the Government’s amendment, we see that it does not mention further education colleges, which is a serious omission, but perhaps one indicative of the way that this Government have treated further education generally, and not least Wiltshire college in my constituency.
One area where the current pressures are most severe is in the delivery of higher education in further education. Because universities are under financial pressure, some are retrenching and withdrawing support for higher education courses that are delivered in local further education colleges. We very much regret that trend, which is something to which my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) may refer in his speech at the end of this debate—if he succeeds in catching your eye, Madam Deputy Speaker—because higher education in further education is a cost-effective and flexible form of provision.
The Chairman of the Children, Schools and Families Committee is very active; I will give way to him a second time.
The hon. Gentleman and I share a love of history—I know that he is very much an admirer of Michael Oakeshott—but will he cast his mind back over the true history? History with things wiped out is not good history, and when Mrs. Thatcher was Prime Minister she wiped out apprenticeships. That should certainly be recognised. This Government have been rebuilding the apprenticeship system over a number of years, and, before the hon. Gentleman leaves further education, I should mention that we have also rebuilt 60 per cent. of the FE estate. Is that not a commitment to FE?
The Chairman of the Select Committee has just revealed his guilty secret to the House, which is that he was a student of Michael Oakeshott, for which reason I am prepared to forgive him a lot. However, his account of what has happened to apprenticeships is tendentious. As the structure of the British economy changed, and as there were fewer manufacturing jobs available, there were fewer manufacturing apprenticeships. We put in place a reform of apprenticeships, with more modern apprenticeships, but under this Government we now have a decline in their number.
If the Chairman of the Select Committee is interested in the figures, I have here the Government’s latest statistics on post-16 education and skills. I can tell him that the number of people in apprenticeships in the first quarter of 2009 showed a decline on the figures for the first quarter of 2007-08. There is now a downward trend in apprenticeship participation, and if we are to reverse it, we need the policies that my party has put forward—policies for easing the bureaucratic burdens on companies taking on apprentices, offering a fairer deal for post-19 apprenticeships and helping small businesses take on apprenticeships. That is the way forward, not the decline that is happening under this Government.
Does the hon. Gentleman not agree, as a man allegedly of great intellect, that there has been a massive increase in the number of apprenticeships available, compared with the situation that the Labour Government inherited in 1997?
What has happened is that the Government have redefined apprenticeships, so that level 2 qualifications —GCSE-equivalent qualifications—are now also called apprenticeships. If we look simply at level 3-equivalent apprenticeships, which is what apprenticeships used to be—in other words, if we look at apprenticeships that are the equivalent of A-levels—we see that the history of the past 10 years is nothing like what the right hon. Gentleman claims. In reality, there has been a decline in level 3 apprenticeships, which has been offset by the redefinition of level 2 qualifications as apprenticeships. That, I am afraid, is a classic example of this Government failing in the real world but then redefining how their performance is measured so that they appear to be doing better than they really are.
However, what I want to focus on, alongside our proposals for new apprenticeship places and more training places at colleges, is the problem that universities will face this summer with the surge in applications and, if anything, a decline in the number of university places. Indeed, it would be interesting if, when the Minister speaks in this debate, he can confirm the figures attributed to the Higher Education Funding Council for England showing that there will be an absolute fall in the number of university places this summer. We have come up with a proposal to bring extra cash into the system to enable this summer’s places crisis to be eased, and we have proposed a discount for the earlier repayment of student loans. With £30 billion of student debt outstanding by this summer, we would need only 1 per cent. to be paid back early, bringing in £300 million, to enable us to pay for 10,000 fully funded university places over three years. That would be an attempt to tackle a crisis facing young people this summer before having an opportunity to receive Lord Browne’s report, which we hope will put forward proposals for the long-term reform of higher education funding.
The hon. Gentleman is talking about a discount of 10 per cent., and comparing that with the Australian and New Zealand schemes, where the discount is 20 per cent. Has he seen the figures calculated by millennium plus, which reached the conclusion that his policy will not raise the amount of money that he is claiming?
I am surprised by some of the claims made by millennium plus, because our estimates are extremely cautious. We require only 1 per cent. of the outstanding stock of student debt to be repaid earlier to generate the cash needed for our policy, and that is a cautious assumption.
However, I have heard the objections of the Government, and want to take a few minutes to go through them, because I do not think that they are well founded. We had the opportunity to hear what the Minister’s concerns were in last week’s debate on higher education organised by The Guardian. I want to do him the credit of going through his four contentions and seeing whether any of them stand up. The first is that our policy is supposed to be
“Regressive, benefiting only the very wealthiest graduates,”
the argument being that only wealthy graduates will wish to repay. The key feature of our proposal is to enable more university places to be offered. The crucial point is that the extra applications this year are from students from black and minority ethnic backgrounds, students from poorer backgrounds and students from families without a history of going to university. The 10,000 extra places will benefit students who, given their backgrounds, would otherwise be unlikely to go to university. The key test is the purpose for which the money is used. In this instance, it is being used for a purpose about which Conservative Members care greatly: improving social mobility and opportunities in this country.
The Minister’s second objection, which we have just heard from the hon. Member for Bolton, South-East (Dr. Iddon), was that our proposed scheme would not generate anything like the sums needed to provide 10,000 additional fully funded places. As I have said, the scheme already operates in other countries. Obviously the specific circumstances of countries differ, but early repayment reward schemes operate in Australia, New Zealand and Canada, and in all those countries they generate substantial extra early repayments. We need only 1 per cent. to be repaid early to fund our scheme.
The Minister’s third objection was not expressed in a particularly coherent way. He said:
“The interest on the amount saved invested instead over the period of the loan repayment by the graduate would outweigh the benefit of the discount by far.”
I think that, translated, that means that in the Minister’s view it would cost more for the repayment to be made earlier, and that he would prefer to receive a flow of income from the interest receipts from the loan over a period of years. My understanding is that he did not want to end up losing interest on the amount that would otherwise have been repaid gradually. However, he is proposing his own sale of the student loan book. The Government have taken powers to sell it. Indeed, given some exchanges during the Committee stage of the Sale of Student Loans Bill, it seems that they may have envisaged selling it at a discount—a larger discount, I rather suspect, than the 10 per cent. that we propose.
It is all right for Ministers to sell the student loan book early at a substantial discount on a wholesale model, but as soon as we, in true Conservative manner, give individuals the ability to choose whether to repay early with a 10 per cent. discount, apparently it is suddenly a bad return. All that we are doing is offering a retail individual option alongside the wholesale option which, as we know, Ministers have been discussing with banks. I would welcome an assurance from the Minister that in no conversation with the banks has he ever considered a discount of more than 10 per cent. for the sale of the student loan book. I strongly suspect that he has considered a substantially larger discount, and I therefore do not think that he is well placed to make that objection.
I look forward to hearing the hon. Gentleman’s response to that.
The hon. Gentleman cited the Australian scheme. Will he confirm that it has proved unpopular and has not realised the funds for student numbers that he suggested would be forthcoming, even given a 20 per cent. discount?
I do not think it is true that the Australian scheme is unpopular. What we are talking about is individual choice. We are not compelling anyone to take this option; we are simply offering it as a choice for individuals. Individuals in Australia, New Zealand and Canada may wish to take advantage of it, and we will ensure that it is also available to individuals here in the United Kingdom.
I will give way to—
rose—
Order. It is for the hon. Member for Havant (Mr. Willetts) to decide to whom he will give way.
I am trying to make some progress, Madam Deputy Speaker. I will give way to the hon. Member for Eltham (Clive Efford), but I must then make some progress.
The hon. Gentleman cannot get away with what he has said. The Australian scheme is not generating the income that he suggested his scheme would generate, even with a 20 per cent. discount. Does he accept that, and, if so, does it not undermine his argument?
I do not accept what the hon. Gentleman says. We looked carefully at the Australian scheme, the New Zealand scheme and the Canadian scheme. Of course there are differences between them—no country’s student loan system is exactly the same as that of another country—but all three provide the same option, and we are ensuring that British people will no longer be deprived of that option. The assumption that 1 per cent. of £30 billion—£300 million—will be repaid early with a 10 per cent. discount is extremely cautious, and that would enable us to fund 10,000 extra university places this summer. Otherwise, according to the figures that we understand the Minister to be considering, there would be a fall in the number of places at the same time as a surge in the number of applications.
The Minister must explain to young people throughout the country why he is willing to contemplate a doubling of the number of people applying for university places who will not be able to secure them. We believe that our scheme will help to tackle that crisis, alongside our extension of apprenticeships and training places at colleges. Between them, our proposals add up to a coherent approach. We intend to ensure, at a time of high employment under the present Government, that this summer young people have an opportunity to take up further education and training opportunities.
I propose to make some further progress with my speech.
The Labour party has not come up with a single constructive proposal for this summer. We are looking ahead at a problem that we recognise to be of great concern to young people and their parents. Ours is the party that is proposing more university places, more apprenticeships and more places at college. All that we get from this Government is a retrospective, historical motion and a set of completely unconstructive attempts to prevent us from presenting a practical proposal for action that would help to tackle the problem.
The hon. Gentleman says that he proposes to provide more training places. The motion says that as well. Presumably, it would mean abolishing Train to Gain. How would that produce more training places, and how many more does the hon. Gentleman think it would produce?
Our calculations suggest that the Train to Gain budget should be refocused on new opportunities for people who are currently outside the labour market. Too much of it is spent on providing qualifications—not necessarily any extra worthwhile skills or training—for people who are already in employment, and whose skills will not be enhanced by participation in Train to Gain. I refer the Minister to the most recent report from the Public Accounts Committee, which made clear that there is a significant problem of deadweight cost in Train to Gain provision. We will redirect that money to where the need is currently greatest—to extra training places.
Will the hon. Gentleman give way?
I will give way again to the Minister.
I am grateful to the hon. Gentleman for his generosity in giving way. His motion calls for more training places, but he did not respond to my earlier intervention by telling us how many more places he would produce by abolishing Train to Gain.
We have clearly identified 300,000 places over two years—a combination of apprenticeships and training places at colleges. Much of the money is currently being spent on, essentially, giving people paper qualifications without enhancing their underlying skills and without improving their progression through jobs. In any event, those people are already in work. We have made a tough decision about priorities, which is absolutely the right decision in the present circumstances. We have decided that our main priority should be new opportunities for young people: that should be the focus of our efforts.
I hope very much that Ministers will be similarly helpful if my hon. Friend the Member for South Holland and The Deepings or I seek to intervene in order to question some of their own assertions.
We face a crisis this summer, with a declining number of apprenticeship places, further education colleges under severe financial pressure, and a declining number of university places. Conservative Members have been trying to present practical proposals to tackle that problem.
Will the hon. Gentleman give way?
No. I want to make some progress.
I want to hear from the Minister—indeed, from both Ministers—a bit more information about what is happening now to our college and apprenticeship provision. First, will the Minister confirm that, according to the most recent estimates that have been reported and according to the Government’s own plans, there will be 6,000 fewer university places this summer than last year? Secondly, will the Minister explain why, when I visited Derby college last week, I was told that it was unable to offer as many engineering courses leading to higher national diplomas—an important form of practical training—as it had in the past, because all the money was being spent on foundation degrees? That is a classic example of the way in which the Government work. They transfer the funding for vocational qualifications such as HNDs and higher school certificates to new initiatives such as foundation degrees. That may be worth while in a sense, but it will be done at the cost of fewer opportunities for people to work towards qualifications that are already well recognised and well understood.
Will the Minister explain the following? Students from a sixth-form college approached me recently to say that they had embarked on a two-year A-level course and that at the end of their first year, while doing their AS-level, they had been told that, because of funding pressures, it would not be possible for them to complete their course with a second year and so get the full A-level. The college said that the AS-level was a qualification in its own right and that, sadly, it was no longer able to provide the second year of that A-level course. Does the Minister believe that that is happening in sixth-form colleges or elsewhere in the country and does he have any proposals to tackle the problem?
Will the Minister also confirm that there are significant pressures on the unit of resource of universities? Although he has been strangely reluctant to confirm this figure, does he agree that the Higher Education Funding Council for England grant letter of 22 December 2009 made it perfectly clear that the planned unit of funding, which was set at £4,140 at the beginning of the public expenditure period, had, in constant prices, fallen by 2007-08 to £3,950, a reduction of £190?
We fully understand that times are tight and that very tough decisions need to be taken, and we cannot pretend that all these reductions in provision can be avoided, but we believe Ministers should come to this House and give a coherent overall explanation of what their public expenditure cuts mean for colleges and universities. Instead, we have a drip, drip, drip of information—yet another announcement and yet another bit of a budget cut somewhere. The reductions in funding and provision are undertaken without any proper public explanation of what is being done or why. That makes it much harder for colleges and universities to adjust for the tougher public spending regime, because Ministers never stand up at the Dispatch Box and level with them in a coherent manner about what they should bank on in the medium term because times are so tight. We call Ministers to this House time and again because, above all, what we want from them is a coherent and clear statement of what they are planning and why.
It is good to see that the Liberal Democrat spokesman, the hon. Member for Bristol, West (Stephen Williams), is present, because I must say that his party really does not do much better. In a previous debate on this subject, I spoke about the extraordinary history of Liberal Democrat policy on tuition fees. I am sure that he will understand why I want to return to that fascinating subject.
I have been looking at “Liberal Democrat Voice”, the website on which we can follow the details of Liberal Democrat policy. When I printed out the relevant policy document from it, I was amazed to see that it began by saying that this was the first page of 842 pages, although I have to tell the hon. Gentleman that 837 of those 842 pages are blank. Only five pages contain any statements on Liberal Democrat policy, although, to be accurate, there are two pages describing the policy, followed by a fascinating set of comments. One of them is from someone who gives their name as “Norman Lamb 4 Leader”, and it states that the latest Liberal Democrat proposal, which is somehow to abolish tuition fees within six years, is a
“Good idea but then how will the LDs fund universities in the future?”
That is a rather good question. We would all like to know how the Liberal Democrat spokesman believes universities should be funded in the future if that income were ever to be sacrificed—although we also know that he no longer believes he can do that in the lifetime of a Parliament.
There was another comment from a man called Tim Leunig, whom I know. He is an academic—at the London School of Economics, I think—and he follows the subject closely. His comment on this public forum is:
“So how will univs be funded? Or is the LD policy to slash the quantity of tuition—Mickey Mouse degrees for all? As it stands”—
we must remember that Tim Leunig is a Liberal Democrat policy adviser—
“this policy is as sensible as the old Soviet trick of cutting the price of bread—how will you pay for it?”
Even on the Liberal Democrats’ own website, people are raising serious questions about how their policy is to be paid for and what it means for universities and students.
We Conservatives did not like fees, of course, but now that they are generating revenues for universities, the Liberal Democrats have to explain what happens to the funding of universities and to the quality of the student experience if that source of funding is removed. They cannot have it both ways. They have given up on any credible claim that they can abolish fees in the lifetime of a Parliament. They now say that, for some miraculous reason we have never fully understood, it can be achieved within six years, but they have never explained where the money is coming from. I very much hope that when the hon. Member for Bristol, West comes to speak, he will give us the latest stage in that fascinating saga of the development of Liberal Democrat policy.
On where the money is coming from, I would like to take the hon. Gentleman back to the issue of the 10,000 places. I salute him for trying to find a solution to our present difficulties, but I have to say that I do not think the figures add up. At present, 20 per cent. of full-time students get no state support whatever. Were there to be a discount, if only 5 per cent. of that 20 per cent. decided it was a good deal to take out a loan and get some grant support because they would get the discount, that 1 per cent. to which the hon. Gentleman is referring would already be gone. Part of the problem with his scheme is that if quite a sizeable proportion of the 20 per cent. who at the moment do not take out any loans decide to do so, that would more than cancel out the early discount.
The hon. Gentleman is making very heavy weather of something that is very straightforward. There is £30 billion-worth of debt already out there. The Conservative party is optimistic about the future. Our motion is a set of proposals for expanding opportunities for young people in apprenticeships, in further education colleges and in universities in the tough times they are facing because of this Government’s mismanagement of the economy.
