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I will deal directly with the principles underlying the universal credit. Both our parties want a simplified benefit system in which less money is clawed back as people move into work. That is why I have been very clear since I started in my position that if the Government get the approach right, we will support them. Pension
reform was the subject of significant cross-party working in the last Parliament, and I sincerely hope that welfare reform can be in this Parliament. The right hon. Gentleman can count on Labour's support when he is pursuing laudable aims, even when it appears that he cannot count on the support of his own Chancellor.
In office, we introduced the working tax credit, which substantially reduced the marginal deduction rates. It halved the number of people facing marginal deduction rates of 90% or more. The Secretary of State has just mentioned that matter. From reading his work in opposition, one cannot fail to see some of his ideas as welcome steps. His dynamic welfare paper promised a 55% taper rate, lower marginal deduction rates for every family, £2 billion a year more going into the pockets of families and £500 million a year less being spent on administration.
The Secretary of State now appears to want to set a taper rate for the universal credit of 65%, 10 percentage points less generous than he advocated in his previous paper. The impact of that was described by his own Centre for Social Justice thus:
"Setting it higher than 55% would increase MTRs"-
"for those working households in receipt of benefits other than Housing Benefit (even if their net income was higher than today). As a result, there would be a negative impact on earnings, and on the number of second earners in employment."
From an initial inspection of what we have been offered today, it seems that in this Parliament we will get a higher taper rate, higher marginal deduction rates for some families, no additional money overall going into the pockets of families and a £2 billion increase in administration and start-up costs. Is that proof that there is no plan so worth while that the current Chancellor of the Exchequer cannot delay or damage it?
There is real concern that some of the measures imposed on the Secretary of State in return for allowing the universal credit to proceed are contradicting the policy aims that he has set out today. On the Government's own figures, because of the June Budget 20,000 more people next year will face marginal tax rates of 90% and 30,000 more will face rates of over 70%. That is because of the Government's plans to increase taper rates for tax credits. We must remember that phase 1 of the implementation plan for his dynamic benefits plan was to reduce tax credit taper rates from 38% to 32%. From this March, the Government are increasing the taper from 38% to 41%.
"The changes in the June 2010 Budget will increase the maximum Marginal Deduction Rate to 95.95 per cent."
That is before even taking into account changes in the spending review, such as real-terms cuts in working tax credit and top-up low wages. Can the Secretary of State explain the approach that his Chancellor is adopting, and can he guarantee that as a result of these changes no one will have a higher marginal deduction rate? Will he tell the House whether anyone-for example, people who currently receive tax credits but not housing benefit-will face higher marginal deduction rates under his approach?
According to the IFS, of which the Secretary of State spoke approvingly in his statement, the tax credit and benefit changes announced in the June Budget mean
that the poorest two deciles of the population will lose about 2% of their incomes over the coming Parliament, more proportionately than the rest of the population. Can he therefore inform the House whether all the analysis being bandied around today about out-of-work households moving into work and children being lifted out of poverty is relative to the position today, or only to the position after the substantial losses that people will face because of the Government's already-announced cuts to benefits in this Parliament? Can the right hon. Gentleman simply provide the figures for this Parliament? Do the Government expect child poverty to have fallen or risen by the end of this Parliament? The Office for Budget Responsibility predicts that an extra £700 million will be spent on unemployment benefits because a longer dole queue following the June Budget has consequences for the welfare bill.
The right hon. Gentleman has allowed all this to happen in return for the Treasury allowing him to spend £2 billion on the new system. Can he give us today the breakdown of the £2 billion secured for the implementation of the universal credit-the IT breakdowns and the transitional costs for affected families? Can he pledge that he will not raid any other part of his departmental budget in this spending review for this purpose if it turns out that that money is insufficient? How does the right hon. Gentleman respond to reports in The Times today that he will need to secure another £2 billion on top of the £2.1 billion that he referred to in his statement to guarantee his pledge, which he repeated to the House today, that
"There will be no losers"?
To conclude, securing headlines-I have to admit that my colleagues and I came to understand this over 13 years-is a lot easier than securing reforms. This morning, the Secretary of State said in an interview on the radio:
"This is about saying to people: if you try, if you co-operate, if we work with you and work pays and you still can't get a job then our duty is to support you."
How can he possibly reconcile those words with the plans his Government have announced to cut 10% of the housing benefit of anyone who cannot find work within a year, even if the jobcentre thinks that they are taking all the correct measures? When he gets to his feet, the Secretary of State can perhaps explain to the House how he justifies that measure, whether it is set to continue permanently within the planned universal credit and, frankly, how it fits with the principles that he set out on the radio this morning.
Mr Duncan Smith: I am glad that the right hon. Gentleman spent so much time saying how much he supported this measure-that is really helpful. He then dwelt on a lot of things that were not necessarily relevant to it, but I will come to those none the less.
I am sorry that the right hon. Gentleman seems to be less than positive. I had hoped that he would consider this to be a major change, which would benefit the very people he says he is in favour of supporting. There is absolutely no question but that this measure will support and improve the quality of life of those who are likely to be affected. When he gets to the White Paper, I would
draw his attention to a chart on page 53, which shows that the bottom deciles-this is from the moment that he left office right the way to the moment set out in the chart-will actually improve their life quality dramatically, taking all matters into consideration and sweeping all the way up to the moment we implement this. The poorer will be better off, and I wish the right hon. Gentleman could have taken the opportunity to welcome that. That is the reality for him and his party, and if I were in his position, I would have been a little more positive.
We believe that child poverty will fall. Let me just deal with the story in The Times about the money, which the right hon. Gentleman mentioned. The fact is that the £2.1 billion is a full envelope for spending review 10; it is absolutely enough to get us to that point. I said to the right hon. Gentleman privately, and I say again publicly, that as we implement these measures over three years of this Parliament and a further two years of the next Parliament, more money will, of course, be required, and that is guaranteed, but we will come to that in the spending review for the next spending review period. [ Interruption. ] Yes, it will be guaranteed, because we have to implement this programme.
Within that £2.1 billion, we will also invest in setting up essential IT systems. The right hon. Gentleman knows, because we have spoken about this, that these are medium-level IT systems. Even in his time, the Department for Work and Pensions handled these systems very well, and there were no problems with them at all. The money will also be used to support the running of the new system and the migration of current benefit and tax credit recipients from today's system. Within that, we will also guarantee, as I said, that nobody loses out.
On the IT challenge that we dealt with, I remind the right hon. Gentleman that, even in his time, we managed to implement some very similar projects and to operate them very well. This is by no means a monolithic system like the Rural Payments Agency or the National Offender Management Service. During his time, the DWP had a strong record of successful IT delivery on systems such as the employment support allowance system, which was roughly on the same scale, and the pension reform system. Both were similar IT systems and both were managed without any particular problems. We are determined that the IT situation will be managed very well, and that we will be able to complete the process.
The support that, as the right hon. Gentleman says, we will give to those who are transiting is covered in the £2.1 billion. I repeat that we will protect those people who, for particular reasons, find themselves on slightly lesser moneys for as long as they stay in that situation. As they move up, they will gain dramatically. Even if they were to fall back, relative to where they were, they will gain dramatically. The reality, I hope, for the Opposition, as they think this over carefully, is that even if they were to return to power, this system would benefit those people.
The right hon. Gentleman asked me about the taper rate. The taper rate that we talked about when I was at the Centre for Social Justice was an optimum taper rate with everything taken into consideration. The taper rate itself involves a decision, which a Government of any
hue would take, about how to set the balance between what we can afford and how much we will be able to give people as they go back into work. The real issue here is not that the taper is 65%. Even with 65%, all those who go back into work will be better off as they work through the hours. If the right hon. Gentleman is saying to me that he would prefer a 55% rate if he were in power, that is fine. He just has to tell me where he intends to get the money from, and that is the issue I have not heard him or his colleagues say anything about since they left us with the worst budget deficit in living memory. I only ask the right hon. Gentleman and his colleagues to think of this as a positive measure. Even if they were in power right now, it would help the poorest in society absolutely dramatically.
Mr Roger Gale (North Thanet) (Con): The introduction of workfare is about 25 years overdue. I congratulate my right hon. Friend on grasping that nettle and I hope that he will not let go of it. One aspect that he did not touch on was the operation of the jobcentres. Jobcentres are no longer jobcentres, but benefit-processing centres. Will he say just a little about how he intends to address that issue?
Mr Duncan Smith: I understand the point that my hon. Friend is making. The reality is that we will reform the whole jobcentre process to make sure that it dovetails with what we are trying to do. Yes, of course, there are areas where some of the advice that is given is not always necessarily of the highest quality, but most jobcentres, and most of the people who work in them, are determined to help the individuals they meet, to advise them properly and to get them back into work. Of course, the Work programme will include private and voluntary sector organisations, so we will tap into the very best qualities and skills that lie outside the jobcentres. My hon. Friend should rest assured that this will only get better.
Miss Anne Begg (Aberdeen South) (Lab): The creation of a single working-age benefit is the holy grail of welfare reform, and the Government will need to be congratulated if they can pull this off, especially if they fulfil their promise that there will be no losers. I am sure that the Work and Pensions Committee, which I chair, will watch the issue carefully. However, I am still not clear as to where the tax credit system fits into the universal credit. The Secretary of State did not answer the questions from the shadow Secretary of State about where they will fit. Will there, for instance, be a single application form to cover the Treasury-delivered benefits and the DWP benefits?
Mr Duncan Smith:
The problem right now is that when people make applications, they have to make at least two completely separate applications at the same time if they are going back to work. There is literally no communication between HMRC and the DWP about what they are sitting on and what they are making their
calculations about. That is why the reconciliation at the end of the year is so gross and why we so often have major overpayments and then try to claw money back. The purpose of these proposals is to bring everything together so that we have one single point from which to take information. Therefore, the tax credit system and the DWP system will come together to create this single taper withdrawal. In future, as people's circumstances change as they go into work-in the past, if they did not inform HMRC or the DWP, they might have been overpaid because they did fewer hours-the information will automatically cascade back to the centre, and we will know what people are doing, so they will be paid exactly what they are meant to be paid. There will be no chase for the money at the end of the year, which, as the hon. Lady and many others know, causes fear and worry among far too many constituents who find that they have been overpaid and have to pay the money back.
Mr Peter Lilley (Hitchin and Harpenden) (Con): May I congratulate my right hon. Friend on his ambitious programme of welfare reform? Among the most important components in it are the steps that he is taking to overcome one of the greatest problems in the system, which makes people reluctant to take work when it is available. Not only might people not earn much more in work than on benefits, but they fear that the job they take might be short-lived and that they might then find it difficult to get back on to benefits if they become unemployed again. Will my right hon. Friend spell out what that involves and, in particular, how he will tackle the problem of people fearing that they might lose housing benefit?
Mr Duncan Smith: My right hon. Friend is absolutely right. One of the great fears that people have, particularly in respect of housing benefit, is that it can take a month or so before they get their benefit back as they come out of work. Because that will be included at the point at which they make the application and because that is tapered into the benefit, there will be a seamless change or transfer. As they come out of work, they will do so with their gross amount exactly as it should be-the thing that will change is the level at which they taper. In other words, the amount will be what they are necessarily paid in benefits. They will not suddenly have to make a reapplication-there will be a seamless process-which should get rid of exactly the fear that my right hon. Friend talks about.
