3.39 pm

Sheila Gilmore (Edinburgh East) (Lab): A lot of strange things have been said by Government Members: they say that the Labour Government did nothing to reform benefits, yet say, “You invented the work capability assessment, so you’re responsible for it.” It cannot be both. As a new Member in 2010, I came here intent on criticising the implementation, not the principle, of WCA, regardless of who formed the Government. I made that clear in one of my first speeches. The fact that someone might think it a good thing, in principle, to carry out an assessment does not mean that the specific form of assessment we have been using has worked.

I want to talk, in particular, about how the change from disability living allowance to personal independent payments is likely to take place. I draw attention to a report published in Scotland and based on work by the Learning Disability Alliance Scotland, which took the proposed test, as published, and ran workshops with about 135 people with learning disabilities to see how the test would work in practice. It found that 12% of DLA recipients would not be awarded PIP. Given that there are 24,500 people with learning disabilities in Scotland, nearly 3,000 could be at risk of losing their entitlement.

The report refers to one case study involving a woman with Down’s syndrome living in the Gorgie area of Edinburgh. At the moment, she receives the low level of the care and mobility components of DLA, which makes a huge difference to her life. The care component means that she can cook meals with fresh food, which is particularly important to people with Down’s syndrome, and the mobility component allows her to get reliably to and from her part-time job in a local supermarket. She can afford the bus fares and can get a taxi if she makes a mistake or gets lost. The awards also help her to cover additional costs. For example, a learning disability means that sometimes she leaves the heating on by mistake and so has higher heating bills. Her DLA means that she can pay these bills without too much worry and difficulty. Under the proposed test, however, she scored only four points, which would mean her losing £41 a week, or £2,000 a year.

The report found that 30% of those in receipt of the mobility component and 40% of those in receipt of the care component would receive less under PIP. For example,

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Frankie, who lives in a small town in a small group home run by a voluntary organisation, receives nine hours of support a week from paid staff as part of his living accommodation. He has a learning disability, cannot read, has a long-term health condition that requires periods in hospital and has mobility problems. At the moment, he receives the medium rate care component and higher rate mobility component of DLA. Under the PIP assessment, he scored some points in some areas, such as living needs—he needs help using appliances and understanding written communications—but that amounted to only seven points. That means he would not get those benefits and would be £85 a week worse off—£4,400 a year.

Yvonne Fovargue (Makerfield) (Lab): Does my hon. Friend agree that the changes to the legal aid system whereby access to welfare benefits advice will either be severely curtailed or not available at all will severely affect people’s attempts to appeal against these decisions, which appear perverse?

Sheila Gilmore: As my hon. Friend says, there are considerable problems with people being able to access legal advice on making appeals, but it is extremely difficult to access advice generally, given the cuts. We are certainly seeing that in my city, where the advice shop—one of the main advice centres—cannot see people for two weeks. Consequently, appointments are made two weeks in advance. Following an assessment result, people sometimes get a letter telling them that they have three weeks in which to appeal, yet it is difficult for them to get even basic advice in order to make an appeal. That is the reality that people are facing on the ground, so we need to look hard at the proposed tests.

Another important aspect of this debate—the Select Committee on Work and Pensions draw attention to this, and I hope that the Minister will consider it seriously—is that if we follow the pattern used with the employment and support allowance, people will be tested and re-tested, even though nothing in their circumstances has changed. One of the Select Committee’s recommendations was that limits should be placed on the number of re-tests under the new PIP. That is not to say that people should not be tested, but if they are re-tested constantly we may run into the problem of people having their next test virtually before they have finished their last test or their last appeal. That is not helpful, particularly for people with mental health problems, for example.

Nadine Dorries (Mid Bedfordshire) (Con): Does the hon. Lady agree that there is a balance to be struck, in as much as those in long-term care—the very vulnerable people she is talking about—should perhaps not be subjected to re-testing in future, whereas the others are entitled to a face-to-face reassessment, and that that is what should happen?

Sheila Gilmore: I do not disagree with the hon. Lady, in the sense that there has to be the flexibility to look at people’s exact circumstances. The point I wanted to make is that we need to impose some limitations, because the stress of having to go through the process is extremely great for some people, and their illness can be made worse.