This week is national science week. To mark it, we have produced an excellent report from Sir James Dyson, which clearly sets out how we can encourage high-tech investment in the future British economy. We have made it clear that we back more information for students, including not only advice and information on the web, but recreating a proper, professional, all-ages careers service. That proposal is even made in the so-called Milburn report on social mobility. The Government’s response in their document, “Unleashing Aspiration”, was a simple rejection, which we think is completely wrong. Above all, we Conservatives believe in raising the quality of the student experience. That is what is crucial to our universities. Of course we are confident that universities can achieve that, even in the tough times they are facing as a result of this Government’s mismanagement of the public finances. We believe we offer a better prospect for our universities. All we have from this Government is more of the same: history lessons—looking backwards, not looking forwards.
I beg to move an amendment, to leave out from “2010–11” to the end of the Question and add:
“commends the Government for its record levels of investment in higher education, an increase of over 25 per cent. in real terms since 1997, which has supported more students participating in higher education than ever before; notes a 24 per cent. increase in the number of students participating in higher education since 1997, more young entrants to full-time first degrees in England who are from state schools, lower socio-economic groups, and low participation backgrounds, and recent studies which have shown that over 50 per cent. of young people aspire to go on to higher education; recognises the Government’s commitment to expanding the range of pathways to higher education, including through apprenticeships, and to expanding the opportunities to participate in higher education, including through the development of foundation degrees, which have benefited 100,000 students; further notes that the Government is providing students with high levels of student support to enable them to access higher education; and welcomes the proposals in the papers Quality, Choice and Aspiration, published in October 2009, and Higher Ambitions, published in November 2009, to provide prospective students with better information, advice and guidance to enable them to fulfil their full potential.’.”
Given the performance we have just witnessed, I do not really know where to start. I notice that the hon. Member for Havant (Mr. Willetts) is wearing a spotted tie; this is a leopard changing his spots. We have witnessed an amazing damascene conversion. In the opening part of his speech he used words such as “access” and “opportunity”, and at the end he mentioned “the student experience”. As we look forward to what is to come this year, with the general election, it is important that students focus on the hon. Gentleman’s past form. They should remember, as we do, university buildings falling to pieces.
The hon. Gentleman ended with a flurry by waving the document by Dyson and saying, “Believe me, we are going to take care of science in this country.” We remember science facilities falling apart; there was no ring-fenced science budget at that time. We remember the unit of resource falling, not by 10, 20 or 30 per cent, but by 40 per cent between 1991 to 1997—that is according to the figures of Universities UK. What was it about students back in the days when the hon. Gentleman was sitting in a Conservative Cabinet that meant that the student experience did not matter, that the unit of resource did not matter and that science did not matter? Why should we, and why should students in this country, believe him now?
Was the Conservatives’ approach not simply one of their wanting to make tax cuts for the rich? That was how they paid for them.
My hon. Friend has a long memory, and the Conservatives still do want that, hence this proposal. Let us give the hon. Gentleman credit, as he is largely known for having two brains, although that of course is in the context of his own party. It is clear, as has been demonstrated in the House today, that this fatuous proposal of an extra 10,000 places is elitist, with the numbers not adding up and with students across the world, who have seen that such a proposal does not work, claiming that it is completely unfavourable to poorer students. Yet again, he has not been able to explain the policy coherently or say where he would get the money from to take care of it. I shall return to that later and I intend to repeat that point on every appropriate occasion between now and the general election. He is not going to get away with it, and he can do a damn sight better.
May I thank the Minister for giving way in what would be regarded as full flow? Can he explain to the House how many physics and chemistry departments this Government have closed since 1997?
Look, I do not want to embarrass the hon. Gentleman, but I should refer him to the fundamentals of our democracy and he would, thus, realise that the Government do not run physics and other science departments in our universities; vice-chancellors do. He should know that. I should remind hon. Members that the chancellor of Oxford university said about the Conservative party’s period in office that
“in just over a decade we doubled the number of students and halved the investment in each. The Treasury calls that higher productivity—it’s a euphemism for poorer pay, degraded facilities, less money to support the teaching of each student”.
That is what we saw previously and it is against that that we will be judged.
Does my right hon. Friend not recall that prior to 1997 things got so bad and the Conservative party created such a mess that it had to set up the Dearing inquiry, and it then postponed decisions on the student loans until after the general election because it had lost its bottle?
I am very grateful to my hon. Friend for reminding us about the smoke and mirrors that the Conservatives employed. They did the same in a number of areas. They promised to reform the tax system, but what did they give us? They gave us the poll tax. They promised to deal with training resources, but what did they do? They abolished apprenticeships. That was the level of their commitment.
Moving back to the current state of education, is the Minister aware of the financial crisis at the university of Gloucestershire? The vice-chancellor candidly admits that that has long-standing causes, but it involves the loss of teaching posts, the closing of the Pittville arts and media campus, and tens of millions of pounds of debt. The university has nevertheless managed to attract a record number of applicants, but it has been scuppered by the indiscriminate way in which the cap on student numbers has been applied by this Government, making a bad situation even worse.
The very start of the hon. Gentleman’s question referred to the long-standing issues that exist at that university, and I know, as does he, that the funding council is working closely with it on that. It is disingenuous, in a sense, to lay that situation at the Government’s door.
Perhaps the Minister would answer the following simple question: how many physics departments and chemistry departments at universities have closed since 1997?
The hon. Gentleman knows that, as I just said, the Government do not run physics and chemistry departments, but let me make it clear that we are not going to take any lessons from the party whose actions led to the creation of the Save British Science campaign. Let me remind him that the number of applicants for physics has increased, as has the number of applicants for chemistry and biology, and that we have renewed facilities. It is absolutely clear that, because of our commitment to a ring-fenced science budget, science is in a much stronger position than it was previously.
If science is so important to the Government—I understand that the Minister cannot comment on institutional decisions—why was the science budget specifically mentioned in the pre-Budget report as a likely target for future cuts?
I have already said to the hon. Gentleman and I have already said in this House that we are absolutely committed to the science funding ring-fence and remain so.
Let us return to the subject of this motion, which is our 50 per cent. aspiration. It is not clear but a transformation has apparently been undertaken by the hon. Member for Havant. My concern is that the right hon. Member for Witney (Mr. Cameron) is, as is the case on many things, much less clear about the 50 per cent. aspiration. He once went on record saying that his party opposed the aim and, most recently, he was asked about it on Mumsnet and he did not answer the question. So it is not really clear whether the Conservatives are genuine about this aspiration and commitment. I know that a former shadow spokesman, the present Mayor of London, said:
“In the words of every saloon-bar analysis of higher education of the last 10 years, what we need is fewer graduates and more plumbers”.
That was their position then and I suspect that it is their position now.
The Minister stood on a platform at the 2005 election of the 50 per cent. target. Will he tell us what progress has been made? What percentage of young men, for example, go to university?
The hon. Gentleman knows that we have made progress, that we have reached 43 per cent. and that he opposed us at every single turn. Let me just spell out why this aspiration is so important. First, we should aim to meet it because it is right. If we believe in the principle that anyone can benefit from higher education and people deserve a chance to go to university to reap the benefits that a degree brings, we should not just pay lip service to the target; we should aspire to reach it. Secondly, it is right for economic reasons—for the reasons that the Leitch review and the Sainsbury review pointed out.
Will the Minister give way?
Not at this moment. We all know that the unskilled jobs that Britain relied on previously are no longer in our economy and we must, therefore, make a reality of the knowledge economy, which means higher level skills and higher level education. We remain committed to the aspiration and we are heading in the direction of meeting it.
I remind the hon. Member for Havant that, notwithstanding the Opposition’s fine words, year on year under this Labour Government we have seen an increase in the number of young people in higher education. There are more young people in higher education than ever before in our history and there will be this year, too. There are more young people from poorer socio-economic backgrounds at university than ever before in our history and there are more black and ethnic minorities at university than ever before in our history. That is the record on which we stand and even in tougher times we will still see increases in the numbers of young people going to university.
The 50 per cent. target—or aspiration—is important because we are reminded that we still have a lot to do to get to the level that we see in other EU member states and major competitors such as Japan and Australia. I do not believe that, as the hon. Member for Bristol, West (Stephen Williams) has been quoted as saying, it is “fatuous”—he does not need to look nervous, as that is what he said. I also do not believe in the duplicity that we have seen on this issue from the Opposition.
We have heard time and again—
Order. Duplicity is not a nice word, and I would be grateful if the Minister would withdraw it.
You are quite right, Mr. Deputy Speaker. Duplicity is not a nice word and I should not have used it. However, the hon. Member for Havant will recognise that there is a tremendous amount of inaccuracy in the way that he has used his words in the past.
As the Minister is concerned about accuracy and inaccuracy, will he confirm that when we look at the participation rates in higher education—the Government have typically redefined this on several occasions, making it very hard to track consistently—it looks as if in 2003-04, 43 per cent. of young people went to university and in 2007-08, 43 per cent. of young people went to university? Will the Minister explain why the fact that the figure remained at 43 per cent. over a five-year period constitutes progress?
We have had this ding-dong several times across the Dispatch Box. It is clear that we started with far fewer students in the system than we have now. I have said before that I would have liked to have seen a faster rate of growth in the number of students from poorer backgrounds. However, the commitment made by the hon. Gentleman’s colleague, the hon. Member for South Holland and The Deepings (Mr. Hayes), to abolish Aimhigher—I think that he has stated that in the House—will do very little. He is not departing from that commitment to abolish Aimhigher—the programme up and down the country in our schools that supports young people from poorer backgrounds to get into university and that gets graduates back into schools so that participation rates rise. How will abolishing that fund help with the issues that the Opposition are raising?
In the constituency of Plymouth, Sutton there has been a 67 per cent. increase in participation since 1997, taking the number of young people going to university to more than 400. There also seems to be a particular surge at universities that are part of the University Alliance group, such as Plymouth, and in the number of students interested in the STEM subjects, such as maths and engineering. Does my right hon. Friend have anything to say to such universities about how that can be taken forward, given that a very precious thing has been established?
My hon. Friend is absolutely right. It is very precious. I would say “Snap” to her—in Tottenham, we have also seen an increase of 67 per cent. in participation since 1997. Her emphasis on science, technology, engineering and mathematics is the right one. I hope that she welcomes the plans that we set out in “Higher Ambitions” in November to ensure that we support the growth in participation in science, technology, engineering and mathematics and that we continue to see such a rise and support universities, such as Plymouth, that want to see a transition of students to those courses.
Will the Minister give way?
I am not going to give way—I think that I will make progress at this stage. I look forward to hearing what the hon. Gentleman has to say when he makes his speech, because he is always very entertaining.
Time and again, we have heard the hon. Member for Havant pledge that he can create 10,000 fully funded student places for the coming year. We have asked questions of him and time and again he has failed to answer them—as we heard again today—or to furnish the House with the detail that is needed to prove that his policy is anything other than a gimmick. It is a gimmick, because he is simply attempting to give Conservative candidates a little bit of cover as they go out to fight the general election. The Opposition do not really mean their pledge, because they are hugely exposed on higher education. The hon. Gentleman keeps coming back to this one policy on student places as a politically opportunistic device, even though he knows that he cannot cost it, that it would favour the wealthy and the very rich, that it is completely regressive and that what it offers is disingenuous.
That is why the million+ group of universities, made up of the universities dedicated to widening access over a consistent period—the modern universities—will be very disappointed that the apparent future Secretary of State, whose aspiration is to be responsible for higher education, describes the million+ group, these modern universities, as millennium plus. He did that in the House today. He cannot even get the name right—that is how much he cares about the universities’ commitment to this agenda. That is perhaps why they described his proposal for an early discount scheme as one that “doesn’t add up”.
The current president of the National Union of Students Australia, Carla Drakeford, said of the hon. Gentleman’s proposal:
“The Australian experience shows that giving discounts for early repayment of student loans is a con. Enticements to pay early are a trick for all but those who go on to earn the highest wages. It’s a good deal for the wealthiest, and a poor deal for everyone else. That’s why very few students make use of the…discount in Australia. It's simply not in the interests of the vast majority of students to take up discounts on what are effectively interest-free loans.”
May I make it clear that during the Minister’s previous remarks, the hon. Member for Bolton, South-East (Dr. Iddon) raised his hands in what looked to me like an admission that the expression “millennium plus” perhaps began with him?
Use one of your brains next time.
Yes—it is the hon. Member for Havant who apparently has two brains, and he adopted that new phrase. Before even taking power, he began to reform modern universities to such an extent that he abolished them. That is an indication of what they can expect.
The hon. Gentleman must explain properly to the House how he would fund that proposal—[Interruption.] He says from a sedentary position that he has explained it, but he has not—or he has explained it badly. The universities do not understand it and students do not understand it, either in this country or in Australia. Apparently, the only person who understands it is him.
The Minister talks about students understanding things, and perhaps he could explain something to some students. UCAS published some figures on 22 January that show that last year, 158,000 of those students who applied for a place at university failed to get one compared with 110,000 the year before. That suggests that without action that number will increase. What message does the Minister give from his Government to those students who will not get a place at university and who cannot get a job as a consequence of Government inaction?
Let us turn, then, to this issue—
No, answer it.
I said, let us turn to this issue. The hon. Gentleman should wait a moment. It is too early to say exactly how many students will be able to start university next year. We know that there will be more students participating in higher education next year than there were this year. We also know that of course demand is up, but I remind Opposition Members that at this point last year they were saying that clearing would be over in half a day, that there would be a crisis and that the Government were failing to support students. We saw nothing of the sort: clearing went on for weeks, and thousands of places were available. We did not see the crisis that they predicted, although I see that the word has been used again today.
It is too early to say. I do not know whether the hon. Member for South-West Norfolk (Christopher Fraser) has a child in the sixth form, or whether he has been into a sixth-form college recently, but I remind him that students have not even taken their mock exams yet. They have not sat their A-levels yet, or received their results. We do not know what they have got, so the funding council has made an estimation. Sir Alan Langlands has said that it is an estimation, so let us see where we get to.
With all respect to the Minister, I asked a perfectly civil and polite question about those students who have been turned down already. I was not asking about those who are currently doing exams, but about those who failed to get into university last year. I gave the figure, saying that 158,000 students cannot get a place at university or a job. I would prefer it if the Minister could answer in respect of his responsibilities and not keep pushing the matter back across the Floor, because I believe that I am asking a perfectly civil question on behalf of 158,000 students in this country who deserve a better answer than the one that I have just been given.
They will get the answer that I have given, which is, first of all, that there will be more students next year than ever before in our history. Secondly, it is too early in the cycle to say what will happen this year, because students have not taken their A-levels and no offers have been made. Thirdly, every year there are students who apply to university who do not get in. I remind the hon. Gentleman that university entrance is competitive by nature and that not everyone who wants to go manages to do so in their first year of trying. However, all of that is against the backdrop of the fact that the Government have increased the number of places year on year. There will also be further increases this year.
I remind the hon. Member for South-West Norfolk that every year there are students who get three A grades but who do not go to university because they are unsuccessful in getting into the particular university or on to the particular course that they prefer.
What does the Minister say to them?
The hon. Gentleman asks what I say to them. I say to them that sixth form is available, and we are funding that. I also say that advanced apprenticeships are available, and we have brought forward 35,000 more of them—[Interruption.]
Order. The hon. Member for South-West Norfolk (Christopher Fraser) is getting the answer that he is getting, whether he is happy with it or not. However, having asked the question, he must not keep interjecting as the Minister replies.
We have increased the number of apprenticeships available in further education to ensure that young people can also access them.
The Opposition have talked about unemployment, but let us be clear: we set up the future jobs fund to support young people at this time, and it is worth £1 billion. The Chancellor has effectively borrowed that money to ensure that employers and local authorities come forward to provide training and opportunities for young people. That leads me to what will be the central discussion in the general election. The Opposition have turned their face against that kind of borrowing, because they also say that we should cut now, and deeply. In fact, it was their intention to cut £600 million from my Department’s budget 18 months ago, so desirous were they to cut funding. So, if the Opposition came to power, they could not fund the extra places even if they wanted to.