Kate Green (Stretford and Urmston) (Lab): Like my hon. Friend the Member for Aberdeen South (Miss Begg), I congratulate the Government on their intentions to make work pay and simplify the system. I very much wish that project well.
The Secretary of State will be well aware of Labour Members' concerns that spending announcements to date have hit women twice as hard as men. Will the universal credit be assessed on a household basis? If so, what assessment has he made of the impact of moving money from purse to wallet within that model and of the impact on women?
Mr Duncan Smith:
The system will assess at household level, but of course, the beauty of that is that we will understand better what household needs are. Two things that will hugely benefit women will flow from that.
First, in knowing what that household should have, we will have a much higher take-up rate. Therefore, the in-work poverty that has been terrible until now will hugely be resolved. The second aspect that is really good for women is that, as the hon. Lady knows, many women who have caring responsibilities do short-hours work. The proposal will hugely benefit them because they will retain more of their income as they go into work. They will be beneficiaries, which I hope helps her.
Jenny Willott (Cardiff Central) (LD): I, too, welcome today's announcement, particularly the expected effect on poverty and especially child poverty. This is a critical reform-as the hon. Member for Aberdeen South (Miss Begg) said, some of us on the Work and Pensions Committee have been pressing for it for a number of years.
Mr Duncan Smith: The Work programme will start well in advance of today's proposal-we anticipate that it will start next summer. There will be a set of contracts on a regional scale that will involve the private and voluntary sectors. Organisations will run programmes against a set of outcomes, for which we will pay them, so that as they deliver and get more people back to work, they will be paid for those results. That will be carefully balanced so that we do not pay them for dead-weight costs that might otherwise have been in the system, but it will certainly be clear.
Malcolm Wicks (Croydon North) (Lab): I welcome very strongly the strategic direction of the Secretary of State's statement, but comparisons will inevitably be drawn with the 1940s. That should remind us of the importance of the work ethic and the fact that citizens have both rights and duties when it comes to benefits and work. It also reminds us of the importance of employment policy. I say that not in a partisan spirit, but because I think there is a real difficulty. Churchill's coalition Government and Attlee's Labour Government took measures to move towards full employment-with great success. When a Government take 1 million jobs out of the economy, both public and private sector, does the Secretary of State understand my concern about the chances of success of the good strategy announced today?
Mr Duncan Smith: I am grateful for the right hon. Gentleman's words of welcome-I particularly value them because I am a huge admirer of his, as he knows. He is right to draw the parallel with the 1940s, not for anything to do with Beveridge, but simply because high withdrawal rates were possible in the system that was set up at that time because the people involved were mostly men who were either in work or out of work-there was very little part-time work in that sense, so withdrawal rates had no effect. Today, because of the nature of part-time work, withdrawal rates cause real problems for people, particularly as they go back to work.
On jobs, I simply say this: yes, as the economy grows, those jobs will be created, but let us not forget that in the past three months, over 1 million jobs went through my jobcentres, and 450,000 jobs rotate through them every week.
Tracey Crouch (Chatham and Aylesford) (Con): Unfortunately, there has been much scaremongering about the impact of welfare reform on those who are disabled or who have mental health conditions. Will the Secretary of State assure the House that the most vulnerable members of society will still get the support that they need?
Mr Duncan Smith: Yes, I can give such an assurance to my hon. Friend. We have for some time needed to simplify and streamline the current disability payments and to target the support obviously and particularly on the most severely disabled people through the universal credit, which will happen, and through reform to disability living allowance. DLA will not be incorporated into the universal credit-it will continue as a separate allowance because it is non-work related. I can promise her that that is uppermost in our minds in the design of the system.
Glenda Jackson (Hampstead and Kilburn) (Lab): The Government and employer organisations have confidently asserted that the expected huge rise in unemployment owing to job losses in the public sector can and will be ameliorated by the creation of jobs within the private sector, albeit neither can put a time scale or numbers on that assertion. Will the Secretary of State guarantee that the changes will not be used by employers in the private sector to drive down wage levels to at or below the national minimum wage?
Mr Duncan Smith: May I first of all say that I hope Labour Members do not simply continue to hope for the worst and preach? The reality is that even in the past few weeks and months, there have been more than 300,000 new private sector jobs. As I said, more than 1 million jobs went through the jobcentres in the last three months and were found for people. Today's statement is about making people better off. If I were sitting where the hon. Lady is sitting, I would say, "How wonderful if the bottom three deciles improve their incomes." The hon. Member for Bishop Auckland (Helen Goodman) may laugh, but in her time in the Government, they spent money and failed and left us with a deficit. Labour Members should apologise for that.
Robert Halfon (Harlow) (Con): I congratulate my right hon. Friend on his statement, particularly as the previous Government's approach to welfare reform was more Ethelred the Unready than Nixon in China. Is he aware that more than 8,000 people in my constituency are on out-of-work benefits? That is one in 10 people. Will the Minister assure them that the universal credit will protect the most vulnerable and give others a real incentive-more money, not less-as they find jobs?
Mr Duncan Smith: The universal credit is about what happens to people as they seek and go back to work. Benefit levels for disabled people-whatever their condition-will continue and be maintained. Those who need support will receive it, but the most beneficial thing for people in my hon. Friend's constituency is simply this: we are at last going to try to get to that group who have been left behind. More than 5 million people were left behind without jobs in workless households during the high years, with children in poverty. That is what we hope to break. I hope that that is seen as a positive message.
Dr Eilidh Whiteford (Banff and Buchan) (SNP): I applaud the Secretary of State for his announcements today and for his efforts to incentivise work, but I still have an arithmetical problem despite his answers to previous questions. I am struggling to see how 450,000 job vacancies divide into the 5 million people that the reforms aim to help. I am hoping that he can explain.
Mr Duncan Smith: This universal credit comes in over a period of four or five years. In the time over which it is implemented, even under the hon. Lady's most pessimistic forecasts, the British economy will grow and create more jobs. The Office for Budget Responsibility, which is independent, forecasts growth of some 2.5%, which will lead to much higher numbers of private sector jobs. The reality is that we must prepare the ground. The important thing is that people are better off as they go to work and take those jobs. The point of the proposals is to break the cycle of people saying, "It's not worth me going to work and it is worth me staying on benefits, because work does not pay." The proposal is about work paying.
Mr Duncan Smith: As my hon. Friend knows, there is a slightly complex group of benefits and supplements with respect to disability. DLA is non-work related, but there are disability supplements for jobseeker's allowance. Many of the disability organisations that we consulted said that the one thing they hoped for from the reforms is that the Government value disabled people, which we believe we do, and give them a chance to go back to work. Apart from the fact that we are creating work choice, the key thing is that the taper rate comes with a disregard. If we give disabled people on the universal credit a larger disregard on their income, we give them more money, which allows them a beneficial position as they go back to work.
Mr Kevan Jones (North Durham) (Lab): The Secretary of State knows that work is good for people's mental health, but he will also recognise that many people who have severe, long-term mental health problems find it difficult to keep permanent employment. What reassurance can he give that such people will not be discriminated against by the benefits system or by employers?
Mr Duncan Smith: I completely agree that such discrimination is unforgivable, and we have to change such attitudes if they exist. The real beauty of our proposals is that we will be able to adjust rates according to people's incapacities. So individuals with particular problems or disabilities will be much more valuable in the workplace than they are now. That is the one thing that the organisations said to us-that those people want to be in the mainstream and in work like everyone else. Our proposals will help that more than anything we are doing at the moment.
Mr Philip Hollobone (Kettering) (Con): May I congratulate my right hon. Friend on his statement? My constituents in Kettering will be right behind him. Often the difference between making more money in work and lounging around on benefits at home is the travel costs to and from work. How will they be taken into account in the calculations?
Mr Duncan Smith: My hon. Friend is right about travel costs. The key point is that if someone going to work retains significantly more money, their travel-to-work costs become much more affordable. Therefore they are able, as other people in work do, to make decisions about travelling to a job over a slightly longer distance. That will be wholly beneficial to those who are out of work.
Sheila Gilmore (Edinburgh East) (Lab): In his statement, the Secretary of State used the fact that 37% of ESA claimants did not proceed to full assessment to insinuate that people were withdrawing their claims because they were trying to cheat the system. Current ESA claimants are people who have newly fallen sick, and they are not long-term claimants. Most of them recover from their illnesses during the assessment period and get back into work, so I ask the Secretary of State to withdraw that assertion.
Mr Duncan Smith: I made no such assertion. What I was demonstrating was that if you put a check in place and ask people to demonstrate their situation, those who are bent on a different purpose will naturally fall out. I used the last Government's work capability assessment programme to illustrate how that affects new entrants. I was by no means casting aspersions on anybody who is going through the programme, because they deserve what they get.
Tony Baldry (Banbury) (Con): Many of those who are out of work will need to update existing skills or acquire new skills to help them get back into the world of work. What is my right hon. Friend's Department doing to try to ensure that people who are out of work can access skills through the further education sector and other means?
Mr Duncan Smith: This comes back to the Work programme, because it will be about drawing in mentors from the private sector to advise people on setting up businesses and to give other support and advice. The mentoring programme will allow us not only to get people into work, but to mentor them until they get the work habit. That is the critical point. Once they get the work habit, they will be capable of looking after themselves.
Mr David Crausby (Bolton North East) (Lab): The minimum wage plays an essential part in making work pay. Has the Secretary of State forgotten that he was completely opposed to the minimum wage and did all that he could to prevent its introduction? Will he ensure that he makes work pay not only by reducing benefits?
Mr Duncan Smith:
There are several ways to make work pay beyond what I am doing. Making work pay by leaving people with more of their own money in the first instance will be a major step forward. The minimum wage is a good indication of how to set the base below which people should not fall. Another area in which the Government have also made a start is lifting the tax
threshold for the poorest people. As we have said, we intend to move that all the way up to £10,000, and I hope that the hon. Gentleman will welcome that.
Andrew George (St Ives) (LD): Will this targeted work activity effectively be a stick-a humiliating sanction-which will not work, or will it be a carrot and a golden opportunity that will build a bridge between joblessness and the workplace, which would be welcomed by unemployed people and the voluntary sector?
Mr Duncan Smith: I think that the hon. Gentleman is referring to the mandatory work placement. May I explain to him that there has been some over-excited commentary on this proposal? It will be available to jobcentre staff who will be able to use it for two categories of people. First, if someone has been out of work for a long time and comes in, clearly demoralised and with very little self worth, and does not feel that they can get up in the morning-as normal people do when they go to work-they can be put on one of these placements, which will give them a start time and a place of work to go to. All the interviews we have done with people on this scheme have said that they benefited hugely from it because it got them up and out. They will still be brought back in to the jobcentre to look for jobs.
The second group is those people who, we suspect, may actually be already working. Placing them on such a programme does something quite neat: it means that they cannot go off and do the work that they are doing and claim benefit. Instead, they have to make a choice.