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Although I have taken interventions, and therefore have extra time, I do not want to take up too much time, because one or two other people still want to speak. The Minister who opened the debate would no doubt respond by saying that we are scaremongering—that what we have described will not come to pass under the test and that everything will be fine. Indeed, she has gone further than that. She has said on numerous occasions that one of the reasons for having a new benefit and not simply changing DLA is that people who currently do not qualify—people with communications difficulties, she has suggested, or people with mental health difficulties—will now qualify under the new benefit. That suggests that more people will be entitled to PIP. I want to know how she can square that with making savings of the size that the Government say they want. If more people who do not currently receive the benefit will qualify, that suggests that even more people will claim than at the moment.

The Minister has also said that we should not worry about the tests because they are going to be a “conversation”, and are not really going to be a test. She has also said that we should not worry about the time limits on tests because a test should take as long as it takes. That all sounds wonderful, but I would like to know—the Minister has to answer for us—how it squares with cutting costs. Indeed, it will add to the administration costs, so is that included in the contract with providers? We do not really know what the terms of the contract are, and if those things are not in the contract, they will not happen. Therefore, for all the warm words about having conversations, being relaxed and the tests taking as long as they take, what the Minister has described will simply not happen unless we are given clarity on whether it is in the contract.

3.47 pm

Geraint Davies (Swansea West) (Lab/Co-op): I will be brief. I was out of the Chamber earlier because I was in the Welsh Grand Committee.

People working in Remploy in particular, but also the disabled community generally, feel very much that they have been kicked in the teeth. They feel as if they are having to pay the price for the mistakes of the bankers. We all know that we had a deficit, but we also know that two thirds of it was caused by bankers, with the other third caused by the previous Administration investing more than they were earning at the time to keep growth going—and being successful in that. Now we have got zero growth and the deficit is going up.

Maria Miller: Will the hon. Gentleman give way?

Geraint Davies: No, I will not give way. I do not have time.

Let me turn to Remploy, which was set up after the war. When I started becoming actively involved with my local Remploy factory about a year ago, the orders it was receiving were not high enough. I went round to the Driver and Vehicle Licensing Agency, the local health service, the local university, and so on, and now the factory is working flat out, getting more and more orders. That just shows that if the central command in Remploy were more effective, the factories could be successful and could work.

As for the finances, yes, the previous Government closed 29 factories, but they also left a legacy of £500 million to modernise and reinvest. However, we now find that

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the residue of that—about £320 million—is being put elsewhere. It might be used to get people with disabilities into mainstream work, but that mainstream work does not exist, because of record unemployment and record numbers of people in part-time work, and we now have the Enterprise and Regulatory Reform Bill, which will enable employers to get rid of people who are weaker without tribunals and all the rest of it. It all stinks, to be honest.

In regard to the financial literacy of the arrangements, the average subsidy has dropped from £25,000 to £20,000, and it costs £10,000 in lost tax and benefits to put a normal person on the dole. Lord Layard has just produced a report on the cost of unemployment in terms of mental health, and it is clear that people in Remploy will end up with other difficulties that will put an enormous cost on the health service. There will be no real economic benefit at all.

Alongside that, there is uncertainty about the pension fund, the factories and the assets. The Welsh Government have, in good faith, offered to take over the factories. They have said, “We’ll have the subsidies if you let us use the factories and make this work. Let us use procurement positively and smartly to make it work.” Of course, the offer has been turned down, because success in Wales would illustrate that similar success could have been achieved in England, and the Government do not want to see themselves failing. This is just a case of asset stripping of the most vulnerable people in our society, and it stinks.

3.50 pm

John McDonnell (Hayes and Harlington) (Lab): This has been a helpful discussion about policy, but the best policy is informed by our own experience of what is happening in our own constituencies. I want to put on record what my constituents are experiencing at the moment. In addition to surgeries, we now have an open-door policy four days a week, and in some ways I wish that we had not. Sometimes we want to hide, because we have been inundated with people who have problems with lost benefits.

I also help with disability living allowance appeals. This is not just about legal aid cuts; it is about the cuts overall. We have lost advisers in the area, so I represent people at DLA appeals, and we mainly win. That is not because of my articulateness, as you can tell; it is because once those presiding over the appeal see the people concerned, they can see that they have been wrongly assessed. Another problem is that people’s appeals are taking so long to arrange, once they have lost their benefits. They can wait for up to six months for their appeal, having lost their benefit, which is causing immense problems.

On the work capability test, I opposed the privatisation of the process and the bringing in of Atos, but if we are going to have a private company doing this work, we should at least be able to understand the contract involved. We should at least be given open access to what has been agreed with that company in our name, and be told what level of performance it is supposed to undertake. I am not sure what other Members have found, but when people come to see me, having gone through an Atos assessment, they tell me that they feel degraded, shamed and abused. I raised the point about suicides with the Secretary of State some weeks ago,

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and I was not exaggerating. Other Members will have experienced this as well. People come into my constituency office and tell me: “I can’t take any more of this. I’ve had enough.” I am really worried by the anecdotal reports of individual suicides, and it behoves the Government to monitor the situation and assess what is happening on the ground.