I am grateful to the Minister for giving way, and I know that he is doing his best to answer this important question. He said that it is early in the cycle, and we respect that, but both he and the House know that it is inconceivable that the Department has not modelled what is likely to happen, based on the experience of previous years. It would be a very irresponsible Department, and a very irresponsible Minister, if those projections had not been made. I think that the House owes it to the students concerned—and that he owes it to the House—to share some of those findings with us.
The hon. Gentleman knows that we have said already that demand is up by 23 per cent. We are monitoring the matter, and looking at what is a changing pattern over the course of the year. There is really nothing more to add, except to say that it far more likely that students will be at university under this Government, because we are committed to access and participation. In contrast, the Opposition would impose cuts now, and they have a scheme that cannot be properly funded or sustained. Under a Conservative Government, therefore, it is very likely that many fewer students would go on to higher education.
Does my right hon. Friend agree that there seems to be some inconsistency among those on the Opposition Benches? They appear to object to having a target or aspiration that 50 per cent. of young people should go to university, but they complain that there are not enough places at present. They had better make their minds up if they want to be treated as an alternative Government.
My right hon. Friend makes the point succinctly and beautifully. I have nothing more to add, except to say that I totally agree that the Opposition are not clear about whether they are committed to the aspiration or whether they are using it as an opportunistic election ploy.
I thank my right hon. Friend for giving way, and I am sure that he is looking at future funding possibilities. Has he looked at discounts, and at how many people already pay back early? Has he made some assessment of what would happen if the sort of discount proposed by the Opposition were introduced?
My hon. Friend is right to raise that issue, because a considerable dead-weight cost is attached to the proposal. In addition, inequality problems would arise because the proposal favours the very wealthiest students, with poorer students possibly seeking to borrow money in order to pay back early what they owe. For those reasons, we reject the Opposition proposal.
Given the current nature of the economy, let us consider where graduates find themselves at this time. We are obviously pleased that the worst fears of the Association of Graduate Recruiters about the effect of the recession on graduate vacancies have not been realised. The latest figures from the association and elsewhere suggest that things in the graduate labour market are beginning to look up. The Government’s response to the particular problems that graduates have faced during the recession and the help that we and our partners have given to enhance employability skills and to boost students’ CVs will now start to pay dividends. The creation of the graduate talent pool and of no fewer than 24,000 graduate internships have been an important part of that, as has the scheme that we launched recently with Raleigh International to provide overseas placements for young people from poorer backgrounds. However, we must do more to help those who have taken up the new university places that we have created to carry the benefits of that opportunity through to the world of work. That is why we also recently announced 8,500 internships with small businesses, in partnership with the Federation of Small Businesses. Those internships are in priority sectors like the digital economy, the low-carbon economy and advanced manufacturing, and we hope to see their number grow over the next period.
We hope that that approach will foster new relationships between small and medium-sized enterprises and universities. We also hope that it will introduce graduates to the jobs of the future and give them an insight into the world of the entrepreneur. We have also asked all higher education institutions to produce a statement on how they can promote employability, and on how they plan to make access to information about employability outcomes available to prospective students.
That hard effort to increase the number of internships was scoffed at by the Opposition when we first proposed it. They said that it would not and could not work, and that it was wasted money. However, I remind them that our proposals are eons away from the failed youth training scheme that was offered to young people in the previous recession, when neither graduates nor young people who were a long way from going to university were supported. We are working with the Federation of Small Businesses and with industry to ensure that young people are not sitting unemployed. That is why there has been the decline in unemployment figures; they are employed and they are getting the skills, particularly the soft skills, that industry needs.
We remain committed to widening participation and access. We continue to monitor the situation for students this year, reflecting and remembering that now, in March, we are still very early in the cycle. I would ask the hon. Member for Havant not to be opportunistic with his prospective parliamentary candidates and others about this participation scheme, and ask him to think carefully about the messages that he is sending to young people. I also say to him that if he is serious about wanting to stand on this side of the Dispatch Box, he must come forward with a proposal that is properly costed and funded and that is actually workable. I remind him again that when we announced our policy to provide the support that we are giving young people in this more difficult economic time, he opposed those policies as well. He was wrong then and he is wrong now, and that is why I suspect he will never make it from being not a bad writer to being a Minister in a future Government.
This time next week, we shall all be eagerly anticipating the Chancellor’s Budget, which may be his last, both before and after the general election. We shall be waiting to see whether there is a bold vision for higher education and research in that Budget, but I think we would be foolish to hold our breath.
This Government decided not to have a comprehensive spending review to cover the current period and the next two years, quite in contradiction to their previous practice, both under the current Chancellor and the Prime Minister as Chancellor before him; yet higher education and research have been singled out for Budget cuts that have been announced so far, in stark contradiction to what has been announced for other Departments. Higher and further education have so far been the victims of targeted cuts that are announced by the Government, either on a piecemeal basis or alluded to in the pre-Budget report, which specifically mentioned science. I repeat my question to the Minister: what is the future for British science in this country when the pre-Budget report specifically says that science should be a target for cuts in the next period? We will have to wait for eight days to see whether the Chancellor expands on that.
We see the contrast, right at the top of the Government, between the Minister’s superior, Lord Mandelson, at the other end of the Palace of Westminster, and the Secretary of State for Children, Schools and Families: further and higher education have been put forward for sacrifice in contrast to the message from the Department for Children, Schools and Families.
Lord Browne’s review is under way. My party considers that the review could have started a lot sooner and, more importantly, could actually have concluded in advance of the impending general election. Then we could have had a genuine debate, with three choices being put forward by the three parties, informed by that review in advance of the general election. Sadly, we shall not get that chance at the coming general election, but it remains the position of the Liberal Democrats that the current tuition fees model for part-financing higher education is bust, and should not form part of the long-term future of funding higher education. We also specifically reject any moves for full variability in tuition fees. The theoretical ability to vary tuition fees exists at the moment, but if the cap were to come off or were to be gradually lifted, it would lead to a market in the cost of higher education, and that is a vision of the future that we simply do not share.
Although he is not listening at the moment, I congratulate the hon. Member for Havant (Mr. Willetts) on using one of his brains to study the blogosphere very carefully. He obviously spends far more time on these matters than I do, whether it is blogs from my own side or from his, or from the Labour side of the Chamber. I am happy to confirm to him that scrapping tuition fees remains the position of my party. We have a six-year proposal to achieve that objective. It is fully costed and will be set out in our manifesto. In year 1, 2010-11, it will cost £595 million, and at the end of year 6 it will, on current figures, cost just under £3 billion. We will, as always, be identifying the sources of those funds.
The hon. Gentleman has just confirmed that the Liberal Democrat policy is to abolish tuition fees over a six-year period. Can he now give a commitment—[Interruption.] That is right, isn’t it?
Absolutely.
The hon. Gentleman has just reconfirmed it. Can he now give a commitment that Liberal Democrat candidates up and down the country will stop putting misleading statements in their leaflets that give the impression that all tuition fees will be abolished in year 1? That is what the Liberal Democrats are doing and it is a fantasy.
I thank the hon. Gentleman for his intervention. I understand he may be feeling a bit worried about some of the leaflets going out in his constituency, because Chelmsford is of course a target for my party at the forthcoming election.
No, I am not.
Order. I say to the House, I appreciate that the general election is not very far away, but this—[Interruption.] Order. This is an extremely important subject, and both those who run our universities and the young people who hope to go there will be either listening to our debate tonight or reading it in Hansard tomorrow, and I suggest the House remembers that.
Thank you, Mr. Deputy Speaker. I certainly hope that students follow this debate closely, and perhaps many of them will be reading Hansard tomorrow—who knows?
Before the hon. Gentleman moves on, could he actually answer my question? Will he stop his candidates up and down the country misleading people and suggesting, as many leaflets by Liberal Democrats throughout the country do, that the policy would be implemented and completed in year 1?
I reiterate that the position of my party is that tuition fees do not form part of the long-term future funding of higher education. We have a six-year costed plan to phase out tuition fees, but starting in year 1, 2010-11, we would remove the fees for anyone studying for their first undergraduate course in their final year of study. That means that every student currently at university entering their final year in 2010-11 would indeed be better off, and that applies in Chelmsford as much as it applies in Bristol, West and other parts of the country.
Will the hon. Gentleman answer this question? The politics page on the bbc.co.uk website claims that the overall costs of the Liberal Democrat policy over six years is £7.5 billion. Who is right—the Liberal Democrats or the BBC? Who should these great students in this great nation of ours believe—the BBC or the Liberal Democrats?
I think the simple answer, if I do the mental arithmetic, is that that is probably the cumulative cost over the six-year period. It is not the cost for each year. I have already said that the cost in the first year is £595 million. The cost in the final year—year 6—of the full removal of tuition fees for both full-time students and part-time students, who are very important in this equation, is on current figures £2.7 billion. Although I have not seen the article to which the hon. Gentleman refers, I would guess that the figure that he quotes is the cumulative cost of years 1, 2, 3, 4, 5 and 6. That was a nice try, but I do not think he has disproved the figures that I am giving.
The hon. Gentleman clearly hopes that students will be interested in his proposition that the Liberal Democrats will abolish tuition fees, but they will also be interested in a question that flows from that. If the fees were abolished under his scheme and those students were at university, how would he replace the revenue that universities would have lost? Would he shrink the numbers of universities and students, reduce the experience, or do something else?
Perhaps the hon. Gentleman was not listening too carefully to what I said earlier about that proposal being a costed proposal. Indeed, all of the quite limited number of extra-expenditure provisions that the Liberal Democrats will put forward in our manifesto for the forthcoming election are costed proposals. Each of those proposals, whether for the pupil premium, tax cuts for the low-paid or the phasing out of tuition fees, is fully costed. We have identified where all the money is going to come from, whether it is from refocusing tax credits, removing higher-rate tax relief for pension contributions or one of many other examples that I could cite. Those examples will be quoted in full, as they always have been in every general election that I have fought as a candidate going right back to 1992.
The hon. Gentleman accepts that his scheme would cost a considerable amount of money. He has previously described the 50 per cent. aspiration as fatuous, so will he confirm that under a Liberal Democrat Government there would be fewer students attending university?
No, I am not prepared to confirm that there would be fewer students, or, indeed, more. The Minister is probably quoting me out of context. [Interruption.] Surely not, indeed, but I think that he probably is when it comes to the 50 per cent. target. I think that I referred to the number as fatuous, because it could well be 49 or 51 per cent. The fact is that, as the hon. Member for Havant eventually said, the proportion of 18 to 30-year-olds attending higher education has been about 41 per cent. on average over the past decade. In some years, it has been 39 per cent. and in some years it has been 43 per cent., but there has been relatively little progress in the past decade, and unless we get a sharp increase in educational attainment in our schools over the next decade, it is hard to see how we are going to get anywhere near 50 per cent. overall. We are close to that figure for young women, but we are nowhere near it for young men, whether they are white, working-class boys or boys of Afro-Caribbean origin, as the Minister surely knows.
Does my hon. Friend agree that the consternation and multiple interventions that we have heard from Members of the other parties reflect their worry that only one political party is going into this election under the watchful eye of my hon. Friend the Member for Twickenham (Dr. Cable) with a fully costed proposal to remove the burden of tuition fees and the debt that accompanies them from future generations of students? Is he not immensely proud of that as a Liberal Democrat?
I am sure that my hon. Friend is absolutely right about the sage of Twickenham. I am looking forward to many debates in the general election, but particularly to the debate among the Treasury spokesmen of the three parties.
I shall now turn to the text of the motion, Mr. Deputy Speaker, as I have been attempting to do for the past 10 minutes or so. It focuses on the number of applicants for higher education in the forthcoming academic year. The Minister eventually conceded that there has been an increase in demand, as he put it, for places this year, just as there was last year, but the people who apply this year will be competing with the people who lost out last year. In our debates at this time last year, Liberal Democrat and Conservative Members pointed out that a crisis was unfolding before our eyes, and the Minister said that the process was competitive—he has repeated that today—and that the people who lost out could always come back in the following year. So the Government must have known that this year’s position would potentially be even worse than last year’s, but they do not seem to have a clear response to that yet. Their response last year was completely inadequate: they eventually allowed universities to expand the number of places, but did not provide them with the normal teaching grant from the funding council to make sure that places were funded, so universities took on the cost of the Government’s lack of foresight and planning.
As this is a Conservative Opposition day, I shall address the Conservatives’ proposals.
Does the hon. Gentleman have a proposal to put to the House?
Indeed, I do. When I have dispensed with the Conservative proposal, I shall turn to ours. The Conservatives have put forward a completely ludicrous scheme to offer a discount to students to pay their fees off early in order to gain a cash-flow advantage for the Student Loans Company and, indirectly, for the Treasury.
The hon. Member for Wolverhampton, South-West (Rob Marris) hit the bullseye with his question. This is Conservative funny money, I am afraid, and offers no guarantee to young people that they will reap any advantage from this poorly costed, ill thought out proposal. It is the higher education equivalent of the Conservatives’ flagship policy on taxes and the Treasury, where all they have to offer is a cut in inheritance tax for the very wealthy. The only people who are certain to benefit from the proposal from the hon. Member for Havant are those students who are going to university and were always going to do so, and who come from the wealthiest families. There is no certainty that those from a poorer background are going to—[Interruption.]
Order. I remind the Whips that they are not supposed to intervene, and certainly not shout persistently from a sedentary position. It is not in order.
To reiterate, in case it was lost in that heckling, there is no certainty that poorer students or those who may lose out on a place this year will benefit, although it is certain that richer students will do so.
Is the hon. Gentleman aware that the Conservative proposal for 10,000 extra places covers one cohort, which would go through university for three years? It is sometimes spun by Conservative politicians as 10,000 extra university places, without their saying that those extra places are available in one year only, to see the cohort through, which is sleight of hand.
The hon. Gentleman is quite right: there are lots of questions that the Conservatives have yet to answer about their proposal, but I am sure that the election debate, whether it is between the three spokesmen in the Chamber or between candidates up and down the country will draw that out.
Turning to the Liberal Democrat response to the crisis in university places and to the way in which young people have become victims of the recession, we, too, think that higher education is a good place for young people to shelter from the recession. We therefore propose 15,000 extra places, specifically in foundation degrees delivered in further education colleges in subjects such as engineering, IT and logistics—skills that we need—thus directly tackling the issues of social mobility and fair access to higher education. According to current statistics, roughly a quarter of the people who study for foundation degrees come from low-participation neighbourhoods. Before the Minister or someone else springs up and asks me where the money for that will come from, it also entails a refocusing of the Train to Gain budget, and has been costed at £120 million in 2010-11 to fund those 15,000 extra places. It is a precise amount; we say exactly what sort of provision there will be, where it will be delivered, what sort of subjects are involved, the amount of money it will cost and where that will come from. That Liberal Democrat proposal contrasts with the Conservatives’ funny money proposal.
Will the hon. Gentleman give way?
For one last time.
I am grateful to the hon. Gentleman. He will forgive me if I missed it earlier, but he has talked about 15,000 extra places and has clearly set out where he thinks the £120 million will come from—presumably every year, and not just for one cohort. His proposal to abolish tuition fees in university, on the current number of students, is equivalent to a commitment of approximately £1.2 billion a year, when it is worked through at the end of the six-year abolition period. He has told us where the funding will come from for the 15,000 extra places. Can he tell us where that £1.2 billion a year, every year, will come from?
We are going back in time to try to cost the overall proposal to phase out tuition fees. I can assure the hon. Gentleman that it is not just my hon. Friend the Member for Twickenham who makes sure that the sums add up. I make sure that they add up in my portfolio as well. Our proposed extra foundation degree places for year 1 and year 2—foundation degrees are a two-year programme—are fully costed in the second year as well, and our aspiration in the second year to start phasing out the final year tuition fee cost is taken into account. That was dealt with in my previous answers.
Widening participation is mentioned in the Conservatives’ motion, but they had remarkably little to say about it. There has been a dramatic increase in the number of people attending university over the past 40 years, if not in the past 10 years, but that increase in participation in higher education has not been a socially balanced increase. That is the problem on which we should now focus. We know that in some social groups there is saturation point among those who go into higher education, whereas in other social groups things have barely changed since the 1960s. The child of a manual worker who did not go to university is just as unlikely to go to university now as in the 1960s, when I was born.