Mark Durkan (Foyle) (SDLP): I am sure that we all want to be assured by the Secretary of State's best attempts at a "Somewhere Over the Rainbow" version of his reforms, but we have to test them for the people in the places we know where low employment is an enduring problem. Do the projections for the universal credit include Northern Ireland? In answer to the Chair of the Select Committee, the Secretary of State mentioned bringing the tax credit systems and the DWP systems together. Has he factored in the Social Security Agency in Northern Ireland and discussed the implications with the Minister responsible?
Mr Duncan Smith: As the hon. Gentleman knows, I have been over there and discussed these matters with my opposite number. I want the reforms to apply to Northern Ireland, and they will. The area has particular problems, as he knows, and we need other devices to overcome those. However, people are unemployed and without work for much the same reason as over here, and I therefore look forward to being able to implement these reforms in Northern Ireland.
Mr Rob Wilson (Reading East) (Con): I welcome my right hon. Friend's statement this afternoon. It will do an enormous amount to help people to get back into work. Does he agree that it is important that we have a well-informed debate about this and will he join me in rejecting the ill-informed comments by the Archbishop of Canterbury? Perhaps my right hon. Friend could invite the Archbishop on one of his frequent visits to an area where he could see first hand some of the problems that these communities face, so that he may be better informed in future.
Mr Chuka Umunna (Streatham) (Lab): I have not had a chance to read the White Paper this morning, but my understanding is that the universal credit will be introduced from October 2013. The Secretary of State mentioned IT issues, and HMRC's business plan says that the update of the PAYE system, which will be integral to the transition to the universal credit, will not be complete until April 2014. How will the Department reconcile the date for the introduction of the universal credit with the delayed completion of the update of the PAYE system the year after?
Mr Duncan Smith: I am grateful for that question because it allows me to get rid of a slight misunderstanding. HMRC's programme is about upgrading the whole of the PAYE system. What we are dealing with comes before that and we do not need all that. We need two important things. As employers collect and collate the information about circumstances anyway, they will download it to the Department each month, instead of waiting until the end of the year. We need two data streams, one sending data through, the other sending data across. That needs a software programme, but it is well below what is being done to PAYE. We will be able to do that on a real-time basis and it will happen before the PAYE changes.
Charlie Elphicke (Dover) (Con): Child poverty rose by 300,000 in the dying years of the previous Government. Can the Secretary of State tell the House more about how his radical reforms will undo that damage and lift more children out of poverty?
Mr Duncan Smith: The last Government spent more than £35 billion on child poverty, and they are to be applauded for making some changes and lifting 100,000 children out of poverty. We should be conscious of that and I will not say anything other than that that was the right direction of travel. However, that was a lot of money to spend to get what was quite a narrow effect, and child poverty rose relatively speaking after 2004. The best approach, we think, is the universal credit, because take-up rates will improve, allowing families who do not know what they are eligible for to take the money. That will automatically improve the quality of life for those families and have a huge effect on child poverty.
Helen Goodman (Bishop Auckland) (Lab): As I understand it, the new contract that the Secretary of State will introduce will begin from day one of a person's unemployment, so he will be tearing up the old contract and the entitlement to benefit of people who have paid national insurance. Furthermore-as the hon. Member for St Ives (Andrew George) pointed out-the sanctions regime will also be introduced at that very early stage. Does not the Secretary of State realise that it is an extremely inefficient way to run an economy to force people with high skills into jobs for which they are not suited? We do not want physics graduates on the checkout till.
Mr Duncan Smith: I am saddened by the hon. Lady's question. She is wrong. First, the contributory principle still exists. The contributory benefits will run in parallel; we are not getting rid of those. Secondly, she said that we should only ever get people into jobs that their top qualification allows them to get. I think that getting people into work is the most important starting point, and from there they can move on. [Interruption.] Oh, quite the contrary! I have been unemployed, and I would have done anything to get a job.
Julian Smith (Skipton and Ripon) (Con): My local jobcentre told me last week that many well-paid caring jobs are not being taken up by jobseekers. As well as addressing the disincentives in the current benefits system, do we not need to encourage jobseekers to be less picky about the jobs they go after? Every job is of value.
Mr Duncan Smith: I agree that all jobs have a value, and that we want people to get jobs, to move on and to be assisted in getting better and better pay and circumstances. Carers will benefit from this system because it allows them to balance their work and caring responsibilities by picking the hours that suit them. Carers organisations have told us that the critical point is that often carers are locked into one set of hours that do not suit them. This system will allow them to take the relevant hours while fulfilling their caring responsibilities.
Clive Efford (Eltham) (Lab): The Secretary of State will be aware that jobcentre staff already have sanctions they can take out against people who they believe are avoiding going back to work. This morning, on the "Today" programme, as my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) pointed out, the Secretary of State suggested that, where people are working with jobcentre staff and searching for work in earnest, the Government's duty is to work with those people to find them jobs. Does that mean that, where someone has been unemployed for a year, jobcentre staff will have some discretion in deciding whether they should continue to receive benefits, if they have been earnestly searching for work?
Mr Duncan Smith: The hon. Gentleman makes a legitimate point, which is that jobcentre staff still retain some discretion when they believe that somebody is making every effort. As he knows, the key is to deal with people who are simply making no effort to find work. The previous sanctions regime existed on that simple basis-in other words, if somebody is not trying, they will be sanctioned, but if they are trying, they will not be.
Julian Sturdy (York Outer) (Con): I congratulate the Secretary of State on grasping the nettle on this difficult issue. May I ask him about part-time and seasonal workers? Will he outline in more detail the support that will be available to allow them to take jobs and help them back into work, while saving the taxpayer money?
Mr Duncan Smith: There is an important feature to the new system that will help people taking seasonal work. In the past, as they shifted their work patterns, the system took a while to catch up, and often overpaid them and caused them difficulties when it tried to withdraw the money. This will benefit them greatly.
Julie Hilling (Bolton West) (Lab): I very much welcome any support for people to get back into work, but I am a little concerned. As always, the devil is in the detail. The document states that nobody will lose out under the reforms, but it also mentions capping housing benefit after 12 months and so on. Will the Secretary of State assure me that nobody will lose out under the reforms?
Mr Peter Bone (Wellingborough) (Con): It is a sad fact that in Wellingborough there is a subculture of young people who have never known a family where anyone has ever worked, and who have always lived off benefits and in social housing. They come to my surgery to try to get a bigger house. How do we break that cultural trend? It is not just about incentives; we have to break the culture.
Mr Duncan Smith: Alone, this would not be enough, but my point is that it will run in parallel with the Work programme, which will get to unemployed people, such as the young people going to my hon. Friend's surgery, early and wrap around them a process that gets them away from that culture. Often they come from homes where there is no work. This programme will get them to see and work through the fact that being in work is the best and most important thing if they want to take control of their lives.
Anas Sarwar (Glasgow Central) (Lab): Can the Secretary of State explain why areas of highest unemployment will suffer most in the transition to the new Work programme? In Glasgow, there will be a six-month gap between the current programme ending and the new Work programme starting. What will fill that gap? This transition will affect thousands of people in the city of Glasgow alone.
Mr Duncan Smith: We are introducing the Work programme as fast as we can, and the summer target for that is critical. It will make a huge difference. However, I must tell the hon. Gentleman that the biggest gap is the one left to us by the last Government, as a result of the major deficit and their failure to fund any of the programmes that they said they would.
Matthew Hancock (West Suffolk) (Con): I warmly welcome today's announcement, like Members on both sides of the House. I also welcome the rhetorical conversion of the Labour party to the importance of incentives and marginal withdrawal rates. It is a pity that they have not been a part of the discussion over the past decade. Once the programme is fully implemented, how many people will benefit from lower marginal withdrawal rates?
Mr Duncan Smith:
I can give my hon. Friend the exact figures later. I can tell him now, however, that there will be a huge uptake, because the marginal withdrawal rates will be so much better for those going back to work. I hope he will forgive me if I cannot give the figures on the spot. However, they will be significant, and people going back to work will benefit enormously. That will be a real incentive for those going back to work. He talked about how the Labour party has been converted. Sometimes, listening to Labour Members'
questions, I wonder whether they have been converted or just hate the idea that somebody is doing something they should have done 10 years ago.
Ian Mearns (Gateshead) (Lab): The Secretary of State has said that getting people into work is the most important thing, and I agree with him. He has also given an undertaking to continue to help people with disabilities to gain employment. However, his Department has cut access to work grants to assist employers in adapting work places to facilitate the employment of people with disabilities. These are particularly important for small and medium-sized enterprises, where jobs will be created. Does he think it is time to rectify that mistake?
Mr Duncan Smith: Actually, we are not cutting the access to work grants- [Interruption.] No, they are being refocused on larger employers. More people will get back to work as a result of what we are doing, so it will be of more benefit than the previous system.
Bob Russell (Colchester) (LD): Let us be clear. I do not want a higher welfare bill, and I do not support those who cheat the benefit system, but I do encourage the Government to take equal measures against those who cheat on their tax. The statement of about 1,200 words mentioned children only twice, in acknowledging that more than 3.5 million children will still be left living below the official poverty line. Where does the statement:
"We are developing...sanctions for those who refuse to play by the rules"
Mr Duncan Smith: A variety of programmes affect some of those groups, and the hon. Gentleman will know that extra money has been refocused on early years. The hon. Member for Nottingham North (Mr Allen) and the right hon. Member for Birkenhead (Mr Field) are producing reports on this. We are looking at dealing with those areas separately. If the take-up improves, which it will because it will be automatic, it will directly affect a significant number of people. We genuinely believe that even in a static state about 350,000 children will be lifted out of poverty. That has to be a pretty good start compared with what happened before.
Mr Virendra Sharma (Ealing, Southall) (Lab): The Secretary of State said that carers will be able to adjust their working patterns according to their own time scales and choose their own flexible hours. How will he ensure that employers agree to that according to the carers' needs, rather than the employers' needs?
Mr Duncan Smith: The point about this system is that because it does not say that people can work for 16 hours-or whatever it is-they can go back into work. Because work pays in every hour they take, they will be able to look at 10 or 15-hour jobs-or whatever-that may be available. For each one, they can make an adjustment and say, "Well, that would suit me. I'd be able to take that," whereas before- [ Interruption. ] Employers will have to advertise those jobs, because they will be available now and people can do the work. The point that I am making is that people can take those jobs now because they pay, whereas before it would not have paid them to work those hours.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): Does the Secretary of State agree that one of the best ways to make work pay is to ensure that it pays not simply a minimum wage, but a living wage? What does he intend to do about that? Can he also give me an assurance that there will be some joined-up thinking and that those who are genuinely seeking work, even if they are out of work for more than a year, will not have their housing benefit cut?
Mr Duncan Smith: The policies on housing benefit stand as they are. On the hon. Lady's point about a living wage, I genuinely believe that the reality is that what we are doing is the best way to ensure that households end up with a living wage. In the past, because the system was so difficult and complicated, the first person into work in a household would often not be able to earn enough money to support the household. Because it will pay more to be in work, the process that we are introducing will give the first person in a household who goes into work a greater opportunity to earn enough money to support the household, allowing the option for the second earner to be just that: an option, rather than an absolute must.
Mr David Winnick (Walsall North) (Lab): In the real world, is it not the case that 18 unemployed people are chasing every vacancy and that two thirds of our unemployed people have each applied unsuccessfully for 11 positions? Let me also tell the Secretary of State that the sum of his recent utterances about the unemployed reminds one of his constituency predecessor, who at a time of mass unemployment in the 1980s told the unemployed to get on their bikes. Now, apparently, it is buses.
Mr Duncan Smith: The reality is that the hon. Gentleman should welcome the programme that I am introducing today, because it will improve the lives of the poorest in society. I am sorry that he chooses to cavil about this. My comment on buses was simply this: people on low incomes in London and many other cities recognise that it is sometimes necessary to travel to their places of work. That is the key point. Frankly, I do not need any lectures from him, and if he and his party- [ Interruption. ] No, they should be prepared to accept that the recession that he refers to is the recession that they left us.
Fiona Mactaggart (Slough) (Lab):
I am proud to represent a town that exists because it has work, and I am proud to have been part of a Government who, for the first time in nearly 20 years, reversed the increase in child poverty. However, I am concerned that the Secretary of State's announcement will not achieve what I believe he intends to achieve. We know that the best way to tackle child poverty is to increase women's income. In Slough, the average bus fare is about £3.50. His taper says that people will keep 35p in every £1 that they earn. If a woman is doing a job that she can get to while her children are at school-for four hours a day, say-she
will have to work the whole time just to pay her bus fares, ending up with £4 more. Will he not take the advice of his hon. Friend the hon. Member for Kettering (Mr Hollobone) and do something about the cost of travel to work?
Mr Duncan Smith: The hon. Lady has to admit that the one group that will be hugely affected in a positive way will be women going into work, because so many are engaged in caring and work and in having to balance the two. They will be paid more for the hours that they work, because they will retain more of their money. Of course there might be disputes and debates about whether we need to support people with travel costs, but it is a bit rich for the Opposition to give us lectures about travel costs after they left us without having done anything about them at all.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): A few moments ago the Secretary of State said that if an unemployed person is trying to get a job, they will not have sanctions placed on them. Can he please explain how he reconciles that with the 10% cut in housing benefit for those who have been unemployed for more than a year?
Mr Duncan Smith: Very simply, that is a disincentive for people to go to work. The policy stands as it is, as I announced in the debate on Tuesday, and if the hon. Gentleman had any issues to raise, he should have raised them then.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): My hon. Friend the Member for Glasgow Central (Anas Sarwar) asked a reasonable question about the gap between the end of the current programmes and the start of the new programme. I am afraid that the Secretary of State departed from his general tone by giving him a fairly party political response. Will he take the point seriously? A gap of three to six months will be extremely significant, so if the new schemes are not ready, why can we not consider extending the current schemes in the meantime, to ensure that we do not leave people without the support that they need?
Mr Duncan Smith: I believe that the programme that we have set out and the timings that we have set for it-it starts next year in the summer-will help all those who need support to get back into work. We can debate or argue about the gap, but my general view is that as employment rises and as we start that process, we will see more people going back to work, and we will be able to support them in a better way than through the previous programmes, which we believe actually cost more money than they returned.
Mr Deputy Speaker (Mr Nigel Evans): Before we move on to the next statement, it might be convenient to remind the House that only those who are here for the statement can ask questions about it, and, just as before, I ask for single questions and pithy answers please.
The Minister for Policing and Criminal Justice (Nick Herbert): With permission, Mr Deputy Speaker, I would like to make a statement on yesterday's public disorder at the National Union of Students rally. The House will be aware that yesterday, following a peaceful demonstration organised by the NUS, a violent faction directed a series of criminal acts against offices on Millbank. This Government have been clear that we are committed to supporting peaceful protest. Indeed, we included the restoration of the right to peaceful protest in our coalition agreement. However, as the Prime Minister said this morning, we are equally clear that when people are bent on violence and the destruction of property, that is completely unacceptable.
The operational response to the violence is quite rightly a matter for the Metropolitan police, but I want to give the House an early indication of what happened yesterday, the action taken by the police and the follow-up action that will now be necessary. This information was provided at 9 o'clock this morning by the Metropolitan Police Service. The NUS initially predicted that yesterday's protest would attract around 5,000 demonstrators. On Tuesday, that estimate was revised upwards, to 15,000. The police had planned to deploy around 225 officers to the protest. It is now clear that that deployment was inadequate. As the situation developed during the day, an additional 225 officers were deployed.
In the initial stages, the march passed the Palace of Westminster in an orderly manner. However, that meant that vehicle access to the Palace was not possible for around two and a half hours. At about 1.10 pm, the front of the march reached the rally point at Millbank. At the same time, a group of protesters ran towards the Millbank office complex, which houses Conservative campaign headquarters. Protesters from the main march then seemed to be encouraged by a number of individuals to storm the building and throw missiles. Windows were broken and significant damage to the property was caused. Some protesters also managed to gain entry to the building, and some got on to the roof.
At the height of the disturbance, it is estimated that about 2,000 people were around Millbank. Many appeared not to be directly involved in violence, but it is now clear that a small hard core within this group were intent on violence. Additional officers were then deployed in public order protective equipment. The Department for Business, Innovation and Skills was also attacked by a small number of protesters. At about 3 pm, the police were informed that members of staff in the Millbank complex were concerned for their safety. They advised them to stay in the building. Officers were deployed to make contact with the staff and secure their safety. That took some time to achieve. By 4 pm, police officers had located the staff members and, over time, arrangements were put in place to escort them from the building. The police then undertook a search of the office complex and made 47 arrests for criminal damage and aggravated trespass. The British Transport police have also made three arrests. Around 250 individuals were also searched, photographed and then released pending further investigation. Forty-one police officers received injuries. A small number were taken to hospital for treatment and were subsequently released.
The police are committed to bringing the criminals who carried out that violence before a court. The whole House will join me in condemning the minority who carried out those violent and criminal acts. There is no place for such behaviour in Britain's democracy. I thank the police officers who were deployed to the scene, and who helped to protect innocent bystanders. They acted with great courage, particularly those who were holding the line until reinforcements arrived.
Yesterday, during the incident, the Home Secretary was in contact with the Metropolitan Police Commissioner, Sir Paul Stephenson. She also spoke to the Mayor of London, and I spoke to Kit Malthouse, chair of the Metropolitan Police Authority, which has responsibility for governance of policing in London. I commend Sir Paul for his swift and candid statement yesterday. I spoke to Kit Malthouse and Sir Paul this morning. The commissioner confirmed that the Metropolitan police will undertake an immediate and thorough review of its operational response to the incident. That will include an examination of why numbers and violence on this scale were not anticipated. The police have to strike a balance between dealing promptly and robustly with violent and unlawful activity on one hand, and allowing the right to protest on the other. Clearly, in this case the balance was wrong, but the decisions are difficult and are not taken lightly.
Let me finish by saying this: yesterday's protest and the policing clearly did not go to plan. The police will learn the lessons, but the blame and responsibility for yesterday's appalling scenes of violence lie squarely and solely with those who carried it out.
Ed Balls (Morley and Outwood) (Lab/Co-op): I am grateful to the Minister for Policing and Criminal Justice for coming to the House and for giving me an advance copy of his statement. Let me start by agreeing that the right to peaceful protest is a fundamental part of our democracy, which is supported on both sides of the House. Tens of thousands of students and lecturers came to London from across the country yesterday in coaches and with banners, placards and whistles to exercise that right and to make their voices heard about the Government's controversial plan to triple tuition fees.
However, the Minister is right to say, as the Prime Minister said in Seoul last night, that the vandalism and violence that we saw yesterday are completely unacceptable. It was perpetrated by a small minority of thugs who hijacked what was planned to be a legitimate and peaceful demonstration, and in so doing denied tens of thousands of students and lecturers the right to have their voices properly heard.
The Metropolitan police has told me that the National Union of Students worked closely and co-operatively with it before and during yesterday's events, as it has in the past. The president of the NUS was right yesterday to describe the actions of that small minority as "despicable" and designed to "hijack a peaceful protest." As the Minister said, there have been 50 arrests so far. Labour Members are clear, as he is, that there is no excuse for such criminal behaviour, and that those responsible must be brought to justice.
It is the job of the police not only to tackle crime, and to protect to the safety of our communities, but to keep public order as they ensure that the law-abiding majority can exercise their democratic right to protest and make
their voices heard. The police ensure that thousands of major events and demonstrations pass off peacefully every year, often in difficult circumstances. I am sure that all hon. Members will want to join me in commending, as the Minister has done, the hundreds of officers involved in yesterday's events, and particularly the small number outside 30 Millbank and Millbank Tower early yesterday afternoon, for their bravery and dedication.
When things go wrong, it is vital to ask questions, to find out what happened, and to learn lessons for the future. We welcome the urgent investigation that the Metropolitan Police Commissioner, Sir Paul Stephenson, ordered late yesterday, and his straightforward and responsible admission that those events were "an embarrassment for London" and that there are lessons to be learned. The Met has acknowledged that there was an operational failure, and it seems sensible and appropriate in this instance that it conducts the investigation and reports to the independent Metropolitan Police Authority.
I am sure that that investigation will look at a number of issues, including whether sufficient officers were on duty to police what was expected to be a peaceful demonstration, when estimates of the size of the demonstration were revised upwards from 5,000 to 15,000 and then to 25,000 demonstrators; why the Metropolitan police made the judgment that the demonstration would be peaceful; whether there was any intelligence to suggest preplanning of violent action; whether sufficient back-up was available, and how quickly it was available and able to be deployed; and how operational decisions were made about which buildings to protect.
Wider questions were raised by yesterday's events that go beyond the direct operational responsibilities of the commissioner and the Metropolitan police, and are rightly matters for the Home Secretary and the Government. Let me ask the Minister whether, given the clear failure of intelligence in this case, the Home Secretary will assess whether the gathering of intelligence by the police and wider security services was sufficient, and sufficiently well co-ordinated. Will the Home Secretary be discussing the procedures for assessing risk and intelligence in advance of such protests to ensure that in future the full risks are understood in advance?
Given that yesterday and on previous occasions, mobile phones and social networking have been used during demonstrations to co-ordinate actions and build momentum during demonstrations, is work under way by the Home Secretary and her Department to support the police in responding to this new challenge and to consider what wider public order issues are raised?
Given that the demonstration was against a controversial aspect of Government policy and that police officers were deployed outside the headquarters of the Conservative and Liberal Democrat parties, did the Home Secretary or her advisers have any advance discussions about possible risks with the Metropolitan police and lead party officials? Was there any pre-warning or planning for staff in those political offices, and are there wider lessons to be learned?
Will the Minister tell us at what time he and the Home Secretary were alerted to the fact that elements in the demonstration were at risk of becoming violent, that they had become violent, and that a serious public
order incident was under way? Will the Minister also tell us what plans the Home Secretary has to update the House following the conclusion of both the Metropolitan police investigation and the wider investigations that I hope she has started?