If the hon. Gentleman concedes that in some groups we have reached saturation point, in his words, does he not understand that that is precisely why our proposal for extra places in summer 2010 is socially progressive? It is the people from the backgrounds that are less likely to go to university, which is where the extra applications are concentrated, who will be helped by our proposal.
The hon. Gentleman is desperately trying to claim some sort of socially progressive message from the Conservatives’ proposals. Only one side of the equation is certain: who will benefit from the discount. The other side of the equation—who will benefit financially from the provision of extra places—is remarkably uncertain because we cannot be sure how many extra places there will be, where they are or whether they are guaranteed for the full period of a three or four-year degree programme.
If we are serious about socially balanced access to higher education, we know that the solution does not lie in our differences over higher education policy. It lies in driving up attainment in our schools. That is why the most costly proposal that the Liberal Democrats will put forward at the election is the introduction of a pupil premium, so that schools whose pupils who come from a disadvantaged background—for example, those on free school meals, as I was when I was in school—will get extra money for the pupils in their care to invest in smaller class sizes, smaller teaching groups or one-to-one intervention in order to make sure that young people do not fall behind. [Interruption.]
The hon. Member for Wolverhampton, South-West says from a sedentary position, “We already do.” It is true that deprivation funding is granted to certain schools, but that is done on a postcode basis. He will know that poverty can be found in more affluent areas and the schools funding formula does not necessarily reflect the fact that in a school where the children overall come from better-off backgrounds, the funding formula does not provide extra funds for some children. We have proposed a pupil premium which is proven to work elsewhere, most notably in Holland, in order to give schools extra money. Free school meals is just one of the proxy measures that we will use to ensure early intervention, so that children do not get left behind.
Is my hon. Friend aware that in some schools in my constituency—the constituency that is considered the most affluent of the Manchester constituencies—some schools will get hundreds of thousands of pounds extra under our pupil premium proposals?
I am fully aware of that. Schools in my hon. Friend’s constituency, in the constituency of my hon. Friend the Member for Cheltenham (Martin Horwood), in my constituency, Bristol, West, and more importantly, in constituencies all round the country where there are disadvantaged children, will be direct beneficiaries of our pupil premium policy. It is by investment in education in schools or FE colleges that we will drive up attainment at 16 and increase progression to 18, so enabling more people to participate in higher education.
That is the point that I have always made—to return to the Minister’s intervention about the 50 per cent. target. The logical result of our pupil premium policy is that more people from a socially disadvantaged background will have the opportunity to participate in higher education, and then the numbers will naturally rise. It is more credible to have a policy that drives up attainment and participation, rather than to set a futuristic target and expect everything to flow through in order to meet it. Our policy will be fully funded and it will be set out clearly in our manifesto alongside our other proposals.
The hon. Gentleman says that it will be fully funded. When questioned by my hon. Friend the Member for Wolverhampton, South-West (Rob Marris), he put his hand up, in an Arnold Schwarzenegger “Hasta la vista, baby” moment, but he did not actually answer the question. He has to explain where the Liberal Democrats would get the money from to fund their proposal and get the increase, and he has not done so. Where would the money come from?
We are widening the debate into the costing of manifestos. I am happy, for the Minister’s benefit, to reiterate what I said in answer to previous interventions. The package of Liberal Democrat proposals at this election, whether they be for fair taxes for the low-paid, the pupil premium for schools, the phase-out of tuition fees, or extra police officers and youth workers on the streets, will be met by cutting back tax credits for some families, taking away higher rate pension tax relief for higher rate taxpayers, and closing some loopholes in the tax system so that we equalise up the tax rates that people pay on their capital gains to those taxes that people pay on their income or savings—a loophole that the Prime Minister opened up during his business-friendly days as Chancellor. We will not have identity cards as part of the future furniture of British life, and we will not have a bells and whistles replacement for Trident either. That is quite a long list of how our spending proposals will be funded. I look forward to similar candour from the Minister and from the Chancellor in a week’s time and at the forthcoming election about how the Labour Government will deal with their aspirations for the future and how they will tackle the current deficit in public funding.
The other way that we deal with widening participation in higher education, apart from the pupil premium, is by having some higher education outreach programmes in our schools and developing long-term relationships with schools in low-participation neighbourhoods, so that more young people will progress to university in the future. Flexible provision must also be part of that future, both for part-time students and for a key role for further education.
It is also important that we pay some attention to the subjects that young people study when they achieve access to higher education. We have said many times in this debate that we need a revolution in information, advice and guidance provided to young people. A related specific proposal that the Liberal Democrats will put forward at the election is of a national bursary scheme to incentivise people to take certain shortage subjects or strategically important subjects at university. If we do not get more people taking science, technology, engineering and maths, we will not have the people with the answers to climate change, we will not be able to build 21st-century transport infrastructure and we will not have the people who can develop our digital economy in the future.
We need to enthuse the young about science. This afternoon, I had a very enjoyable visit to the National Physical Laboratory in Teddington, which reawakened my own enthusiasm for science, where I heard, among its many schemes for science outreach, about the “protons for breakfast” programme. We also need to ensure that science is taught well in schools, by having teachers who are qualified in the subjects and schools that can teach the full three sciences rather than just general science.
Investment in higher education and research is key both to this country’s future prosperity and to ensuring that we have some of the answers for the future, whether they be in health, climate change, or delivering social mobility, which we have also discussed this afternoon. The response of the rest of the developed world to the current recession has been to announce investment in higher education and research over the next decade. We will have to wait eight days to see whether the Government share that vision. The Liberal Democrats certainly believe that there must be investment in higher education and research so that we can have both an economically prosperous future and genuine social mobility.
rose—
Order. Six speakers are seeking to catch my eye, and we have about 50 minutes left. If hon. Members can exert a little self-discipline and take something under 10 minutes each, we will try to get everybody in if we possibly can.
Thank you, Mr. Deputy Speaker. I shall be very brief. I want to put out a radically different message from those that we have heard so far. It does not represent Government policy or Opposition policy, but it certainly represents a socialist policy.
I shall describe where we have come from. When I was a student in the 1960s, we had full grants and no fees. Indeed, my wife was a student at a teacher training college, and she had a full grant on which she could live throughout the year, with no fees. I remember my late father, who was then chair of Barnet constituency Labour party, saying at that time, “It won’t be long before we’ve abolished means testing, we’ll all get full grants and it’ll be paid for out of progressive general taxation.” That is what we looked forward to at that time. Now, we have many more students at university but we have gone way back on that situation, and that is regrettable.
In 1998, much to my surprise, our Government introduced a Bill that abolished grants and introduced fees. It was not in our manifesto, and I was one of33 Labour MPs who voted against it. I was very disappointed, and I subsequently voted against top-up fees as well. The National Union of Students has a modest proposal, saying that
“university education should be free at the point of use, with graduates giving back to the system depending on how much they earn”—
in other words, through general taxation. That just involves abolishing fees, essentially, and the union also says:
“NUS believes that businesses should be expected to make a greater contribution.”
If we restored corporation tax to its 1997 rate, which would not be difficult for companies to adhere to, we would have another £6 billion or £7 billion to spend, and that could go straight into higher education. A figure of £1.2 billion to abolish student fees is a small price: it represents about one third of a pence on the standard rate of tax, or about one seventh of our subsidy on the savings of the richest 1 per cent. of people in the country. Those are small sums of money, and if we look at the tax gap, we find that the vast amount of money that is not collected due to tax evasion, tax avoidance and whatever is estimated to be well over £100 billion a year. The money is there if we choose to find or raise it, and we could pay for a fully free system of higher education, with grants for all our students.
The hon. Member for Havant (Mr. Willetts) suggested that we persuade more people to take up apprenticeships rather than to go to university, but I want to see a world where there is a continuum, in which studying at university and being an apprentice are rather similar. The difference is that if one is an apprentice, one gets paid; if one is at university, one has to pay for the privilege. That suggests that university is something for the affluent middle class, because that is where they pay, and that apprenticeships are for working-class people, who cannot afford to go to university. That is profoundly misguided and wrong.
I want to see a world in which students, whatever their social background, have a choice, do not suffer a penalty by going to university and do not feel forced to go into an apprenticeship because of financial arrangements. People should not choose to go to university when an apprenticeship is more appropriate, but mention was made of the student experience, and that varies depending on one’s affluence and background. I have often imagined a scene where, at the same university, the working-class students, who do not have much money and have to borrow, work in bars and serve drinks to the wealthy students who do not have to work. Indeed, if one is a student from a less academic background, and one has to spend more of one’s time and energies raising money to study, one’s performance in one’s studies can be damaged, so we should be concerned about the student experience.
What is going to happen? Students now leave university with average debts of £20,000, and the NUS suggests that the figure might double in time. That will be a serious disincentive to many. It has also been suggested that the lifetime financial advantage of going to university is starting to taper downwards slightly; it is becoming less financially advantageous to go to university, and the way forward should be the funding of education at every level through progressive taxation. There are countries that do that—Finland, for example, does not charge; everything is paid for by the state in its state education system. That means that everybody has a fair crack of the whip and that nobody has to suffer because of their inability to pay.
Those are some of the points that I wanted to make; many of the others have been made already. In conclusion, I should say that in our local town is the university of Bedfordshire. I was chair of governors at the college of higher education that became the university. It is a splendid university that does a wonderful job. Its students are very diverse—a large number come from ethnic minorities or from not traditionally academic backgrounds and many do degrees as adult and part-time students. That is the sort of university that really makes a difference. It does a fantastic job and gets awards for the quality of its teaching and the employability of its students. Just recently it has been expanding research in the STEM—science, technology, engineering and maths—subjects, and it is doing a tremendous job on that. The university of Bedfordshire deserves support, but it is not getting sufficient support at the moment. We should lift the cap on student numbers and encourage all our universities to take as many students as they can in future. That would benefit society, the universities and young people. I hope that my right hon. and hon. Friends on the Front Bench have listened to what I have said.
It is clear that ensuring access to higher and further education is in the best interests of most students. Whenever the desire to access such education exists, we must give people the opportunity to fulfil their potential. Action has been taken towards that end. University has gone from being a rite of passage for the few to being a right to a better future for the many. Just as the number of people going to universities has increased, so has the number of courses that are available.
Yet too often that kaleidoscope of options breaks down into a black-and-white outcome. On the one hand, for those who go to university because they have the motivation and application, it is the perfect continuation of their intellectual education. On the other hand, a wasted minority go to university because of the paucity of alternatives. Too often, those who would be better served by apprenticeships, foundation courses or being in work are funnelled into full-time courses with no benefit to their lives. Three or four years later they emerge, saddled with at least £9,000 of debt and with no clear idea of what they want to do. They are no better off than when they started. That is a long time to be going in the wrong direction at such a high cost.
The issue of access to higher education has become confused with getting as many people into university as possible. University is right for some, but not for all. A blanket approach of 50 per cent. participation may be one way to unlock potential, but it will not produce the best results for 100 per cent. of the people who go. The Government are trying to offer more inclusive universities. Instead, they should be creating more inclusive routes to future jobs.
The Government must take a step back. Employers, voluntary associations and colleges could then work together to create a more flexible and worthwhile system for those who choose not to go to university. A greater range of alternative courses—part-time or work placement courses—would then exist, as well as the option of a local college or university. These could be based around jobs that genuinely cater for people’s talents.
Some proposals have been made on a more flexible approach. Increasingly, access to higher education courses and foundation degrees is being offered through partnerships with further education institutions. This brings opportunities closer to local people. Students unable to afford the cost of higher education away from home can still access some level of higher education nearby. I believe that the current figure for such courses is 10 per cent. of the higher education total. The Government’s policy paper, “Higher Ambitions”, noted:
“We are committed to the enhancement of locally accessible higher education that can create new opportunities for individuals and their communities.”
Yet I find it difficult to square such a statement with the impending cuts in higher education. Forcing universities to save £449 million will probably lead them to focus on core, rather than supplementary, services. That will lower the number of partnerships between universities and colleges, and in doing so limit people’s access to higher education, which so many have taken advantage of.
We must foster a culture in which people are not burdened with the expectation that they must go to university when they would better placed pursuing a more realistic alternative. Worthwhile jobs should have the same standing as degrees. Access to higher education should be seen as a lifelong opportunity, and not simply be focused on those turning 18. We must encourage people’s interests and abilities through the choices made available to them. “Give me a place to stand”, Archimedes said, “and I will move the world.” We must recognise that university is but one place to stand—there are other places—and we must ensure that we offer every 18 or 19-year-old a practical and achievable opportunity.
As you rightly said, Mr. Deputy Speaker, this is a very important debate. I know that young people will be following our proceedings, and I am pleased to make a contribution, not only because of that, and not only because I am a recovering academic. I taught in the university system in the mid-1980s, and I recall what it was like at that time—the inadequate facilities that we were trying to cope with, the limited experience that students had, the pressure on courses, the large seminar groups, and the difficulty that many had in getting into the system. The system of the 1980s short-changed students who were at university and denied life-changing opportunities to others who should have been at university but could not get there because of the lack of funding.
One of the reasons I left academia to come here was to try to address some of those problems and to seek a transformation in the university experience of students, which is what has been happening for the past 10 years. I wanted more people to go to university and those who did go to enjoy high-quality courses. About 300,000 more students are now going to university, and the chances of getting there have improved. I did some research that shows that 10 years ago about 64 per cent. of those applying to university got in; the figure now stands at about 68 per cent., so there is a distinct improvement. In my own constituency, which started from quite a high base, the figure has risen by a further 27 per cent. in the past 10 years.
I wanted extra investment to go in to support each student who was at university, and that, too, is exactly what has been happening—it is up by a third in real terms and now stands very favourably against the OECD average. I wanted more students from lower income backgrounds to get into universities, and because of the policies that we have been pursuing, we are seeing the fastest rise in access to university for students from lower decile backgrounds and some of the poorest and most deprived areas in the country.
One thing that is making a big difference is the education maintenance allowance. EMA support makes the difference for people who might otherwise have left the education system at 16. Because of EMA, they see their potential and realise that they can get to university. Any proposal to scale back EMA or to abolish it completely, which we are hearing from Opposition parties, would be detrimental to their declared objectives for universities.
I wanted more investment in further education colleges as well as in universities. In my constituency, we have seen a transformation in Warwickshire further education college in the past 10 years—a record level of investment and a sharp increase in the number of students who go through. That is partly attributable to the inspirational leadership of Ioan Morgan, who is due to retire this summer, and whose great work and contribution should be acknowledged.
I have also seen the difference in the two local universities, Coventry and Warwick. The latter is now among the top universities internationally. It is highly successful at securing private investment, but it is still dependent on significant public investment to sustain it. It plays a key role in the west midlands economy. The Warwick manufacturing group has become world renowned for its contribution, and Warwick’s medical school, which is new under this Government, now trains around 1,000 doctors and levers in important private research money. It is now involved in some leading aspects of medical research. Warwick medical school is supported by £6 million from Advantage West Midlands, the regional development agency. I am concerned at the suggestions we hear from the Opposition parties that RDAs might disappear, which again does not sit very neatly with their alleged aspirations to improve universities and the university experience.
Many of those developments have been supported by the controversial reform of funding, about which we have had intense debates. However, I believe that we have settled on a fair policy. It recognises that there will continue to be a major public contribution to support people going through university, but also that there will be a contribution from the students themselves, reflecting the long-term advantage that they will gain. I wanted a review after the original cohort had left university, and I am pleased that that is now happening. I am delighted that the review will involve student representation—indeed, students will be represented by a Warwick university student. We should await the outcome of the review, but if it concludes that we are keeping the fees system, I hope that we will not depart from the core principles of widening access, improving quality and matching any change in fees with changes in grant.
May I make one long-term proposal to my hon. Friend the Minister? Can we think again about child trust funds? I raised that in 2003 when we debated revising the cap on fees, but I want to talk about it again. The first child trust funds will be fully maturing in about eight years’ time. Will the Government consider allowing some people to convert their child trust fund as it matures into an education trust fund if they choose to use it to fund themselves through university? If they come from a family background that meant that they benefited from additional top-ups during the growth of the child trust fund, could we not provide a further top-up if it is converted into an education trust fund? That, too, would go a long way towards long-term investment for education, and is part of what we must do to widen opportunities and diminish inequalities. We should be thinking not about abolishing the child trust fund, as we hear from Opposition parties, or about limiting its scope, but about widening it in imaginative ways to serve those longer-term educational objectives.