Finally, as the Minister said, the root of yesterday's events was the fault of no one but a small minority of violent demonstrators whom we all roundly condemn. They are a timely reminder of how we are all reliant on the police to maintain public order and to ensure legitimate and peaceful protest. Let me ask the Minister and the Home Secretary whether they are confident that the police will have the resources that they need in the coming years to deal with threats to our national security, to tackle organised crime, to ensure safe and successful Olympics and Paralympics, to continue visible neighbourhood policing in all our communities, and to ensure public order at major events without-
Ed Balls: I will repeat the question, because some hon. Members did not want to hear it. I am asking for assurance from the Minister for Policing and Criminal Justice and the Home Secretary that they are confident that the police will have the resources they need in the coming year to deal with threats to our national security, to tackle organised crime, to ensure safe and successful Olympic and Paralympic games, to continue to provide neighbourhood police visible in all our communities, and to ensure public order at major events without stretching the thin blue line to breaking point.
Nick Herbert: The right hon. Gentleman rightly draws attention to the importance of peaceful protest, as did I. We should reflect on the fact that the Metropolitan police must deal with around 4,500 demonstrations every year. It has always had to deal with demonstrations, and it will continue to have to do so. He asked about intelligence, and it is clear there are questions about that, but my response is to his wider point about the role of the Home Secretary. These are operational matters for the police, and it is right that the commissioner should investigate them properly and review the failures that have clearly occurred.
On the right hon. Gentleman's final point about resources, we are of course confident that sufficient resources have been provided to the police over four years as a result of the spending review to ensure that the public can be kept safe. We believe that savings can be made by police forces while protecting front-line policing services. I would counsel him against seeking to make political capital by trying to link the action that we have had to take to secure savings with this incident. So far as I am aware, no one is suggesting that inadequate resources were available to the Metropolitan police. There is, however, a question about how and when they were deployed. The Metropolitan police now has a record number of police officers and a budget of more than £3.6 billion. It has sufficient resources to deal with such incidents at the front line, and that will continue to be the case. He is very unwise to suggest otherwise and to make political capital out of the incident that has just taken place.
Michael Fallon (Sevenoaks) (Con): Will the Minister join me in paying tribute to the staff at Conservative headquarters, led by Baroness Warsi, who continued working in a frightening situation yesterday, as did others in surrounding offices? Surely those enjoying higher education are the one group who should be pursuing their point of view by argument and debate, rather than by violence.
Nick Herbert: I agree with my hon. Friend. Of course it was worrying for the staff at Conservative campaign headquarters in Millbank and for other members of the public. My right hon. Friend the Home Secretary spoke to Baroness Warsi during the day about that experience. I also agree with my hon. Friend that this is the place where democratic debate takes place over issues of public policy. No one questions the right of those students to march yesterday and to make their case, and 40,000 of them did so peacefully. There is plenty of opportunity to debate policy, but there is neither a need nor any excuse for a minority to resort to violence.
Keith Vaz (Leicester East) (Lab): May I join those on both Front Benches in congratulating the Metropolitan Police Commissioner on admitting what went wrong yesterday and holding a thorough investigation? I am sure that members of the Home Affairs Select Committee will be keen to look at those findings, especially in view of the criticism that the police received following the G20 protests, to find out whether they might have felt the need to adopt a different approach. Everyone has rightly condemned the violence. Has the Minister received any information that lecturers were also involved in organising this protest? If that is the case, and it is more than just anecdotal information, will he speak to Ministers at the Department for Education to ensure that their establishments look carefully at the way in which their employees have behaved?
Nick Herbert: I have received no such information. I repeat that the vast majority of the 40,000 who were demonstrating yesterday did so peacefully, and the Government have no issue with that, or with their right to protest. The right hon. Gentleman also mentioned the response to the Tomlinson incident. I discussed this with the commissioner of the Met this morning. He was clear that there had been a failure on the part of the police force to assess the risk properly, and he is reviewing that. He did not seek to attribute the blame to any deliberate change in policing tactics as a consequence of the Tomlinson incident. It is worth reflecting, however, that Her Majesty's inspectorate of constabulary stated in a formal report following the Tomlinson incident that the British model of policing
"can be easily eroded by premature displays of formidable public order protective uniform and equipment which give the perception-inadvertent or otherwise-of a hardening of the character of British policing."
Conor Burns (Bournemouth West) (Con):
Yesterday afternoon I agreed to give an interview outside St Stephen's entrance to some students from Nottingham university. After that interview we were joined by a
bearded, slovenly man in his 40s wearing an "End capitalism now" badge-[Hon. Members: "A Lib Dem".] I was wearing a yellow tie, so perhaps he mistook me for one. This man sought to wind up the students. In my judgment, he was an old-fashioned agent provocateur who had infiltrated the group. What assurances can the Minister give the House about future intelligence gathering, so that those who come here to make legitimate protests do not get infiltrated and have their legitimate causes hijacked?
Nick Herbert: Neither I nor the Government have anything against bearded people-or even against anti-capitalists, although we may disagree with them. We do, however, take issue with those who resort to violence, criminal damage and intimidation. It is clear that a small minority came along to yesterday's demonstration intent on pursuing those acts. They have been disowned by the president of the National Union of Students, as the right hon. Member for Morley and Outwood (Ed Balls) pointed out, and it is only fair not to characterise the rest of the demonstration by association with the actions of that thuggish minority.
Clive Efford (Eltham) (Lab): Speaking as a hirsute Member of Parliament, I am pleased that the Policing Minister is not going to discriminate against my minority. It is important that we all condemn the violence that took place and commend the officers who acted very bravely in difficult circumstances, but we need to remember that more than 50,000 students and lecturers protested peacefully yesterday, as is their right. There was just a tiny minority whom the Prime Minister described as
"a bunch of people who were intent on violence and destruction".
Perhaps he was recalling his Bullingdon club days. Given the intelligence gathering done by the police, why were they taken by surprise when so many people travelled quite a long way to get to London in order to protest? Surely they should have been aware of the numbers of people likely to be there. There is a history of this, as I know from my previous profession, having been caught up in a previous demonstration when students blocked some of the bridges in London. Why were the police not prepared?
Nick Herbert: I repeat that the review of the deployment of the police is being conducted by the commissioner of the Metropolitan police, and it is right that we should await its outcome rather than speculating on why there was an intelligence failure.
Robert Halfon (Harlow) (Con): Does my hon. Friend agree that yesterday's mob fires of placards and papers had echoes of 1930s book burning? Does he agree that mob rule is no substitute for democratic rule? Will he also pay tribute to the thousands of students who were not in Westminster yesterday, but were continuing their studies up and down the country?
We are committed to supporting the right of peaceful protest. Everyone in this country is entitled to make their views known by peaceful and
democratic means. It was open to students yesterday to hold a lobby of Parliament and contact their MPs, who I am sure, whatever their views, would have listened to their concerns. It is neither necessary nor justifiable for a small minority to resort to any kind of violence, intimidation or criminal damage.
Steve McCabe (Birmingham, Selly Oak) (Lab): I welcome the Minister's commitment to peaceful protests and demonstrations. Does he share my view that the appropriate sentence for many of these professional thugs and agitators is an exemplary prison sentence? Can he assure me that cost will not be a factor when the courts make their decisions?
Nick Herbert: I think that the hon. Gentleman, too, is close to trying to make a political point on the back of these events. My right hon. Friend the Justice Secretary has made it absolutely clear that prison will continue to be reserved as the appropriate place for serious, violent and repeat offenders. We have no plans to fetter the power of magistrates or sentencers in that respect. The Government want the full force of the law to be brought to bear on those who committed acts of violence yesterday: they should be brought to justice.
Mr David Nuttall (Bury North) (Con): In view of the decision made yesterday by a small minority of those involved in the demonstration to resort to violence and the destruction of property, does the Minister not agree that we should consider again whether the current sentences for such criminal behaviour are a sufficient deterrent?
Nick Herbert: We are conducting a review of sentencing, which will be published later this year. Of course there was no justification for the acts that took place, but I am not aware of any inadequacy in the sentencing powers available to courts. What is necessary is for the authorities to be able to collect the evidence and properly bring these individuals to justice.
Mr David Lammy (Tottenham) (Lab): At 1.10 pm I was at the front of the march with my hon. Friend the Member for Bolton West (Julie Hilling), and I saw no surge on Millbank at that time. May I refer the Minister to the website london.indymedia.org? He will learn from that website that anarchist groups, both in this country and abroad, had been planning to join the march for quite some time, and there is a fair amount of evidence that they were caught up in the criminal damage. It is surprising that the police were not aware of that activity. Can we ensure that we do not curtail the activities of students who march in London in the coming weeks, which some intend to do?
Nick Herbert: I can reassure the right hon. Gentleman that the Government wish to protect the right of peaceful protest. He mentioned websites. I am sure that this debate is being noted by the Metropolitan police, and I shall make certain that his comments are drawn to the attention of the commissioner. He is, of course, free to write to the commissioner, and if he wishes to copy me in, I shall ensure that his comments are noted.
Tom Brake (Carshalton and Wallington) (LD): When the Minister reviews the way in which the event was policed, will he confirm that Her Majesty's inspectorate of constabulary's recommendations on adapting to protests were followed by the Met in this case?
Nick Herbert: That point will, of course, be covered by the review that the Metropolitan police are undertaking. The Association of Chief Police Officers reviewed its policy on protests as a consequence of the HMIC recommendations, and a number of steps were taken. We shall keep all those matters under review, as is proper, but the essential point is that we must not take precipitate action in a way that would undermine the importance that the House and the country attach to peaceful protest. Equally, we must ensure that we are taking every possible step to prevent violence and violent disorder.
Anas Sarwar (Glasgow Central) (Lab): I wholeheartedly agree with the Minister's condemnation of yesterday's violent actions, and with his tribute to the police. The NUS was quick to condemn those actions, and is frustrated-as anyone else would be-that its genuine protest was hijacked by militants and extremists. Will the Minister take this opportunity to distance himself from the comments of the hon. Member for Mid Bedfordshire (Nadine Dorries), who said during the business statement that the NUS was "egging on" the protesters? I do not think that yesterday's events should be used as a way of defaming the name of the NUS.
Nick Herbert: I understand that the president of the NUS has condemned the actions of this minority in the clearest possible terms. There was obviously a failure on the part of the NUS to assess properly the number of people who would be taking part in its march. That is one of the matters that needs to be reviewed by the Metropolitan police, who have previously had very good relations with the NUS on issues of this kind.
Angie Bray (Ealing Central and Acton) (Con): Does the Minister agree that certain remarks "twittered" to the wider world about the fact that the violent rioting might be due to Government policy are not only unacceptable but highly irresponsible?
Nick Herbert: I do agree with my hon. Friend. There is no justification for resorting to violence, intimidation or criminal damage. Whatever the disagreements with policy, there are proper democratic means of expressing that disagreement, including peaceful protest.
Kevin Brennan (Cardiff West) (Lab): Further to the point about the National Union of Students and the accusations made by the hon. Member for Mid Bedfordshire (Nadine Dorries)-who I note is attempting to catch your eye, Mr Deputy Speaker-may I ask whether, when the Minister was briefed by the Metropolitan police or during any of the discussions that he has had about this matter, any evidence has been presented to him of any involvement of the leadership of the National Union of Students in organising, perpetrating or encouraging violence?
Nick Herbert: No evidence has been put before me other than the facts, which I have sought to give the House. The review is being conducted by the Metropolitan police themselves. It is an operational matter. Let us await the outcome of the review, which will be presented to the Metropolitan Police Authority, as it should be.
Nadine Dorries (Mid Bedfordshire) (Con): In response to the comments of the hon. Member for Cardiff West (Kevin Brennan), let me say that there is photographic, film and eye-witness evidence that NUS stewards whipped up the crowd yesterday. It is not good enough.
The Minister has said that the estimate of the number of protesters was upgraded from 5,000 to 15,000 yesterday. Can he tell us at what time the NUS informed the police that the estimate had risen by that amount? Did the police have time to "man up" to deal with that number of protesters?
Nick Herbert: I said in my statement that the police were informed on Tuesday evening that the NUS had upgraded its estimate of the number of protesters. Of course anyone who organises a demonstration or march has a responsibility to ensure that it is conducted properly, and a responsibility for the way in which that is done. In my view this is a matter for the Metropolitan police to investigate. If there is any evidence of incitement by any individual, I hope that it will be brought before the courts.
Mark Durkan (Foyle) (SDLP): Obviously we all offer our sympathy to the police officers who were caught up in coping with circumstances that they did not expect, to workers in the offices that were targeted and affected, and to the many students who are disappointed and frustrated by the hijacking of their impressive demonstration. However, will the Minister and others examine the intelligence issues surrounding yesterday's events, and ask whether anyone should have picked up a clue from what happened in Dublin during the past couple of weeks? A demonstration by the Union of Students in Ireland was hijacked and used as an excuse for targeted and deliberate agitation by exactly the same tendencies as were involved in yesterday's events in London.
Nick Herbert: The hon. Gentleman has made his point forcefully. It is precisely the sort of point to which I am sure the Metropolitan Police Commissioner will pay attention when he looks into whether there was a proper intelligence assessment, and what the failure was.
Geoffrey Clifton-Brown (The Cotswolds) (Con): My right hon. Friend may be interested to know that I spoke to several police constables this morning. They believe that it is a miracle that no death or serious injury resulted from yesterday's events, particularly if the story of an incident involving a fire extinguisher being thrown off a roof is true. They told me that serious questions must be asked and an inquiry must be carried out quickly, so that different actions can be taken if a similar event occurs again.
I strongly agree with my hon. Friend on both counts. First, serious violence did take place, and it is very fortunate that no one was more seriously hurt-especially given that many of us saw on the
television screens someone apparently throwing a fire extinguisher from the roof of the building, which could have really hurt, and possibly even killed, people standing below. That underlines the importance of proper policing, and of a proper review of how the incident was dealt with. I agree with my hon. Friend that it is important for the review to be conducted speedily.
Thomas Docherty (Dunfermline and West Fife) (Lab): I am sure the House will wish to congratulate the Serjeant at Arms and her staff on the speedy decisions they took yesterday afternoon. Given that this was a peaceful demonstration that was hijacked by a small number of Trotskyites, Socialist Workers and anarchists, does the Minister agree that it is beholden on Members not to make up lies and accusations to tell to the media or put in their blogs, even when those blogs are 70% fiction?
Nick Herbert: Well, anybody in this House is free to make whatever comment they wish about the conduct of this demonstration and those who sought to disrupt it, but the Government's view is that there were 40,000 people most of whom were marching peacefully, and that the demonstration was disrupted by a minority intent on violence.
Mr Tobias Ellwood (Bournemouth East) (Con): I must declare an interest: I have led a few demonstrations myself as president of the Loughborough student union-around this building, in fact, and against the poll tax, although I will keep that information to myself. In those days, we did not feel the need to throw fire extinguishers off roofs, to set fires or to try to put police officers in hospital. It is interesting that neither I nor my constituency neighbour, my hon. Friend the Member for Bournemouth West (Conor Burns), received a single request to be lobbied here in Parliament. In my day Twitter and Facebook did not exist, so students can mobilise themselves much more quickly nowadays. What are the police doing to understand intelligence from such sources and act more quickly?
Nick Herbert: It is my understanding that the police do monitor the various forms of social media, but such questions will form part of the intelligence review that the commissioner is undertaking as part of his wider review of what went wrong yesterday.
I would like to apologise to the House: I said in my statement that my right hon. Friend the Home Secretary had spoken to the Mayor yesterday, but my right hon. Friend tells me that that was not the case. I spoke to the deputy Mayor yesterday and again this morning.
Julie Hilling (Bolton West) (Lab): Yesterday's demonstration was organised jointly by the University and College Union and the National Union of Students, and 50,000 people came and were well behaved. However, witnesses have said that when the assaults on the building took place, that was organised by telephone and people pulled up their hoods: it was an organised event. Why was there a failure in the intelligence, therefore? Why was the building not-
David Tredinnick (Bosworth) (Con): Will my right hon. Friend re-evaluate the sense of allowing large demonstrations around Parliament square when they could be held in other parts of London? Is this a sensible measure, and why was the House closed for so long yesterday?
Nick Herbert: It was an additional concern yesterday that vehicle access to the Houses of Parliament was denied for two and a half hours. It has always been the position that it is important that Members of Parliament should be able to get to and from this place so that we can take part in debates and vote. We are reviewing this matter in the context of protecting peaceful demonstrations while also ensuring the special nature of Parliament square, and access to the House of Commons and the House of Lords.
Ian Mearns (Gateshead) (Lab): The issues involved in yesterday's events raised by Members here today clearly go beyond what the Metropolitan police can resolve within the terms of their remit. Why has the Home Secretary not made a statement about yesterday's events?
Nick Herbert: I am afraid I disagree with the hon. Gentleman. This is a matter for the Metropolitan police, who, quite properly, are reviewing it. This is an operational matter for them. There is a principle, which is often advanced to us by Opposition Members, that the operational independence of the police should be protected. We strongly agree. The police are, however, accountable-including in this case-to the Metropolitan Police Authority and the Mayor, and that is why the report will go to the MPA. I am sure that it will question the Met about these matters.
Nicky Morgan (Loughborough) (Con): Yesterday, I spoke to both the NUS president and the Loughborough students who were present, and I am glad to be able to say that none of them was involved in any of the violence. However, my non-student constituents ask what obligations those organising protests have to work with the police-such as whether they should undertake to report any intelligence as soon as they become aware of it. We will see more protests, so what can we do to stop them being hijacked?
Nick Herbert: There are statutory obligations on the organisers of marches to notify the police of any relevant intelligence, and that happened in this case. It is important for there then to be a proper dialogue between the police and the organisers. As I have said, those who organise marches and demonstrations have a responsibility to ensure proper conduct. When incidents such as the disturbance at yesterday's NUS demo take place the cause is undermined, and I believe that happened yesterday.
Mr Rob Wilson (Reading East) (Con):
Students from Reading university demonstrated in a peaceful and appropriate way and were very upset by the criminal damage. However, did my right hon. Friend see the
"Newsnight" interview with the president of the university of London student union? Is he concerned that militants in unions and political parties might be preparing to hijack future protests for their own political purposes, and against the wishes of the decent majority?
Nick Herbert: I repeat that there is no excuse for resorting to violence, intimidation or attacks on property. There are plenty of means-including through access to this place, lobbying Members of Parliament-for people to make their views known.
Mr Philip Hollobone (Kettering) (Con): As well as criminal prosecutions, will my right hon. Friend encourage universities, colleges of higher education and, in some cases, employers, to take appropriate disciplinary measures?
Nick Herbert: I think we need to draw a distinction between those who were marching peacefully and the small minority who were clearly engaged in criminal acts. They must be brought before the courts in the proper manner, after which action can be taken by the relevant academic authorities.
Charlie Elphicke (Dover) (Con): It would be all too convenient to write this off as just the work of professional agitators, but serious allegations have been made about NUS stewards, on-air TV confessions by student union leaders and the handing out of "What to do if you're arrested" leaflets, which would not need to be brought along to a peaceful demonstration, but I understand were handed out by the NUS. Will the Minister ensure that these allegations are properly investigated?
Nick Herbert: I am sure the Metropolitan Police Commissioner will have noted my hon. Friend's views in respect of any allegations of criminal behaviour. Not only will the commissioner be reviewing the deployment of police officers in such circumstances, but, as he repeated to me this morning, he is determined to ensure that the perpetrators of the violence, wherever they came from, are brought to justice.
Richard Graham (Gloucester) (Con): Does the Minister agree that the remarks made on television yesterday by the university of London union president were irresponsible and tarnished the reputation of responsible trade unions, and that Opposition Members who signed a coalition of resistance with ULU about direct occupation of buildings should withdraw from that association?
Nick Herbert: I did not see the remarks to which my hon. Friend refers, and I would be grateful if he would send them to me. Anybody who incites a criminal act in any way should expect to face the consequences, and the police cannot, and must not, tolerate the actions of anybody who either was directly involved in violence, intimidation or criminal damage yesterday, or incited that behaviour.
Matthew Hancock (West Suffolk) (Con): Will the Minister reassure the House that the investigation into that incitement to violence will cover the NUS president, who is reported to have called for demolition not only on "the streets of London" but
"inside the rooms where the deals will be made"?
I am not aware of the remarks that my hon. Friend attributes to the president of the NUS, but
I repeat that if any individual has, through spoken or written words, incited criminal acts, that is a matter for the police, who should gather the evidence and act accordingly.
Michael Ellis (Northampton North) (Con): Does the Minister agree that the limited number of Metropolitan police officers at the scene in Millbank in the early stages of the incident showed outstanding bravery and professionalism, and should be thanked from the Treasury Bench for that exceptional conduct, which they showed in the face of vastly greater numbers?
Nick Herbert: I agree with my hon. Friend. I have already expressed the Government's thanks to police officers, who did a very difficult job yesterday, particularly those who were manning the line when it was clear that more resources were needed. Last week I attended the Metropolitan police annual service of remembrance for fallen officers at Hendon. It was a sober reminder that police officers-those in the Metropolitan police and across the country-daily do their duty and sometimes lay their lives on the line for us, the public. At a time of change and police reform, it is important that we remember the great job that police officers do for us.
Mr David Lammy (Tottenham) (Lab): On a point of order, Mr Deputy Speaker. Can you advise the House of the rules on parliamentary privilege? Certain Conservative Members have used the opportunity of the statement to slander NUS presidents and other members of the NUS, and it is clearly unacceptable.
Kevin Brennan: On a point of order, Mr Deputy Speaker. Can you investigate whether there is currently any obstruction to accessing the House, because no comments or contributions were made by Liberal Democrat Members during the previous statement?
Ian Mearns (Gateshead) (Lab): On a point of order, Mr Deputy Speaker. The answer given by the Secretary of State to a point that I made about access to work grants contradicted one that I had been given by his own Department in a response to a constituent's inquiry. May I ask that the Secretary of State come back to clarify the position?
Secretary William Hague, supported by the Prime Minister, the Deputy Prime Minister, Danny Alexander, Mr Patrick McLoughlin, Mr Oliver Letwin, Mr David Lidington, Mr Jeremy Browne, Mr Alistair Carmichael, Mr Henry Bellingham and Alistair Burt, presented a Bill to make provision about treaties relating to the European Union and decisions made under them, including provision implementing the Protocol signed at Brussels on 23 June 2010 amending the Protocol (No. 36) on transitional provisions annexed to the Treaty on European Union, to the Treaty on the Functioning of the European Union and to the Treaty establishing the European Atomic Energy Community; and to make provision about the means by which directly applicable or directly effective European Union law has effect in the United Kingdom.