When I have discussions with year 10 students in schools in my constituency, I do not find a great love for fees, but nor do I find great love for the alternatives. That is certainly true when we discuss the graduate tax or having a slimmed-down university system as a way of getting rid of fees. Those students accept that we must share the costs fairly. They will carefully scrutinise what we propose after the review, just as they scrutinise ideas and suggestions now. They have spotted the quack remedy that we have heard from the Opposition this evening, funded as it is by the bizarre belief that tens of thousands of new graduates will rush to make early repayments of their loans—an unreal suggestion.
The Government have higher ambitions, and the young people we are talking about have higher ambitions for themselves. I am certain that the only way that those ambitions will be realised is if we maintain the approach to universities and funding that we have seen from this Government over the last 10 years.
I am grateful for the opportunity to contribute to this important debate on access to higher education. I wish to focus my comments this evening on the challenges facing those who are already studying at university, because we should not have a debate about improving access to higher education without considering the alarming level of drop-outs—a situation that has been made much worse by the student loans fiasco that the Government oversaw last autumn. Remarkably, they are still making a giant cock-up of that as we speak.
It is fair to say that no hon. Member would disagree that widening access to higher education is very important. Indeed, I would go as far as to say there is something of a cross-party consensus with regard to intention. There is general agreement that all young people, whatever their background, should have the opportunity of a place at university if they have the ability. Young people have no lack of aspiration, but there are clearly barriers to that aspiration. That is why we must all do what we can to ensure equality of opportunity for all.
Last year, according to UCAS, 158,000 people who applied for a place at university failed to get one—40,000 more than in the previous year. That suggests to me that the number of disappointed applicants will increase again this year, possibly by an even greater number. The situation is being exacerbated by the fact that many applicants, who would have otherwise secured employment, have been encouraged to apply to university by the sharply contracting job market. Let us not forget that some 1 million young people are now not in education, employment or training. This recession has hit the young particularly savagely.
The harsh reality is that despite a sharp rise in applications, many bright and able young people will be denied a university place, especially as we expect a reduction of 6,000 undergraduate places in 2010-11. If that is not a signal that the Labour Government have failed young people, what is? Even Pam Tatlow, who represents million+, and who apparently wants to be a Labour MP, believes that what Labour has done in cutting university places is wrong. In its report entitled “Scarred for Life”, million+ said that
“young people who might have gone to university, risk being relegated to the ranks of the long-term unemployed, with all the personal, family and health consequences this brings”.
Pam Tatlow and her report are right. The Government are not doing enough to help while our young people struggle. They are allowing the talents of a swathe of young people to be wasted.
In fact, the Government have failed young people since they came to power in 1997 by largely failing in their efforts to widen participation in higher education. Rarely has so much money been spent to such little effect. It is scandalous when we consider the reality of what has happened.
As well as this 13-year failure, there is also the scandal of the past year and the student loans fiasco. Many students still have yet to receive the financial support that they are entitled to and so desperately need. It is causing huge problems—some students have dropped out already and others are on the verge of doing so. While the current drop-out rate stands at about 7 per cent. for universities, I have little doubt that this figure will rise in light of the student loans crisis of the past year. I recently raised the current situation with Reading university, based in my constituency. As things stand, about 200 students at Reading university are still awaiting loans from Student Finance England, although I find it remarkable that the organisation is unable to produce an accurate list, so it is impossible to determine the exact number of students affected by the ongoing crisis. Reading university is doing its best to help those who have contacted it for help, but many students have probably not contacted the university, as I found out when I visited one of the halls of residence and discussed the matter with students. It is highly likely that Reading university is far from unique, and other universities throughout the country have students who are still affected.
As things stand, many students are hanging on to their degree courses by their fingertips. I am sure that the whole House would agree that this is an unacceptable state of affairs. In the context of today’s debate, I fail to see how such ongoing failure and incompetence can be seen as a commitment to widening participation or widening access. In fact, it is disastrous for widening participation. Let me be absolutely clear: it is the most hard-to-reach groups that are being made to suffer the most in this debacle. That should be to this Labour Government’s eternal shame. Having overcome all sorts of personal obstacles and barriers to secure a university place, many disabled students are still not getting the financial support that they need and deserve.
Astonishingly, recent figures from Student Finance England have shown that only 6,000 of the 19,000 applications for disabled students allowance have been processed. Last month my hon. Friend the Member for Forest of Dean (Mr. Harper) asked the Minister about the disabled students allowance. The Minister confirmed that 27 per cent. of applicants were still awaiting the result of an assessment, and that payments had been made to only 29 per cent. of applicants. Although recipients of the grant constitute a small number of the overall student population, figures show that in 2007-08 they totalled 40,700. Indeed, in a parliamentary answer given in November in the other place, the figure given for total expenditure on such students was £90 million, which equates to an average of £2,210 a student.
Assuming that the numbers have grown slightly since 2007-08, by my calculations around 30,000 disabled students have not received their proper entitlement. If that had happened under a Conservative Government, there would quite rightly have been howls of outrage, not least from newspapers such as The Guardian, yet we have heard little or nothing about it. It is with great sadness that I say that it is our most vulnerable students who are being let down by this useless, inept Government. I find the situation shocking and, quite frankly, unacceptable. How could any Government manage to be so incompetent?
However, it is not just disabled students who have been let down. Many families on low incomes have also been affected. That is because anything over and above the basic level of a maintenance loan is means-tested, and the processing element of such requests is done after the standard loan has been decided. That means that mature students with considerable family responsibilities are suffering. Such students from non-traditional backgrounds are the very people whom this Government have preached about helping into higher education, and the very people who are on the verge of dropping out, owing to the disgraceful lack of financial help and support.
Such people are often the recipients of child care grants and adult dependent grants. The figures for 2008-09 show that 9,800 students in England received child care grants worth a total of £36.1 million, which is an average of just under £3,700 for each student in receipt of the grant, while 7,800 students received a total of £18 million in adult dependent grants, an average of just over £2,300 for each student. Those people are in real trouble, and yet Student Finance England is apparently completely unable to provide any data on the backlog, because payments are being processed manually. Can you believe it, Mr. Deputy Speaker? Tens of billions of pounds have been spent by this Government on computers, and yet the funds to reach some of our poorest students are being processed manually. You just could not make it up if you tried.
I do not criticise the support package itself; indeed, it is commendable. In a written answer to my hon. Friend the Member for Basingstoke (Mrs. Miller), the Minister confirmed that a child care grant of up to £13,260 a year is available for eligible, full-time undergraduate students with children in child care, although as I have just mentioned, the average works out at about £3,500.
Let us put the exact figures aside, however. How can people look after their children if the money has not arrived for the past six months? Where is the money now, and when will it be paid? How can a family survive in such circumstances? Although only 0.5 per cent. of students are eligible for support, they are in many ways the most affected. Such students are crucial to the widening of participation, and they should be nurtured.
Let me say one last word before I am told to sit down. [Interruption.] The Front Benchers spoke for an hour and a half, and I want to have the final say.
Another group has been let down by incompetence on account of another failure to deliver the financial assistance that was promised. This Government can never again preach about widening participation, given that they cannot even deliver on their basic duty of care to disabled students and mature students who want to look after their families.
I want to explain, in clear language, why so many chemistry and physics departments close. That accusation was made by the Conservatives, and it is true.
There are two main reasons why it has happened. First, under the Conservative Government teaching was made a very unattractive proposition owing to the huge cuts that were forced on secondary schools. Secondly, the number of specialist teachers available to teach physics, chemistry and mathematics in those secondary schools fell under successive years of Conservative Government, and eventually—until the present Administration took control—non-specialists were trying to teach very technical subjects. Given that factor alone, is it any wonder that there was little demand for university places for the study of science and engineering?
In the 1960s and 1970s, there were four examples of what I would term colleges of advanced technology, churning out thousands of scientists and engineers. They were Brunel, Aston, Salford and Bradford. What happened in 1981, just after the Conservative Government had taken control? Those four colleges almost closed. It is true that the Conservatives made them into universities, but then they almost closed them. John Ashworth, the new vice-chancellor of Salford university, arrived in 1981 to face—and this is the truth—a 44 per cent. cut in funding for a single university, and that was not uncommon. All the other colleges of advanced technology churning out all those scientists and engineers suffered similar cuts, which completely destabilised their chemistry, physics and engineering departments.
Salford used to have the largest chemistry department in the country; it also taught physics very adequately, and had a very good mathematics department. Even more important, it had large and productive engineering departments teaching civil, mechanical and electrical engineering, and the graduates experienced no trouble in obtaining jobs in British industry. Following the cuts made by the Tory Administration, however, those departments closed one by one, and there were similar developments throughout the British university system.
The cuts continued. Between 1989 and 1997, there was a 36 per cent. fall in funding for students in our higher education system. The truth is that the Conservatives caused those departments to close, and caused the shortage of scientists and engineers in this country. They have asked the same question three times, and now I have given them a truthful answer.
When the present Administration took control in 1997, the buildings in our universities and schools were in a shocking state. I am proud of my Government for investing so much money—not just revenue expenditure to support students in our universities, but tens of billions of pounds of taxpayers’ money to bring not only schools but, in particular, universities up to a decent standard. I am now proud to enter the chemistry department of Manchester university, and to compare the state of its laboratories today with the state the laboratories that I knew under the Conservative Administration. Students now want to study and research in those laboratories, but if they had gone to a university such as Manchester for an interview during the Conservative Administration, they would have seen some very shoddy laboratories.
I want to be parochial for a few moments. When I was first elected to represent my constituency in 1997, not one of my secondary schools had a sixth form attached to it. The only sixth-form college was geographically remote from many of my constituents, so they either did not bother to get a qualification that would give them access to university or they had to travel out of the borough to Bury or Salford—or they had to go to the other two parliamentary constituencies where the schools did have sixth forms attached to them. Today the position has completely turned around. Thanks to this Government, a brand new community college is now under construction in my constituency, and I also have a new sixth form under construction. Both of them are going to open this September on an educational campus adjacent to the university of Bolton. Also, in one of the poorest areas of my constituency I have a second brand new sixth-form college, and it is oversubscribed. The students who formerly went out of the borough now want to study in these brand new colleges, but if it had not been for this Labour Government, we would not have had three brand new colleges, provided by the Learning and Skills Council. These colleges are now attracting students back to study mainstream subjects.
I have to hand some figures showing the effect of a Labour Government for my students. In the academic year 1997-98, in the most affluent of our parliamentary Bolton constituencies, Bolton, West, 2,220 students enrolled in UK higher education institutes. By 2008-09, that figure had gone up to 2,685. In the Bolton, North-East constituency, the figures are 1,945, up to 2,260. In my constituency, which is the least affluent of the three Bolton constituencies, the figure in 1997-98 was only 1,560, but by 2008-09 it had increased significantly, to 2,155, thanks to the policies of this Government. However, now that these three new colleges are in place—two sixth-form colleges and one community college—I am expecting more of my students, including some from among the poorest estates in my constituency, to begin to access higher and further education.
I warn my constituents tonight that if we see another Conservative Government, we will see another deterioration not only in secondary education, but in further and higher education. That is the choice my constituents will face on 6 May—or whenever the general election is held.
I think that I may have the pleasure of being the last Back-Bench speaker in this debate. More than anything, I want to look forward, rather than backwards. I may be one of the newer and younger Members of this House, but that means that I have a rather different perspective from some other Members.
I do not know how old previous speakers were under the last Conservative Government, but new students now—whom we should be thinking about, and who might be listening to this debate or might read the record of it tomorrow—were five years old under the previous Conservative Government. It does no honour to them at all to say that they have not the brains to look at the choices facing them now, and in the next three years, and the next 10 and 20 years, and throughout their economic lives. It is essential that we look forward, not back. If we do that, we will all realise what choices we have to consider, and students will do that as well.
Let me start by saying that anybody who has the academic ability and ambition to go to university should have the opportunity to do so, regardless of how wealthy their parents are. In my view, a person’s time at university is the beginning of their independence, and it is all the more important that that independence occurs financially, as well as socially and emotionally. Students at the point of moving away to university—I note that many students in my constituency are being encouraged to stay at home, but we might get on to that separate topic later—begin to plan their lives independently of their family background. That is an incredibly important milestone in social mobility. We are talking about the lives of individuals. We are talking about someone moving away from their background and saying, “I am going to create my life. I am going to do what I want to do with my life.” That occurring on a small scale and eventually being writ large across society is how social mobility works. It is about individuals choosing what they wish to do with their lives. I fully support the role of this debate in drawing attention to what choices individual students wish to make. Higher education is, therefore, an investment in one’s own future. I accept that, as I suspect hon. Members from all parts of the House would. I hope that they understand the economic ramifications of it.
I shall draw further attention to myself by saying that I suspect that I am one of the few Members of this House who is paying off their student loan and putting the Department of Resources to the trouble of calculating the payment to come out of my monthly pay cheque—
Would you get the discount?
Irrespective of whatever I may or may not be contributing myself, I welcome Lord Browne’s review of higher education funding and student finance. I particularly welcome its balance and the way in which its terms of reference allow an exploration of the balance of contribution among taxpayers, students, graduates and employers. Some important points of intergenerational fairness are contained in that review, and I wish to discuss that briefly before posing three questions.
This generation is the one that will pick up the bill for this Government’s debt crisis, the one that will have to work harder to obtain higher qualifications in order to have the privilege of doing so and, sadly, for reasons that are outside the remit of this debate, the one that is, in many cases, leaving school with worse qualifications in the sense of being able to read, write and get out into the workplace. Many students I meet during the course of my constituency duties testify to that, as do many businesses, which are seeking to employ them positively but are looking for the things that will help them to do that.
This generation is also the one that will have to work longer and harder to pay off that debt crisis. I understand that we will all now individually be paying £23,500 to get rid of that debt, and that collectively the amount of interest we are paying on our debt is more than the dedicated schools grant. In addition, inequality has widened over the past decade, as I believe the National Equality Panel report confirms. This year’s 18-year-olds are the first to have experienced their entire education under only a Labour Government, starting from that point of five years old, to which I have referred. Given all that, perhaps the Ministers would like to join me in an exercise of arithmetic, although they failed to do that earlier. We know what the choice is facing those young people—incidentally, I should mention that they are also first-time voters—as do they. This Government have failed that generation and its parents.
I wish to focus on just three ways in which this Government are confused. I shall focus on this year’s sharp increase in the number of applications, on the reduction in the number of undergraduate places and on my concerns about a couple of other matters dealt with in the funding letter that went to institutions last December. First, there will be 6,000 fewer university places in September, so why are the Government not considering ways to allow more students to go to university? My second question relates to the teaching allocation. I understand that the letter says that the allocation decreases by 1.6 per cent. in real terms. Why do the Government not agree that teaching quality and the student experience must not suffer in this round? My third question is rather more of a specialist one, and it relates to historic buildings. I would be grateful for some information from the Government Front-Bench team on why the Government are not sticking by a pledge across the Departments to promote access to the built and historic environment. I shall come on to that shortly.
Institutions such as Norwich university college of the arts, which despite sitting in the constituency of the right hon. Member for Norwich, South (Mr. Clarke), who is sadly not in his place, serves my constituents and a wider regional and national area too, are suffering a reduction in resources at a time when demand is extremely high. I can quantify that for hon. Members by saying that there has been an increase of 140 per cent. in the number of applications to it this year. However, it has been limited to an intake of 500 first-year students although it has more than 1,000 applications from students of good ability, attainment and ambition seeking to take its courses. I am not talking just about courses that could be said not to matter—although I challenge anybody in the House to define what such courses might be—but about courses that are strongly linked to areas of emerging economic strength, regionally and nationally.