Mr William Cash (Stone) (Con): On a point of order, Mr Deputy Speaker. I raised earlier with the Leader of the House my Committee's concerns at the extremely short time between the presentation of the European Union Bill and its Second Reading. The Bill deals with matters of enormous constitutional importance and it would be appropriate, within the terms of reference of my Committee, to guarantee that we are given adequate time to consider it. I would be grateful, Mr Deputy Speaker, if you would be kind enough to take that point on board for the purposes of ensuring that, within the Standing Orders, my Committee has appropriate time to deal with the Bill.
We now move on to the main business of the day, but before I call Margaret Hodge to move the motion on her Committee's report, I should remind the House that the Backbench Business Committee has recommended that this item take no longer than 15 minutes. We will then move on to the main debate on policy for growth.
That this House notes the publication of the Sixth Report from the Committee of Public Accounts, on Cafcass's response to increased demand for its services, HC 439.
This is a new procedure for the House and I am grateful to the Backbench Business Committee for giving my Committee the first opportunity to present a Select Committee report to the House. I wish to highlight key points in our report, but I am conscious that the House wants to move on to the debate on growth so this should not take longer than 15 minutes. I will be most happy to take interventions from those on both sides of the House, to which I shall try to respond. The Backbench Business Committee does not envisage that Members will seek to speak after I sit down and the intention is that the Deputy Speaker will put the question right away before we move on to the main Back-Bench debate.
The role that the Children and Family Court Advisory and Support Service-CAFCASS-plays is crucial for the most vulnerable children in our society at the most vulnerable point in their lives, when their future is being decided by the courts. CAFCASS advises the courts on behalf of the children-it advises what is in the child's best interest-so ensuring an effective, efficient and timely service is essential if we are to serve our children well.
Mr Peter Bone (Wellingborough) (Con): In the discussion about the response of CAFCASS, was there any discussion about children who have been trafficked? They seem to be falling through the system at the moment.
Margaret Hodge: I agree entirely with the point made by the hon. Gentleman, but our Committee focused more on the service that CAFCASS was able to give to children whose future was being determined by the courts and therefore on whether CAFCASS officials were writing reports that the judiciary could take.
Our Select Committee undertook its inquiry on the basis of a National Audit Office report into the way in which CAFCASS had responded to a substantial and sustained increased demand for its service in the wake of the tragic death of baby Peter. We were particularly grateful to Sir Nicholas Wall, president of the family division, and Sir Mark Hedley for giving us important insights into how they, as the customers of CAFCASS, experienced the service. It was welcome and important that they both felt that the quality of the reports they received from guardians in public law cases was good. However, we have grave concerns as to the whether the organisation itself is fit for its purpose.
"unable to revisit the contents of its reports to courts."
Margaret Hodge: I am extremely puzzled by the allegation that has been made by the hon. Lady's constituent about the veracity or otherwise of reports that are considered by the courts. I think that it would be inappropriate for me to comment on that, but I urge her to take it up through the appropriate mechanisms, because it is clearly an area of concern.
The Committee had grave concerns as to whether CAFCASS was fit for purpose. We all accept that it was hugely difficult for CAFCASS when it was faced with a 34% increase in the number of care cases, but in our view it was ill-prepared to respond appropriately and the reasons for that failure go beyond the crisis created by the sudden influx of new cases. The facts established by the NAO, and accepted by the permanent secretary in signing off the NAO report, cause us grave concern. At the height of the crisis, it was taking 40 days on average to allocate fully a care case to a family court adviser. I understand that it currently takes 27 days-nearly a month in a child's life-just to start the work that will lead to a decision for that child's future. The goal that CAFCASS has set for itself is to allocate cases within two days, but two years after the end of the baby Peter case in the courts, CAFCASS is still not meeting its own standard.
Sir Alan Beith (Berwick-upon-Tweed) (LD): The report and what the right hon. Lady is now saying are depressingly similar to what we in the then Select Committee on Constitutional Affairs said in 2003, which led to the removal of the entire board of CAFCASS. Does she think that what she is now describing can be resolved by changes at the top, either at board level or in senior management, or do we also have to look at whether the remit and work of CAFCASS can be refocused as part of the family law review?
Margaret Hodge: As the right hon. Gentleman will know, I was the Children's Minister when his Committee considered that report. We had hoped that putting in a new chief executive and a new board would enable the organisation to manage the transition to the new arrangements and provide an effective service for children. It is particularly depressing in coming back to this issue a few years later to find that that has not taken place. I agree with the implication of his assertion-the time has probably therefore come to review the arrangements that were put in place and to see whether they are appropriate to ensure the proper care of children. I take that point seriously.
CAFCASS's ability to respond to private law cases, where demand is still increasing, was also woefully inadequate. One third of the section 7 reports required by the courts are more than 10 days late and CAFCASS also faces the ongoing challenge of an ever-increasing number of open care cases remaining on its books. At the end of September, CAFCASS had nearly 12,000 open care cases-over 2,500 more than a year before.
During 2009-10, CAFCASS reached an agreement with the judiciary which enabled it to prioritise new and delayed cases, to introduce a duty system to support the courts in care cases and to write fewer reports in private
law cases. All sides agree that, although those temporary changes were necessary, they were not desirable and the duty system for public law cases did not serve the needs of children well. The guidance underpinning those practices has now been amended to minimise the use of duty guardians, but that simply adds to my Committee's concerns about the capacity of CAFCASS as an organisation to respond to the demands placed on it.
Matthew Hancock (West Suffolk) (Con): It is a pleasure to serve under the right hon. Lady on the Public Accounts Committee. Will she take this opportunity also to note the evidence that we heard that, despite all the problems, the hard work and commitment of the case workers and of social workers were commended by everybody from whom we took evidence?
Margaret Hodge: I agree entirely. We changed the way in which my Committee normally operates in that we deliberately took evidence from members of the judiciary. It was heartening to hear that they found the quality of the reports presented to them to be good; there was no criticism at all of the quality. We found it rather more disturbing that both the permanent secretary in the Department and the chief executive of CAFCASS thought that they were running a world-class organisation, whereas the evidence suggested that the quality of the organisation was far from world class.
Mr Richard Bacon (South Norfolk) (Con): On that point, was not one of the most shocking aspects of our Committee's inquiry the discovery that CAFCASS had not previously collected all the information that it required? However difficult it is, CAFCASS must undertake the data collection that it needs to manage its business.
Margaret Hodge: Yes, there was unanimous agreement in Committee that the failure to collect adequate data to be able both to predict future case load and to manage current peaks and troughs in case loads was extremely worrying. I do not think that we were given any proper undertakings or comfort that CAFCASS was on top of the data and information requirements that would allow it to improve its performance.
Joseph Johnson (Orpington) (Con): One way in which CAFCASS was world class was in the amount of pay that the chief executive received: £168,000. Given how long he had been in the role-since 2004-and the litany of failure against key performance indicators that the report exposed, did the right hon. Lady feel that the Department was sufficiently engaged with the possibility of management change at the top of CAFCASS?
Margaret Hodge: That is a matter for Ministers. I hope that the Under-Secretary of State for Education, the hon. Member for East Worthing and Shoreham (Tim Loughton), who is in his place, will note this point: we were all a bit taken aback by the fact that the permanent secretary appeared, from the evidence that he was giving, to believe that the organisation was world class, as all the data in front of us suggested otherwise.
The evidence that we had before us suggested that CAFCASS is an unhappy organisation with underlying problems and challenges. Let me draw the House's attention to two of the facts in our report. First, Ofsted carried out inspections of 10 CAFCASS areas in 2009 and failed eight of them. That is a terrible indictment of the organisation. Secondly, the NAO found that sickness rates among family court advisers averaged 16.1 days per annum-double the average for the public sector as a whole and indicative of low morale in an organisation that is not being properly managed by its senior executive.
CAFCASS was established in 2001 and brought together the work previously carried out by more than 100 organisations based in the Court Service and in local government. I know from my time as Children's Minister that there have been continuing challenges and problems with the organisation, and it is particularly disheartening for me to return to considering the organisation after the reviews in 2003.
I welcome the fact that a family justice review is taking place and although that might impact in the short term on the already low morale in the organisation, I hope that it makes proposals that will ensure that the most vulnerable children in our society are properly served. I hope that in determining the future of the service the Government will have regard to the conclusions in our report.
Margaret Hodge: I urge the Government, as they are considering financial cuts to services across the board, not to place at risk the response we should collectively make to the needs of the most vulnerable young people in our society.
Sir Alan Beith (Berwick-upon-Tweed) (LD): On a point of order, Mr Deputy Speaker. We are all grateful to the Backbench Business Committee for enabling the Select Committee report to be presented, but I hope you will encourage the various parties involved, including the Backbench Business Committee, to review the procedure. Perhaps a little longer is required-such as a half-hour slot-in order that the Chairman may present the whole case and then take questions, including from the Minister. I saw that he tried to intervene. On behalf of Committee Chairs in general, I would like to encourage further consideration of the exact procedure to be followed for this excellent innovation.
Mr Deputy Speaker (Mr Nigel Evans): I thank the right hon. Gentleman for that point of order. I have been an MP for 18 years and we seem constantly to be modernising the House. This procedure is embryonic-this is the first time we have followed it-and I am sure that the Backbench Business Committee will reconsider it and consider what changes need to be made to make it more effective. I agree with his comments about the first running of the procedure; it was very useful.
That this House has considered the matter of policy for growth.
It gives me great pleasure to move the motion and I know that I speak for many others in this House when I say that we welcome the Backbench Business Committee's decision to hold a debate on this crucial subject. I also remind the House that in the Register of Members' Financial Interests I have pointed out that I am a business adviser to a couple of companies.
This is a crucial subject because the Government's whole economic strategy rests on the assumption of above-trend growth starting next year and continuing for the rest of the Parliament. I am sure that every Member would like to see faster and sustained economic growth from this point after the trials, tribulations and difficulties that the economy has been through in recent years.
Knowing how popular this debate is and that about 50 Members would like to catch your eye, Mr Deputy Speaker, I shall not exercise the right of the mover of a motion to speak at great length. The House will be delighted to know that I shall not be giving my analyses of where the world and British economies are or of monetary and growth trends, as that would take a little longer. All those who are desperate to know my analysis can read it on johnredwood.com-a not-for-profit site that is full of wise advice and good analysis with a great deal of modesty. I am sure that colleagues will be delighted to know that. I shall stick to the headlines, based on my analyses, and the conclusions that I should like to put to the Minister and others.
The strategy over the five years in the Red Book, as amended in the Green Book, says that by the fifth year of the Parliament the Government hope to be spending £92 billion a year more on current public services than in the last Labour year, and that they wish at the same time to reduce the deficit. To do that, they assume that there will be an increase in tax revenue of £176 billion a year by that fifth year. We believe that it is assumed that most of that increase in tax revenue will come from increases in current tax rates through growth in the economy. So the Government have a great deal invested in the idea that growth is going to speed up and be sustained-we all do.