As any Member will know, we are talking about not just units of growth but individual people—18-year-olds—whose hopes are being dashed. What is dashing them? It is not the economic situation alone but the lack of freedom given to higher education institutions to innovate and do what they do best in teaching students. There are ways to create extra places, as demonstrated by my hon. Friend the Member for Havant (Mr. Willetts). I simply do not think the Government have considered the economic and human impact of allowing this reduction to pass. Anyone who has the academic ability and ambition, as I have said, should have the opportunity to go to university, and I cannot think how the Minister can reconcile his agreement with that statement with such a policy this year.
The teaching allocation within the higher education settlement decreases by 1.6 per cent. in real terms this year, as per the letter written by the noble Lord Mandelson in December. Teaching quality and the student experience must not suffer. We need more tutor attention for students, not less, so we are able to compete internationally in higher education. I think that the Minister for Higher Education and Intellectual Property agrees with that. He has said:
“Teaching is protected because this government recognises that a higher quality student experience with excellent teaching and research is vital”.
Will he now explain how the teaching budget cuts of 1.6 per cent. in real terms protect that teaching?
If we are to achieve any consensus on the fees review in a way that is progressive, fair, sustainable and supportive of social mobility, the bargain must be that people pay for higher education but only for good-quality higher education. The payment should be for teaching by qualified, experienced, researching academics who work together with their undergraduates and their postgraduates to make our higher education institutions internationally proud places to study in. I want to see whether the Minister can continue to assert in his summing up that Government plans will have no impact on those laudable aims.
The final, rather more specialist, aspect of my speech relates, as I mentioned before, to historic buildings. My understanding is that some universities and colleges will be experiencing a particular impact from the noble Lord’s cuts because of their historical estates. I understand that some higher education institutions will have suffered the withdrawal of the premium for historic buildings because of that letter. Not only will that undermine the ability to provide an environment for learning, but it will damage our national heritage more broadly. We all value the aims and ideals of education, and we can all understand that point, if it is true. I look forward to some clarification, as I can see looks of puzzlement on the Ministers’ faces.
I want to draw out a point of confusion in the Government. The Department for Culture, Media and Sport’s mission statement—mission statements are wonderful things—states:
“We work to support and promote the widest access to excellence in culture—in the arts, in museums and galleries, in architecture and in the built and the historic environment, and libraries.”
“Access” is a key word there. It runs through the entire debate and through the themes of fairness that we have been speaking about all evening. As today’s motion notes, an enormous contribution is made to our economy and to our civic life by universities. We all want the widest range of access to our economic, civic, educational and heritage assets because that is fair and progressive.
Having said that, I do not expect the Chancellor to speak to the First Secretary, or for him to speak to the Secretary of State for Culture, Media and Sport, but if some parts of the Government are interested in cultural and historical sites of importance while another part of the Government is cutting funding to educational institutions on the same grounds, surely we are all in a pickle. I do not know why the Government are not helping us in this matter by acting in a joined-up way. I would like them to answer all three of the questions that I have posed.
This has been an important debate, because all our futures are built on how well we educate the next generation. It was begun splendidly by my hon. Friend the Member for Havant (Mr. Willetts) and we have heard the enthusiasm for higher education that permeates this House and crosses parties.
As Disraeli said:
“Upon the education of the people of this country the fate of this country depends.”
This is also an important debate because our country faces real choices. The choice is between a Government who promised so much yet have delivered so little, and a new Conservative Government determined to deliver real opportunity and to help everyone to do their best. As youth unemployment reaches record highs and the number of people not in education, employment or work nudges the 1 million mark, we should not let this Government get away for a second with their claim—and they have repeated it tonight with extraordinary temerity—that 50 per cent. of all young people would go to university.
That is exactly what Tony Blair promised the Labour conference 10 years ago. It is also what the Labour party manifesto promised in 2001, with the claim that it would be achieved by the end of a decade. This Government encouraged all to aspire to the academic path and by that yardstick—their yardstick—they have failed. They have failed to meet their target for participation, failed to widen access to higher education, and failed to expand opportunity.
It is clear for all to see. There has been a sharp increase in applications, with a cumulative effect that was identified by the hon. Member for Bristol, West (Stephen Williams). So applications for HE next year are likely to go up, but in response the Government are planning cuts that are likely to lead to a reduction of 6,000 places.
The loss of those places will disappoint thousands of young people. After spinning the virtues of academic achievement for so long, the Government are pulling up the ladder of opportunity.
On that point, does my hon. Friend agree that what the Minister said to me earlier was an insult to the 158,000 students who were refused a place at university last year? In response to my intervention, the Minister said they should return to sixth-form college. Does that not show a complete lack of understanding of the problem, and of understanding and sympathy for the problems that students face?
I think very highly of the Minister, and I admire his long journey from Tottenham to this place. However, I thought that he was disappointing—understandably, the response that he received in this House was one of surprise, nay shock; and disappointing in the message that he broadcast to all the young people coping with disappointment themselves as a result of the Government’s failure to live up to their pledge. The Government are pulling up the ladder of opportunity, and that is not a happy position for this Minister, or others, to be in.
The facts behind the Government’s failure speak for themselves. Even though the figures have been recalibrated and recalculated, by last year the Government had achieved just 43 per cent. participation in HE. The House will remember all the promises of 50 per cent. participation, but the real rate is only 43 per cent., and participation by young women masks the failure to allow more young men to participate.
Participation among men stands at only 38 per cent.—just 1 per cent. higher than a decade ago. That is all the difference that the Government have made, despite all their rhetoric and spin. Under a consistent measure, the proportion of entrants overall has hardly increased over the decade. And even though the Government have spent more than £2 billion a year on programmes to widen participation—and we heard the Minister wax lyrical about them again earlier—the participation rate by working-class students has hardly improved since 1995. As my hon. Friend the Member for Reading, East (Mr. Wilson) memorably put it, so much for so little.
As though that were not bad enough, the improvement rate for working-class participation has actually declined. In the previous decade, participation by working-class students grew at a faster rate, according to the Government’s own figures—[Interruption.] The Minister makes an intervention from a sedentary position with a degree of complacency that I think inappropriate, given the subject that we are debating. However, he will know that the latest statistics from the Higher Education Statistics Agency show that the number of undergraduates from lower socioeconomic groups is falling.
In all our key competitors, vocational education and training provide an alternative route to higher-level skills, as my hon. Friend the Member for Isle of Wight (Mr. Turner) said. Here, however, the number of people taking level 3—that is, technician-level—apprenticeships has fallen. At the beginning of the decade, 84,600 people started an advanced-level apprenticeship, but last year that number was 81,400.
indicated dissent.
The Minister shakes his head once again, but the figures are here for him to consider, when he wishes to do so. Let us just compare our figures with those for France and Germany. In both those countries, more than 500,000 people start the equivalent of a level 3 apprenticeship every year.
John Ruskin was right:
“Education is the leading of human souls to what is best, and making the best of them.”
Too often people, especially young people, do not get the advice and guidance that they need to turn their ambitions into reality. In two thirds of schools in England, careers advice is given by staff without any formal qualifications, and a recent study found that only 31 per cent. of young people feel that they are getting adequate information about going to university. That is why we so desperately need a dedicated, impartial, all-age careers service with a presence in every school and college in this country and a presence on the high street too.
If we are to help more people to access higher education, we have to move away from the Government’s narrow view that the only form of study that counts is full-time degree courses taken at 18. According to a recent report written for the Government,
“the UK is not doing enough to provide a more or less complete online educational experience to students who, for a variety of reasons cannot enjoy a conventional campus based learning experience.”
I believe that institutions must be given more flexibility to deliver greater opportunity in practice, and that means that, as a nation, we cannot afford to fall behind other countries in the provision of e-learning and other forms of distance learning. We need to look again at part-time study, flexible learning, credit-based learning and modular learning.
It is extraordinary that institutions are not encouraged by the Government to learn from the Open university, which has led the way in developing innovative ways to study online. Many new universities, first as polytechnics and since, have developed strong links with local industry over many decades. They have pioneered sandwich courses and part-time day release courses in which students can combine work and study. But the Government’s expectation that universities should all be alike has often undermined those links. [Interruption.] The Minister is chuntering again, but he must know that sandwich courses have declined, according to Universities UK and CBI research. He knows, too, that the number of students participating part-time has declined too.
Lord Mandelson talks about a two-year degree course. We already have a two-year degree course: it is called a foundation degree, often developed in collaboration with FE. My hon. Friend the Member for Havant made it clear that alongside HNDs and other traditional vocational educational routes, we value foundation degrees. They make possible flexible study and are a route to a full degree. But the danger is that under the Government’s plans, in future many more students will be denied the chance to take up foundation degrees, as universities claw back these places from colleges. That is what the Association of Colleges warns and we are hearing from colleges up and down the country that their provision of HE in further education, with all the advantages it offers in terms of widening participation, is now jeopardised.
Will the hon. Gentleman give way?
I will not, because I want to make progress. I do apologise. There is limited time.
When I meet students up and down the country, I am struck by just how many work part time, even though they study for a full-time degree course. The fact is that many now need to combine study with work, even if they are registered as full-time students. Condensing studies into two years may be a barrier to some potential students. Instead of prescribing to universities how to deliver new forms of provision, we should be giving institutions the freedom that they need to develop programmes that best meet the needs of their students and their communities. We should be encouraging greater collaboration between FE and HE. We should be more imaginative and innovative about what is taught, where it is taught and how it is taught. That is the best way of widening participation, not dictating to universities from the centre in the micro-managed, target-driven way so favoured by this Administration.
I know, of course, that these Ministers are not despicable, and I know they are distressed because they are distrusted and now disdained. I know too that they are disappointed, disabled by their own incapacity to put right what they have done wrong, because they carry the bitter legacy of their Labour predecessors’ failure. Ministers, however well meaning, will not concede; they do not prepare because they cannot pretend to be capable of making the change that we need. Instead we have the obfuscation, exaggeration and self-congratulation of the amendment they have tabled tonight. It is all about the past, not the future. Spin, not substance, is given undeserved attention by that misleading amendment to our modest motion. Only a fresh start can bring the change we need: change and hope, change for the better and hope for the future.
As Ezra Pound said:
“A man’s hope measures his civilization.”
I know that Ministers are civilised people. They are marked not by malevolence but by mistakes and misadventure. They are drowning, not waving.
Whatever Ministers’ motives, they have done for Britain what Philip Larkin said our parents do to us all. Strangely, they have let down the parents as much as their children. All those ambitions frustrated by a cut in the number of university places—more than a quarter of a million will miss out this year. For that reason alone, it is time to change.
It is time to dare to dream again of a change for the better: a better Government who will create 100,000 new apprenticeships and pre-apprenticeship places; a better Government who will provide 50,000 more FE college places a year; and a better Government who will fund 10,000 extra student places and so make people’s dreams come true. There is a chance to change and a chance to hope for a better Government—a Conservative Government.
By putting that third poet in, the hon. Member for South Holland and The Deepings (Mr. Hayes) took more time than he was allocated, Mr. Speaker, but he is a literate man and we are always delighted when he does that.
I congratulate hon. Members on an excellent debate, despite the knockabout at the end from the hon. Gentleman. We have had some great Back-Bench contributions, including from my hon. Friend the Member for Luton, North (Kelvin Hopkins), who expounded higher education policy on behalf of himself. The hon. Member for Isle of Wight (Mr. Turner) made a fine contribution, and on the Labour side there was an extremely thoughtful and thought-provoking speech from my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt), who described himself as a recovering academic, unless I misheard him. He rightly pointed out that the success rate for students getting into universities has increased in the past 10 years from 64 to 68 per cent. One would not think so from listening to Opposition Members, but that is a fact. He rightly paid tribute to Ioan Morgan from his constituency, who is a native of Tredegar in the county I come from in south Wales. He made an interesting proposal on education trust funds that I think bears further examination.
We heard from the hon. Member for Reading, East (Mr. Wilson) and my hon. Friend the Member for Bolton, South-East (Dr. Iddon). My hon. Friend spoke with great authority, as ever, about science and science teaching and rightly pointed out the investment that this Government have made in further education in the past 10 years. Hon. Members did not mention, but could have, that in 1997 not a single penny was spent by the Conservative party on capital in our further education system.
We also heard from the hon. Member for Norwich, North (Chloe Smith), who mentioned the historic buildings proposal, which I understand comes from the funding council. We were not looking perplexed; that is the case. Interestingly, she pointed out to the House that she is still paying off her student loan, so reminding us of exactly the kind of person who would benefit from the discount that the hon. Member for Havant (Mr. Willetts) proposes. It would be Members of Parliament and people of that ilk who would get the 10 per cent. discount that he wants to offer. I noted that the hon. Lady did not declare an interest, but that is, perhaps, understandable: she knows that the hon. Gentleman has no intention of introducing the policy, because he knows that it is completely unworkable.
The Conservative Front-Bench contribution perfectly embodied the values and playbook of the Cameroonian Conservative party—a series of assertions, positionings and manoeuvrings designed to suggest a feint to the left on the political field, while all the time the ball is being shoved up the jumper, hidden and moved carefully to the right wing, where we know it really is. Any good coach would tell you, Mr. Speaker, that when such tactics are used you should look at the big picture. Despite all the hullabaloo, distraction and nods by the Tories in this debate to more being done on FE and HE, they plan to cut public spending quickly and deeply this year if they get anywhere near to power. In the meantime, however, they want to pretend that they would like to do more.
To sustain the illusion, the hon. Member for Havant is peddling a bogus policy based on Mickey Mouse maths. On his student loan refund scheme, he thinks that if he repeats often enough in the House, with sufficient swivel-eyed conviction, that two and two make five, eventually people will start believe that two and two make five. I have to point out, as Labour Members have already pointed out several times, that his refund scheme simply does not add up. He does not have to listen to us—he can listen to people outside, because he might think that I am a little biased. He would be right, because I am, but there are other voices he could listen to. Perhaps he should listen to million+, which my hon. Friend the Member for Bolton, South-East mentioned, and which says some interesting things about the proposal. It points out that the immediate likely impact would be an increase in the uptake of student loans by people who do not need to take out a student loan, as my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) rightly pointed out.
An early discount repayment scheme would incentivise students who can afford to pay to take out a loan. If tuition fees were £10,000, by taking out a loan with a 10 per cent. discount for early repayment, they could pay back £9,000, rather than £10,000. On that, million+ says:
“There is a real risk that such a scheme would change student behaviour with wealthier students…paying less towards the cost of their higher education than students are not…well off”.
So much for the progressive policies of the Opposition—their proposal is a giveaway for those who least need it. Where have we heard that before?
At least the Opposition are consistent. Whether it is inheritance tax or student finance, they make sure that their minted mates are looked after first. It is worse than that, because the amount that the proposal would raise in revenue would fall pitifully short of what would be required to fund the 10,000 student places that they bogusly say they are going to fund—more Mickey Mouse maths. The policy of the hon. Member for Havant costs him £30 million before he has funded a single extra place, because £300 million is already repaid by graduates every year without a discount operating. If they receive his 10 per cent. discount—and he cannot prevent them from doing so—it will cost him a cool £30 million in exchange for precisely nothing. More Mickey Mouse maths.
In any case, the hon. Gentleman’s assumption that he will get big money from his scheme flies in the face of the evidence from Australia, which tried double the discount rate that he is offering. The take-up was tiny, so nowhere near the amount of money that he thinks will be raised, in his carefully considered wild guesstimate, could be raised. More Mickey Mouse maths. They like giving it out, but they do not like it up ’em. The money that the hon. Gentleman hopes to get back from his scheme, although it is much smaller than he thinks, is money that is already owed to the banks, so in reality, there is no new money in the proposal at all. It is disguised borrowing. What is more, it is expensive, bureaucratic and convoluted borrowing for one cohort of students, as my hon. Friend the Member for Wolverhampton, South-West pointed out.
If the hon. Member for Havant wants to commit to borrowing to fund more student places, he should do it openly and in the most efficient manner for the public purse, but he will not do so, because he wants a buy now, pay later, something-for-nothing policy, the true cost of which he does not have to admit to the country and the House—Mickey Mouse maths. No wonder the president of the NUS in Australia has described this kind of discount scheme as a con, a good deal for the wealthiest and a poor deal for everyone else. She has a very good point.
That is not the end of it, because the Opposition motion calls for more training places—another apparent move to the left, but actually just more Mickey Mouse maths, because the Opposition’s policy is to abolish Train to Gain. They say that they have several uses for the money, but as far as I can see, they have spent it several times over. However, I will give them the benefit of the doubt, despite their Mickey Mouse maths. One thing that would be certain if they abolished Train to Gain—one thing on which we can depend as sure as the sun will rise tomorrow, and as sure as the hon. Member for South Holland and The Deepings (Mr. Hayes) will quote poetry in his speech—is that there would be fewer training places.
We have had 1.4 million people training through Train to Gain. Just this month I shared a stage with the millionth learner to get a qualification through Train to Gain, and he had his boss, the managing director of William Blythe Ltd of Accrington, with him—
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Question put accordingly (Standing Order No. 31(2), That the original words stand part of the Question.
The House proceeded to a Division.
I ask the Serjeant at Arms to investigate the delay in the No Lobby.
Question put forthwith (Standing Order No. 31(2)), That the proposed words be there added.
The Speaker declared the main Question, as amended, to be agreed to (Standing Order No. 31(2)).
Resolved,
That this House welcomes the contribution made to the economy and civic life by universities; notes the sharp increase in university applications for 2010-11; commends the Government for its record levels of investment in higher education, an increase of over 25 per cent. in real terms since 1997, which has supported more students participating in higher education than ever before; notes a 24 per cent. increase in the number of students participating in higher education since 1997, more young entrants to full-time first degrees in England who are from state schools, lower socio-economic groups, and low participation backgrounds, and recent studies which have shown that over 50 per cent. of young people aspire to go on to higher education; recognises the Government’s commitment to expanding the range of pathways to higher education, including through apprenticeships, and to expanding the opportunities to participate in higher education, including through the development of foundation degrees, which have benefited 100,000 students; further notes that the Government is providing students with high levels of student support to enable them to access higher education; and welcomes the proposals in the papers Quality, Choice and Aspiration, published in October 2009, and Higher Ambitions, published in November 2009, to provide prospective students with better information, advice and guidance to enable them to fulfil their full potential.
Business without Debate
Delegated Legislation
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Children and Young Persons
That the draft Safeguarding Vulnerable Groups Act 2006 (Regulated Activity, Devolution and Miscellaneous Provisions) Order 2010, which was laid before this House on 27 January, be approved.—(Steve McCabe.)
The Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 17 March (Standing Order No. 41A).
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Rehabilitation of Offenders
That the draft Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2010, which was laid before this House on 2 February, be approved.—(Steve McCabe.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Children and Young persons
That the draft Safeguarding Vulnerable Groups Act 2006 (Controlled Activity and Miscellaneous Provisions) Regulations 2010, which were laid before this House on 2 February, be approved.—(Steve McCabe.)
The Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 17 March (Standing Order No. 41A).
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Commons
That the draft Commons Councils (Standard Constitution) (England) Regulations 2010, which were laid before this House on 9 February, be approved.—(Steve McCabe.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Representation of the People, Northern Ireland
That the draft Representation of the People (Timing of the Canvass) (Northern Ireland) Order 2010, which was laid before this House on 3 February, be approved.—(Steve McCabe.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
That the draft European Parliamentary Elections (Northern Ireland) (Amendment) Regulations 2010, which were laid before this House on 24 February, be approved.—(Steve McCabe.)
The Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 17 March (Standing Order No. 41A).
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Northern Ireland
That the draft Electoral Law Act (Northern Ireland) 1962 (Amendment) Order 2010, which was laid before this House on 24 February, be approved.—(Steve McCabe.)
The Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 17 March (Standing Order No. 41A).
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Housing
That the draft Housing and Regeneration Act 2008 (Registration of Local Authorities) Order 2010, which was laid before this House on 20 January, be approved.—(Steve McCabe.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
That the draft Housing and Regeneration Act 2008 (Consequential Provisions) Order 2010, which was laid before this House on 3 February, be approved.—(Steve McCabe.)
Question agreed to.
Business of the House
Ordered,
That, at the sitting on Monday 22 March, notwithstanding the provisions of Standing Order No. 16 (Proceedings under an Act or on European Union documents), the Speaker shall put the Questions necessary to dispose of proceedings on the Motions in the name of Secretary Jack Straw and Mr Secretary Woodward relating to Northern Ireland not later than four hours after the commencement of proceedings on the first Motion; proceedings may continue, though opposed, after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.—(Steve McCabe.)
Petitions
Dementia Research
I wish to present a petition calling on the Government to increase funding for dementia research. It has been signed by 2,542 members of Unison and others.
The petition states:
The Petition of members of UNISON and others,
Declares that one million people will develop dementia in the next ten years; that one in three people over the age of 65 will die from dementia but that it can happen at any age; and that while drugs may alleviate some symptoms, there is currently no cure;
Further declares that the Government must fund research to develop better treatments and a cure, and to prevent an NHS crisis; and that for every £283 invested in cancer research, dementia research gets only £1.
The Petitioners therefore request that the House of Commons call upon the Government immediately to increase funding for dementia research to help the lives of those affected today, and to reduce the threat in future to the NHS.
And the Petitioners remain, etc.
[P000750]
Free School Meals (Stoke-on-Trent)
I wish to present a petition on behalf of the people of Stoke-on-Trent, South who have told me time and again that they believe that all primary age children should be entitled to a free school meal. I have met on many occasions school cooks and dinner staff who have told me of the profound need that many children have for a substantial, nourishing free school meal. The people of Stoke-on-Trent, South have also expressed their concerns that the local Conservative council has not even made an effort to work with partners on this issue in the pilot scheme.
The petition states:
The Petition of Rachael Wilson and others,
Declares that there is a desire among the people of the city of Stoke-on-Trent for Free School Meal provision in the area’s schools; further declares that several hundred postcards in support of Free School Meal provision, signed by parents, grandparents and carers of children studying in Stoke-on-Trent Primary Schools, have been sent to the Member for Stoke-on-Trent.
The Petitioners therefore request that the House of Commons call upon the Government to take steps to ensure that Free School Meals can be provided in the city of Stoke-on-Trent.
And the Petitioners remain, etc.
[P000769]
Badman Report (Gosport)
I am grateful to have the opportunity to present a public petition signed by a considerable number of constituents in the Gosport constituency who are supportive of home education and concerned about the recommendations in the Badman report. The petition was collected by my constituent Tracy Weaver and her husband Dr. John Weaver, who, together with their children Abigail, Rebecca, Charlotte and Isabel, came to a constituency surgery, where I had a chance to discuss home education with them, the children being educated at home.
The petition reads:
The Petitioners therefore request that the House of Commons urges the Secretary of State for Children, Schools and Families either not to bring forward, or to withdraw, proposed legislative measures providing for tighter registration and monitoring of children educated at home in the absence of a thorough independent inquiry into the condition and future of elective home education in England; but instead to take the steps necessary to ensure that the existing Elective Home Education Guidelines for Local Authorities are properly implemented, learning from current best practice, in all local authorities in England.
And the Petitioners remain, etc.
Following is the full text of the petition:
[The Petition of persons resident in the Gosport parliamentary constituency,
Declares that they are concerned about the recommendations of the Badman Report, which suggests closer monitoring of home educators, including a compulsory annual registration scheme and right of access to people's homes for local authority officials; further declares that the Petitioners believe the recommendations are based on a review that was extremely rushed, failed to give due consideration to the evidence, failed to ensure that the data it collected were sufficiently robust, and failed to take proper account of the existing legislative framework.
The Petitioners therefore request that the House of Commons urges the Secretary of State for Children, Schools and Families either not to bring forward, or to withdraw, proposed legislative measures providing for tighter registration and monitoring of children educated at home in the absence of a thorough independent inquiry into the condition and future of elective home education in England; but instead to take the steps necessary to ensure that the existing Elective Home Education Guidelines for Local Authorities are properly implemented, learning from current best practice, in all local authorities in England.
And the Petitioners remain, etc.]
[P000650]
We come now to the Adjournment.
I do beg the hon. Gentleman’s pardon: the day would not be complete without petitions from Dr. Spink.
Footpath Closure (Hadleigh, Castle Point)
Thank you very much, Mr. Speaker, how gracious of you.
People should be able to live in peace and quiet in their homes. So-called antisocial behaviour is often simple thuggery, and it should not be tolerated. The local council should now take the issue of street design in the Hadleigh area seriously. It should protect long-suffering residents and not just brush them aside, as it has for years. We should fight bad behaviour, not excuse it; we should challenge, not hug hoodies. I congratulate each of the excellent residents who signed the petition.
Following is the full text of the petition:
[The Petition of Doug Beard, residents of Shipwrights Drive, Highfield Avenue, Castle Point and others,
Declares that they object to the link footpath between Shipwrights Drive and Highfield Avenue, Hadleigh; that this footpath is a focus for vandalism to adjacent residents' properties and close residents, resulting in hundreds of pounds of damage to roof tiles, walls, security lights, and regular attendance of police officers; further, that this footpath does not provide sufficiently significant convenient access for local residents to outweigh the considerable loss of quality of life caused 24/7 to residents; that for these and many other valid reasons residents of Shipwrights Drive and Highfield Avenue, Hadleigh call for the complete closure of the link footpath since this is, on balance, in the public interest.
The Petitioners therefore request that the House of Commons urge the Government to press Castle Point Borough Council, the Highways Authority and all Councillors, to ensure the immediate closure of the link footpath between Shipwrights Drive and Highfield Avenue, Hadleigh.
And the Petitioners remain, etc.]
[P000767]
Disrepair (Felstead Road, Castle Point)
I have a second petition, which addresses the important issue of the condition of our paths and roads, which are the subject of the Adjournment debate that will begin in a moment. Residents are deeply concerned about Felstead road and have been asking councillors to take action to repair it for years. Recent ice and water damage have exacerbated the problem. The key concern is for people’s safety, and especially that of elderly people. I warmly congratulate all the caring residents who signed the petition, which states:
The Petition of Mr. Kent Taylor, Mr. Lee Gardiner, residents of Castle Point and others,
Declares that the pavements and Felstead Road between the A13 and Bowers Road, Benfleet are in a state of disrepair; that in their current state, these present a real and immediate danger to local residents, especially the elderly and those with limited mobility, and have already been the cause of several accidents; further, that poorly maintained pavements disadvantage pedestrians, are unsightly and adversely affect the local street scene; that for these and other valid reasons, residents call for the immediate repair and continued maintenance of the road and pavements since this is in the public interest.
The Petitioners therefore request that the House of Commons urges the Government to press the Borough Council, Essex County Council, the Highways Authority and all Councillors, to ensure the immediate repair and continued maintenance of Felstead Road, Benfleet.
And the Petitioners remain, etc.
[P000768]
Potholes and Road Maintenance
Motion made, and Question proposed, That this House do now adjourn.—(Steve McCabe.)
I would like to bring to the Minister’s attention the blight of potholes and neglected roads, which is a national problem, yet one that often falls down the political agenda, perhaps because it is not seen as an emotive issue. As Paul Watters, head of roads policy at the AA, recently explained to The Guardian:
“If it’s a choice between a school or a nursing home and the roads, the votes are in people, not lumps of tarmac…But of course the teachers who go to these schools and the nurses who work in these nursing homes all use the roads.”
Mr. Watters has a point, and the problem is widespread. Estimates suggest that there are at least 1.6 million potholes in England and Wales, and that the cost of repairing each of them is about £70. The Asphalt Industry Alliance estimates that the average shortfall in the road structural budget per local authority is £6 million, and that in England only 57 per cent. of the required budget for road maintenance is received. The Local Government Association estimates that there is an £8 billion shortfall in highway maintenance costs, built up across the country for up to 20 years.
Local authorities are responsible for nine out of 10 miles of road—the Highways Agency only looks after motorways and major trunk roads—which is why the lack of funding for local authorities is such an issue. The Asphalt Industry Alliance estimates that, owing to chronic underfunding, it would take up to 13 years to clear the maintenance backlog on England’s roads, at a cost of £58.2 million per local authority. The problem is that the potential cost is adding up. Mr. Watters of the AA also said
“Our roads are such an underrated asset. We’ve got to preserve the asset and put more money into road maintenance. Less money is a false economy. If we let the roads collapse it will cost up to nine times more than if we repair them before they expire.”
Many people have said that this Government failed to fix the roof when the sun was shining, and it appears that they may have failed to fix the roads as well. Potholes affect all road users, from cyclists to bus passengers, and the problem is particularly acute at night on smaller, unlit roads. Drivers are often unaware of the existence of a pothole until the damage has been done, and the damage is significant.
The costs of the problem do not only involve the roads. Potholes are also a major factor in axle and suspension failure, which is estimated to cost British motorists £2.8 billion a year. Last year, an additional £35 million was paid in compensation. Potholes are an extremely costly problem which affects the whole country.
Cyclists and motorcyclists suffer particularly as a result of potholes, as they are more likely to feel the effects of uneven road surfaces, and two wheels mean that their weight is spread more thinly. Potholes can literally be a life or death issue for them. Cycling groups have backed the call for the problem to be addressed. Their reports show that it is increasing: in January 2009, 699 allegedly hazardous potholes were reported to cycling group CTC’s website, fillthathole.org.uk. During the same period in 2010, 3,508 hazardous potholes were logged.
St. Albans is a beautiful constituency, but it is car and traffic-ridden, and at the best of times it has significant congestion problems. Many of the council’s future traffic management initiatives, intended to combat the congestion in the town, depend on encouraging more people to abandon their cars and to cycle, walk and, indeed, use motorbikes. Cycling is a greener and, potentially, an efficient, healthy way in which to travel, but given our current road conditions, that is often not the case for St Albans cyclists. Without investment in our roads, cyclists will have a raw deal and experience unacceptable hazards. Many of them are children, who may not be able to cope with an unexpected pothole as they are cycling to school or in the area where they live.
Motorcycle News is championing the cause of motorcyclists who are being equally endangered by cavernous potholes. It is asking readers to submit pothole pictures and stories as part of its campaign to address the dangers that potholes pose to bikers. As it has observed in its campaign, bikers are voters too. The Government really ought to take notice of the pothole mania across the country that is affecting so many people in so many age groups.
Yes, you heard it here first: this election really will be fought on the pothole. We normally joke about there being no Liberal Democrats in the Chamber, but in St. Albans they are usually staring down a pothole, so perhaps that is where they are at the moment. Our local paper, the St Albans and Harpenden Review, has been running a campaign called ROAR, which stands for repair our awful roads. As I have said, the issue is not really funny. It is causing a dreadful situation in St. Albans.
I must declare an interest: my husband is an ardent motorcyclist. I know from listening to him that there is great and genuine concern about motorcyclists hitting potholes and the possibility of tragedy, particularly on poorly lit or unlit roads. I commend Motorcycle News on leading the campaign to protect motorcyclists. Two wheels, whether motorised or pedal driven, are suffering far more than four wheels on these treacherous roads.
Why do we have such cavernous holes in our roads? The cold snap in January exacerbated an already dire situation. As a result of two particularly harsh cold snaps in two years, the problem has now reached a tipping point for our roads. Cold weather produces potholes when water penetrates tiny cracks in the road. When the water freezes, it expands, widening the cracks. When it melts, these cracks are increased by vibrations and pressure from traffic flows—and we certainly have traffic flow in St. Albans. The cycle of freezing and thawing water has widened cracks in road surfaces, creating potholes. Once a pothole is created, it quickly degrades, becoming a massive and dangerous cavern if not repaired swiftly.
Geoff French, vice-president of the Institution of Civil Engineers, correctly forecast this problem. He said in January that the thaw would bring little respite, with drivers having to cope with increasing numbers of potholes. He warned that the continuous cycle of freezing and thawing, particularly on roads where long-term maintenance had been neglected, would break up road surfaces. That is what is happening. This is not just about potholes; the degradation of the road surface, which causes a rutting effect, is also particularly bad in some areas, such as mine.
Professor Stephen Glaister, director of the RAC Foundation, told the media:
“Potholes are not just about inconvenience. They damage vehicles and cause accidents. It is wrong to think doing nothing is the easy option. In previous years councils have spent almost as much money dealing with compensation claims as fixing the problem.”