My first point is that the one thing we cannot afford over the next five years is rapid inflation. Currently, inflation is too high. The Bank of England, I am afraid, was disastrous in the era of the exchange rate mechanism when it lurched from boom to bust and advised the Government to take that course. It was again extremely bad over the past five years when the conduct of monetary policy also lurched from boom to bust. The Bank and the banking regulators allowed far too much credit up to 2007 and then starved the markets of money and kept rates too high in 2007-08 and into 2009, and we lurched from boom to bust. That was not a global crisis: those events were not happening in India, Australia, Canada or China, but they were Atlantic events-America did something similar. Britain did that and we must not do it again.
My policy recommendation to the Treasury is that I hope that the Chancellor will make it very clear in the next couple of weeks that we do not need any more money printing or quantitative easing in the current circumstances. The economy is growing, jobs are being created and inflation is still running at somewhere between 3% and 4.5%, depending on which index one relies. When we talk to business, we hear that there is a lot of inflation out there in the pipeline thanks to commodity price increases and increases in the world supply line prices now. Those increases are largely fuelled by the enormous quantitative easing under way in the United States of America and we do not need Britain to fuel them further with more quantitative easing.
Mr Redwood: No, I do not think that is true at all. The reason we are now beginning to come off the bottom is that monetary policy lurched from being too tight to being too loose. Labour always said that that matter was decided by the Bank of England rather than by it, but we now need to think ahead. Monetary policy has been loosened somewhat and there is a bit more money around-indeed, there is a lot of money in the world as a whole-and it would be a disaster to fuel great inflation from here. If we can hold public sector pay and prices down-
If we allow public sector inflation to take off, that £92 billion extra will be needed to pay for the extra costs and wages and will not be available for real increases in programmes that most colleagues would like.
Mr Redwood: I shall not because we have to make progress. The £92 billion will go further if we can avoid high inflation. The Government should tell the Bank of England that the single objective is to get prices down, as it was asked to do, and to keep them down. More quantitative easing is not compatible with that aim.
My second point, which many colleagues will probably wish to address from their own, personal constituency experiences, concerns the lack of credit for business. Those two points are not contradictory, because while there has been a lot of money creation from which the public sector has benefited greatly by borrowing huge sums at very low prices, there has been a strict rationing of credit, particularly to smaller businesses, and a huge restriction on the balance sheets of the leading banks. One figure with which the House can never grapple is that the Royal Bank of Scotland-the state nationalised bank in all but name; we own most of the shares-has been on a drastic slimming course. It had a balance sheet of £2.2 trillion when it came into the public sector and by the end of this year, according to its plan, that
figure will be down by £1 trillion-£1 trillion will have disappeared from the balance sheet. It is a global bank but quite a bit of that has an impact on the British economy.
It is not surprising in that climate that it is difficult for small businesses to get the money they want. So my second piece of policy advice to the Government is that they should tell the banking regulator that enough is enough. The bank balance sheets, which were trashed in 2007 by very lax regulation, are now in danger of being strangled by very tight regulation. The tier 1 capital ratios for example, which in some cases reached a scandalously low 4% in 2007 on Labour's watch when it did not seem to care about these things, are now at about 10%. That is job done for the time being. We could, by all means, come back to it if we have rapid growth and if there are incipient signs that there is too much credit, but that is not the current situation. We should take the brakes off a bit, particularly for the small business sector.
My third point is that we need to get some of that credit into the big projects that the country needs. I hope that Ministers will make urgent moves to clear the ground on planning, regulation and general background so that the country can again get on with building power stations, transport links and the broadband links it needs to fuel growth. While I hope that all or most of those projects will be privately financed-another reason why we need to fix the banks more quickly-I hope that Ministers in this Government, unlike in the previous Government, will make rapid decisions so that the private sector can get on with that job.
Let me address two final issues. First, in order to collect £176 billion extra in tax in year five, from year zero in the plan, the Government need to optimise their tax rates. They accepted in their Budget statement that to go above 28% on capital gains tax would lead to a reduction in revenue. I welcome the development of wisdom in the Treasury on this important point, but I have bad news-28% is not the optimising rate for capital gains tax and 50% is not the optimising rate for income tax. I would like to tax the rich more-that will surprise colleagues and delight the Opposition-but the way to do that is to cut the rates. We need to do that to attract them here, keep them here and make them honest here, and we need to have rates that maximise the revenue from the rich-the sooner the better-to hit those targets.
Colleagues will be delighted to hear that I have come to my final point. We were promised deregulation and were told that there was going to be a mighty freedom Bill. The Deputy Prime Minister was supposedly toiling away in his enormous room in the Cabinet Office that was inherited from the Lord Mandelson regime and no expense was to be spared in making sure that we had a really big deregulation Bill. I now hear rumours that it is going to be a civil liberties Bill from the Home Office. Will the Minister, who has responsibility for small businesses, champion a proper deregulation Bill? Deregulation is the tax cut for business that does not cost the Treasury a penny. Indeed, it could be the tax cut for business that saved the Government money as well.
There is too much needless regulation and too much regulation that does not do the job. Labour introduced extremely complicated mortgage regulation and more of it is out there. It obviously failed. As soon as we had
all the regulation, the mortgage banks went down-something that they had never done before-because the wrong thing was being regulated. I want to regulate the cash, capital and solvency of those banks, but to make it easier for people to borrow money. Does the Minister know that the mortgage market is seizing up through too much of the wrong kind of regulation? Will he get on and fix it? I hope colleagues have a great debate.
Mr Deputy Speaker (Mr Nigel Evans): Order. As colleagues will see, this is a very popular and important debate, and a number of colleagues wish to participate in it. A five-minute limit has therefore been introduced.
Mr Virendra Sharma (Ealing, Southall) (Lab): I am grateful for the opportunity to speak in this important debate. Economic growth in the UK in the months and years ahead is extremely uncertain for two reasons. First, the Government's reckless gamble to eliminate the structural deficit in four years by reducing public spending by £81 billion is resulting in 500,000 public sector job losses and a further 500,000 private sector job losses are likely. This will impact on growth, causing a double-dip recession at worst and stagnation in the UK economy at best.
Secondly, having been caused by international factors, the current economic uncertainty and any prospects of growth are still going to be greatly determined by what happens in the international economic arena. Let me begin, then, with the international dimension.
"The outlook for growth is highly uncertain",
"The contribution of net trade to growth has so far been weaker than the Bank of England Monetary Committee had expected, and it is unclear how persistent that weakness will prove to be."
Joseph Johnson (Orpington) (Con): On a point of fact, the Governor of the Bank of England did not say that the growth outlook was tremendously uncertain, but that the inflation outlook was very uncertain. He said that, in his estimation, the UK's economic recovery was likely to continue.
The Governor of the Bank of England added that unless the G20 nations at the current summit in South Korea work together on trade and tackle imbalances
between creditor and debtor nations, the world economy is likely to be damaged. He said:
"What is most important at present, given the difficult and dangerous times that the world economy faces, is that the world leaders at the G20 have a constructive approach... We are in a position where the world economy can be a win-win outcome, but I'm afraid we're also in a position where it can be a lose-lose."
These are indeed difficult and dangerous times for the world economy and for UK growth prospects. Britain is particularly vulnerable to economic shocks in the eurozone. UK banks are exposed, with many loans to Ireland, Greece and Spain. Rumours of an EU bail-out of Ireland were rife in the financial markets only this week.
Equally, in the wider international economy, China, Brazil and India have all seen economic growth reducing. This all means more uncertainty as Britain tries to rebalance its economy away from being reliant on financial services and consumer spending on domestic service industries and more towards export-driven sales of our manufactured goods. My right hon. Friend the shadow Chancellor is right to say that the previous Government became over-reliant on tax receipts from the financial services sector, so it is right that, as we go forward, we try to build our manufacturing base back up and sell more of our goods in the world market, but it will not be easy.
I shall now deal with the domestic economy and growth-or, given the Chancellor's reckless plans as laid out in the spending review, perhaps I should say the lack of prospects for such growth. The growth figures of 1.2% and 0.8% for the last two quarters have indeed been welcome news, but have nothing to do with the Government's decisions since coming into office. The truth is, in fact, quite the opposite. Those two growth figures show the positive effects of the previous Government's fiscal stimulus. When carefully analysed, the figures also show that much of the growth was due to a temporary and seasonal upturn in the construction industry.
If Members care to look at the predictions for the UK construction industry going forward into 2011, they will find talk of recession. This is not surprising, given the Government's decisions in the emergency Budget and the spending review. If the housing capital budget is slashed by more than 50%, it does not take an economic genius to work out that the construction industry is going to take a hit. Equally, the cancellation of the Building Schools for the Future scheme, and the 60% reduction in the capital budget for schools, will also have a severe recessionary impact on the construction industry.
Let me illustrate that point with examples from my constituency and local borough. Ealing was due to have 18 schools either completely rebuilt or significantly rebuilt or refurbished. Some £305 million was to have been spent on those projects, representing a substantial boost to the local and regional economy, in addition to meeting the need for extra school building due to a rising demand for school places in the borough. Those plans were brutally cut in the emergency Budget, and in the end we managed to rescue projects for two sample schools, one of which is Dormers Wells high school in my constituency. However, we still face the withdrawal of almost £250 million of public money-
Mr Sam Gyimah (East Surrey) (Con): Thank you, Mr Deputy Speaker, for allowing me to speak in this important debate. In the short time that I have available, I shall focus on small businesses. Many Government Members agree that to get the economy back on track, we need small businesses and the private sector in general to begin to employ people again. We also believe that only when the private sector begins to employ people will we lift the country up and get it back on its feet. I want to tackle three elements that affect small business: first, the funding environment in general; secondly, the regulatory regime; and thirdly, the access to talent.
On the funding environment, much has been said in the House over the past few weeks and months about the need for banks to lend to small businesses, but we need to consider how banks treat small businesses in general. There is an institutional bias against small businesses in terms of lending money to them. Many banks would rather not do so, because the revenue profile of small businesses is too volatile, and banks tend to see that as equity-style risk, so they stay away from it. There is also an institutional bias in terms of the absolutely critical bank charges that small businesses have to endure.
Ms Louise Bagshawe (Corby) (Con): Is my hon. Friend aware of the invidious practice, so prevalent in my constituency, whereby banks ask the directors of small businesses to give personal guarantees, despite the healthy shape of their balance sheets? Such practice discourages entrepreneurs from developing small businesses.
Mr Gyimah: I agree 100%. For many small business men or women, the only way in which they can get the banks to give them credit to grow their businesses is to put their own assets on the line, and that is unacceptable because those people often take on a lot of risk to keep their business going. In looking at the funding environment, we need to get banks not just to lend, but to consider everything else, including credit.
It is great to see new small businesses trying to step into the breach, however. I came across a business called Funding Circle, which encourages lending by private individuals to small businesses, but that is nowhere near enough compared with what the big banks can do.
Another thing that the Government can do, in particular, is look at cash flow. One of the biggest things that determines the fate of a small and growing business is the amount of cash flow, and national insurance and VAT are the key drivers of that. The Government have made the right decision by giving certain businesses national insurance holidays, but it would be great if we could extend that to more businesses.
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