As I have mentioned, in 2008-09 a staggering £35 million in compensation was paid out to road users. Will the Minister pledge to invest in maintenance now, rather than waste money on compensation claims in the future that should be invested in the chronically underfunded road networks? I want to give the Minister quite a while to respond to the issues I am raising.
Apart from the weather, one of the key factors leading to potholes is the use of deep trenching practices by utility companies. That is when trenches are cut into roads—often after they have just been re-tarmacked, bizarrely—to renew or install utilities and other services. Over the last three years, the AIA has counted about 2 million deep trenches dug into our road surfaces, so this is a real issue. Deep trenches have a significant impact on road structure, producing a 30 per cent. reduction in road life and contributing to the number of potholes, as the making good leaves small cracks that are particularly vulnerable to damage in weather such as we have had over the last two winters. When a trench is cut into a road surface and filled in afterwards, the gaps around the edges of the hole are where the problems occur. In areas such as St. Albans, where we have to take so much building and development to meet our housing-targeted needs, we regularly have our roads dug up by the utility companies.
While utility companies do the work and reap the benefits in charges for services, it is local councils that have to maintain the highways, and taxpayers who ultimately pay when repairs develop into potholes and ridged surfaces a few years down the line. Many of us have been beating up the gas and electricity companies for the massive profits they have been making, and it seems to me that when they are installing some of these services, they ought to be thinking of giving a little back to their communities. Industry bodies have argued that, considering the long-term damage done to roads and the resultant potholes, utility companies could help with maintenance. This might foster a culture of more considerate works on roads, and help to maintain good roads. Will the Minister give us his thoughts on this matter, and on whether anything can be done to tackle the problems caused by deep trenching? We all know that at present there is no money to spare in the Government’s coffers, so it should be an imperative that we explore such other means of trying to get adequate funding for our roads, particularly if some of the damage is being caused, or stored up for the future, by the utility companies.
If the utility companies are, through necessary works, compromising the integrity and life of our roads, they should pay into a dedicated road repair fund to contribute to any ongoing maintenance that results from their working. On the principle that the polluter should pay, this approach would at least be reasonable, and it would levy what, in effect, would be a pothole premium. I note that some authorities are thinking of having a pothole tax, but it seems deeply unfair that the poor old motorist and taxpayer who picks up the bill is taxed yet again, if it can be shown that the utilities may well have been responsible for part of the problem.
In Hertfordshire, the problem with potholes is particularly acute. Last financial year, 21,000 pothole work orders were raised in the county and the average cost of a pothole repair was about £80. Hertfordshire’s roads are exceptionally busy, with HGV flows on its A roads being more than twice the national average. That pattern is replicated for all types of vehicle flows, and the picture on our minor roads is the same. The roads in Hertfordshire are subject to twice the average level of wear and tear, so it does not take a mathematician to work out that the number of potholes will be twice as high as the average or even far more than that. The county has some of the most congested roads in the country and a very high level of car ownership. It has the most motorway miles and, thus, the most traffic coming off those roads. As a result, our roads are under intense pressure.
Hertfordshire’s roads, like those in other areas of the country, have suffered significant damage as a result of two exceptional winters in a row. Since the start of 2010, nearly 18,000 potholes have been reported in Hertfordshire, either by Hertfordshire’s inspectors or by members of the public. In one week in February, Hertfordshire Highways received 2,000 pothole repair requests—these have to be about significant potholes, not just blemishes on a road surface. The problem has been even worse this year than in recent times. In January and February 2010, Hertfordshire Highways dealt with 13,000 potholes whereas the figure for the same period in the previous year was 6,600—the 2008 figure was 6,500. We have, thus, had double the amount of potholes to try to repair and, in order to try to catch up, the county council has been working its socks off. It is getting a lot of criticism from political opponents, but it has had 50 teams out filling or patching our worst roads.
Last year’s cold snap in February resulted in repairs costing about £1.1 million over a six-week period, and dealing with the accelerated deterioration of the roads was estimated to cost £16 million. Hertfordshire claimed nearly £6 million of emergency Government funding to cover the period, and we were hopeful that we would receive it given the high level of usage that our roads get, but we received absolutely nothing. Hertfordshire Highways expects that this winter’s cold weather will have caused much more damage than that of February 2009. The damage has not been quantified but it is estimated to be likely to be well over £20 million and perhaps even higher. The Local Government Association has asked the Government to support our local authority, but as yet we have received nothing. That was the case for the previous disaster, so let us hope that this time the Government see fit to give us some funding in recognition of our desperate situation in Hertfordshire.
These are big problems indeed, but they have been made more difficult to tackle as the Government have, unfortunately, seen fit to give Hertfordshire the lowest increase in financial settlement of any county. So we have double the national average road usage and one of the highest numbers of potholes, yet we are getting the lowest increase in financial settlement at a time when we are already chronically underfunded and the county council is having to absorb the extra costs of an ageing population and rising school numbers. Something has got to give and, unfortunately, at this moment it is our roads.
Despite that situation, this year Hertfordshire Highways has, once again, through efficiency savings, put more money into highways—it has managed to find an additional £6.3 million for 2010-11—and still managed to keep the council tax rise to zero, but that cannot continue. Hertfordshire Highways is good at what it does—the Audit Commission has given it a top rating—but it is attempting to make good the under-investment in our roads over the past 20 years; this is not happening just overnight. I know that I am saying that I want the Government to recognise the low funding levels, but this has been a long and intractable problem.
As we have seen, Hertfordshire’s roads are exceptionally busy, yet we receive precious little funding to tackle the resultant problems. People in St. Albans contribute a lot into the Chancellor’s coffers and they feel that St. Albans and Hertfordshire are seen as a cash cow. Taxes are being skimmed away from local people and allocated to other areas, and there is a refusal to give local people the services and infrastructure they need. At this late hour, the Minister surely will accept all these facts and figures. I know that he or his Department has contacted the county council to try to find out more about this problem, and I am grateful to him for that. I hope that in the spirit in which this debate is being held, with the recognition that this is a national problem, the Government will, given that Hertfordshire is so badly affected, give a little back of what we requested in previous years.
This year Hertfordshire received the lowest rise in central Government grant of any county council in the country. We cannot keep up repairs on the roads when we do not have enough money to do that. The council is struggling in a difficult financial climate to fix this year’s problem, yet the requests for additional funding and apparently specifically targeted emergency funding from the Government have been refused and we do not know why.
The formula grant for Hertfordshire county council is £175.965 million for 2010-11. If Hertfordshire received only the average level of grant increase, that would provide an additional £3.7 million to help balance our books or, more importantly, smooth our roads. Will the Minister investigate the matter and take the opportunity to explore the option of a dedicated pothole levy on the utility companies? Will he see whether anything can be done to provide a fairer funding settlement for our area? When I talk about the pothole levy, I do not expect the cost to be passed on to the customer. I do not expect to see higher utility bills for people in St. Albans. Developers, when they come into our area, have to pay section 106 money in recognition of the impact that they have on the local area and I believe that utility companies should do the same. I ask the Minister to think sensibly about this and to see what can be done to provide a fairer funding settlement for our area to allow local people to tackle the problem.
I congratulate the hon. Member for St. Albans (Anne Main) on securing this debate on the maintenance of our road networks. She has raced through a number of disparate issues and if she feels that I do not respond to any of her points during the course of my speech, I am happy for her to write to me and I shall respond in writing.
Roads are the heart of our transport system. They are the universal service on which everyone, whether pedestrian, cyclist, motorcyclist or other vehicle user, relies. They are the heart of our communities, too, and the local highway authorities are responsible for more than 98 per cent. of the roads in this country. Motorways and trunk roads carry a third of the nation’s traffic and half of its heavy goods traffic, often over great distances. Such journeys essentially bypass the towns and villages along their way, and it is right that a national organisation, the Highways Agency, should run those major arteries. By contrast, local roads have a different function. They are right by where we live and work, where we walk the dog or where we pass the time of day with our neighbours, so it is important that the local authorities that are responsible for them recognise the importance of keeping them in good order.
Local highways maintenance is a major business. In the financial year 2008-09, English local highways authorities spent a little over £5 billion on running and repairing their networks, covering everything from major bridge repairs to paying the electricity bill to keep the street lights on. That money pays, too, for the salt to keep the roads clear and for the repairs to the potholes that the hon. Lady has been talking about this late evening.
Central Government help in that process by providing funding. My Department provides capital support to authorities as part of funding their local transport plans. Over 10 years of local transport plan funding, the Department for Transport has provided about £6.5 billion in capital spending support for English local highways authorities outside London. The real-terms increase in capital allocations to local authorities since the introduction of the local transport plan settlement is 135 per cent. This year, local authorities outside London have received £755 million for capital maintenance works in that way, and there has also been funding for major maintenance schemes and projects under the private finance initiative.
Will the Minister address in particular the underfunding that has been prevalent, unfortunately, in my constituency and in Hertfordshire generally, given the fact that we have some of the heaviest traffic coming through our county? I have the busiest non-motorway road, the A414, in my constituency. We have significant traffic that is not typical, yet we have below-average settlements. I appreciate that the Minister has given funding to all those other areas, but will he address the seemingly low settlements that we get in St. Albans?
The allocation of the funding is based on a formula that takes account of the sort of factors to which the hon. Lady refers. Clearly, when the Department for Communities and Local Government and the DFT allocate funding in the next round from 2011 onwards, one of the things that the various working groups will be looking into is the perceived fairnesses and unfairnesses towards different authorities. The hon. Lady said that hers is a floor authority, so she will be concerned to make sure that it is not penalised in the next round of the spending review.
Central Government also help by supporting the UK Roads Liaison Group, which has produced a range of codes of practice on highways maintenance that are widely respected across the industry as representing good practice. The group has also produced a range of other research and reports, notably on the lessons to be learned from the severe weather of February 2009, which has been much quoted in this House over the past few months.
I mention central Government’s activity in this connection, not to blow our own trumpet but to emphasise that local roads are a local resource and that we are very much in a supporting role. When there are calls for central Government to take a more directive role in local road maintenance—such as with the strategic stockpiling of winter salt—we have consistently said that it is a matter for local authorities. There is no reason why local authorities should not collaborate, when they see the advantage of doing so, to achieve efficiency savings and other benefits. An example of that can be found in the east midlands, where the Midlands Highways Alliance expects to achieve savings of £11 million through authorities working together.
The Chamber is not exactly crowded tonight, and I have asked specifically about the roads in St. Albans. The east midlands is an interesting topic generally, but I would appreciate it if the Minister could address the specific issues to do with my constituency that I have raised, especially given that other hon. Members have chosen not to attend this debate to speak about their areas.
I was giving the east midlands as an example of best practice. If the hon. Lady’s local authority were to follow that example, it could save money that could be used to fix the potholes. Not unreasonably, Liberal Democrats in her area are complaining that her local authority is not making those savings.
The Minister appears to consider that the Liberal Democrats have a fair point, on the basis that my local authority is not rated excellent or doing what it should. That is bizarre, given that the Audit Commission has found that my authority has managed the money superbly. The problem is that it does not have enough money to buy the tarmac it needs. The Minister has alluded to efficiency savings, but that is not a valid comment as our authority makes such savings every year, and year on year. I am sure we would all like to learn best practice, but the Minister will appreciate that we need the money to begin with.
The hon. Lady seems to believe that her authority has nothing to learn from others, and other people can make of that what they will. She has also knocked back a potential saving of £11 million that could be used to improve the potholes in the area that she represents, potholes that she regards as so appalling.
The Government believe that if local authorities are to take proper care of their highway assets, they need to plan. For some years, we have been working with the UKRLG to encourage authorities to develop transport asset management plans. These are not just documents that engineers write and then put on a shelf, as they provide a clear statement of the assets held, their condition and the level of service that the council wants them to deliver. Only in the light of these can the transport asset management plan set out how the authority intends to manage the asset to keep it in a condition that will deliver that level of service.
May I take the Minister’s comments as read? I am sure that my parliamentary opponent from the Labour party will be interested to hear that he puts all the blame for potholes in St. Albans on the failure of my county council to manage the roads. I beg to differ about that: I said we can learn from best practice, but I am sure the Minister is not really saying that we have potholes in the roads because of poor management—or is he?
All local highway authorities should plan for different scenarios in the winter months. I have mentioned the historic amounts that have been invested in local authorities around the country over the past 13 years, but the hon. Lady will be aware that some parties advised us to make immediate cuts in this financial year. We did not take that advice, and have continued to invest record amounts this year as well.
However, I hasten to add that, if we had taken the advice to reduce the deficit even faster—by half over the next four years—the result would be immediate cuts to local authorities around the country, including the one that the hon. Lady represents. We have also been advised to impose a zero increase in council tax. If we had taken that advice, any idea that there might be additional funds for local authorities would have been laughable.
The context for this debate is that the hon. Lady is asking for central Government subsidy to help her local authority with potholes. That does cause one to wonder whether she knows what she is talking about.
I have suggested that the Minister consider imposing a pothole levy on the utilities companies, but he is choosing not to look at that. He is scoring party political points, even though road users, cyclists and pedestrians are taking their lives in their hands on my roads. I really feel that that is beneath him, and I hope that he will try to answer my logical and reasonable questions about the funding formula that affects Hertfordshire and the potholes that affect my residents. Is he prepared to think out of the box, and associate funding with the damage done by the utilities companies?
Far be it from me to defend myself; I was trying to read the speech which dealt with that, but I was intervened on, I think, six times. I will try to return now to the speech and deal with some of the points that the hon. Lady made.
One point that is worth touching on in the context of perceived unfairness in funding is that the Department has additionally provided private finance initiative funding of £3.96 billion, and PFI credits for highways maintenance and street lighting schemes. Cyclists and motorcyclists find those very useful. There are 25 sign projects with a value of £993 million. In addition, there are 10 projects in procurement, six street lighting schemes and four highways maintenance projects with a combined value of £2.35 billion—examples of the investment that this Government give to local authorities, not just Hertfordshire but others around the country.
One of the things that local highways engineers have been telling us a lot over the past few months is that the roads that have been worst affected by the winter weather have been those that were not in optimal condition in the first place. Where a proper treatment has been put down, which is effective in keeping water out of the road’s substructure, the damage is far less.
There is another lesson to learn from asset management planning. Clearly, those who assume that they are perfect will not learn the lessons; those who have the humility to learn the lessons might. That lesson is this: considering the whole life of the asset, and planning over that horizon, delivers much better value for the taxpayer—and much better roads for the road user—than a purely reactive approach of repairing whatever happens to be worst.
Asset management planning will also help local authority engineers to make the case to their authority treasurers for the funding needed to deliver the service that the council wants it to deliver. For the first time, authorities will be able to put a value on their highways assets. That will be an advantage to authorities such as Hertfordshire. The Chartered Institute for Public Finance and Accountancy plans to publish later this month rules that will set out how to value highways assets in the authority’s accounts, which can in turn feed into the Government’s aim for whole of Government accounting.
When authorities undertake that valuation, they will discover that their highways assets are far and away the most valuable asset that they own—as the hon. Lady acknowledged—generally valued at more than all their other assets put together. That fact alone should help to concentrate councils’ collective minds on what resources they should devote to the public realm. One of the points that the hon. Lady raised, quoting someone else, was that sometimes politicians will choose to spend moneys on schools and hospitals, not roads. But I should make it clear that we do not want accountancy to drive the management of the highways assets; rather, it should be the other way round, with the accounting figures simply falling out as a by-product of good asset management.
The hon. Lady made a point about the utility companies paying a pothole tax for the damage that they might do. She will be aware that potholes can develop for a number of key reasons, including adverse weather, damage to or poor maintenance of roads, higher volumes of traffic and heavier vehicles than anticipated, and poor reinstatement after utility, highway authority or other works in the carriageway. In fact, the Government originally consulted in November 2009 on a revised edition of the code used by the utility companies, which is expected to be launched in April 2010 and focuses on formalising many of the practices already being undertaken. In particular, it looks to strengthen the requirements for edge treatment to ensure a better-performing joint. Utilities pay fees to authorities to inspect their works and ensure adherence to the required specification. Inspections can be made at various stages of the works up to the completion of the guarantee period, which may be two years or three years.
House adjourned without Question put (Standing Order No. 9(7)).