People have had enough of being called scroungers. We have seen the increase in hate crime towards people with disabilities because of the atmosphere that has been created by the media and by some politicians using loose language on this subject. Those people feel shamed, simply because they are claiming the benefits to which they are entitled. That is the experience in my constituency office at the moment, and it just goes on.

This is carers week. Other London MPs will also tell the House about constituents who have gone on to personal budgets, and that those budgets do not cover the wages of the carers whom we want to care for our people. It is virtually impossible to pay enough to get someone to stay overnight. Most of these arrangements have now been privatised, and people are getting a different carer coming in every day. The relationships with the carers have been broken down by this process.

Respite provision is now critical in my constituency, but what is my local Conservative council doing? It is closing the centres where people used to get respite. This is all part of the modernisation programme. It is closing three centres and modernising one. Of course, two of the centres that are being closed completely are in the most needy area of my constituency; a working-class area. It just goes on.

After the Southern Cross debacle, the company was broken up and some of the residential homes were given back to their original owners. I give this warning now: that arrangement is beginning to break down already, because the management in those individual homes are not competent to manage the process of disaggregation and the long-term planning of care. Why? The local authority role in providing those services has been so undermined and the resources have been cut, even for the management of those individual contracts. We are facing a crisis. A number of people are trapped in this whirlpool of deprivation, and it will be almost impossible to pull them out if we continue with these policies.

I went to the GMB conference last week, spoke to the manufacturing section and met many Remploy workers. They are now absolutely desperate, and they feel completely betrayed. They might not have agreed with the Sayce report, but at least there was a process there that they saw they were working through. That has now been torn up and everything in that report has been reneged upon. They feel absolutely vulnerable, with some saying, “We will not work again.”

In the early 1980s, I sat on the first committee established to remove restrictions against people with disabilities. It was called CORAD— the Committee on Restrictions against Disabled People. I was nominated to sit on it by the TUC. It took us 25 years before we secured anti-discrimination legislation. I congratulate the last Government on achieving that. I was one who wanted to mainstream employment. In fact, I was an ardent advocate of that; over the years, experience taught me

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that we always need an element of supported employment. That is what Remploy does well. What does it do badly? As my hon. Friend the Member for Swansea West (Geraint Davies) argued, the management have been abysmal. All the workers are saying is, “Listen to us; we can manage these resources more effectively than the current management, but we also need the support of the Government.” As my hon. Friend said, what happened to the commitments about public procurement that we were promised over the last two years? If it had not been for the individual efforts of people such as my hon. Friend and others, as exemplified today, no procurement would have happened because the Government have done nothing.

Finally, the Government should not think that this issue or these people are going to go away because they are not: these people are mobilising. We now have a disability movement in this country of which we have not seen the equal before. Black Triangle occupied Atos offices in Scotland; members of DPAC—Disabled People Against Cuts—chained themselves in Trafalgar square. These people are not going to go away. They will be in our face—and rightly so. I will support them, including if Remploy workers opt to buy their factories.

3.56 pm

Mrs Anne McGuire (Stirling) (Lab): I am delighted to welcome the contributions to this afternoon’s debate of my hon. Friends the Members for Aberdeen North (Mr Doran), for Islwyn (Chris Evans), for Hayes and Harlington (John McDonnell) who just spoke so powerfully, for Wansbeck (Ian Lavery), for Swansea West (Geraint Davies), for Edinburgh East (Sheila Gilmore), for Rutherglen and Hamilton West (Tom Greatrex) and for Westminster North (Ms Buck). They all made their contributions in their own distinctive ways. We have covered some of the areas identified in the motion.

I kick off by talking about the social care crisis, identified by the hon. Member for West Suffolk (Matthew Hancock) and highlighted by my hon. Friend the Member for Westminster North. I hope that we are now at a point in discussion where we can reach a cross-party consensus on social care. Both those Members identified the major difficulties. I think we should remember that it was my right hon. Friend the Leader of the Opposition who invited the Government to come into those cross-party discussions, having had a pretty bruising experience prior to the last general election when we thought we might have had a basis for moving forward. I certainly welcome the fact that we are treating this issue with the seriousness and urgency that it deserves. However, my image of the contribution of the hon. Gentleman is that he goes around working out how much people’s bottoms and legs can be insured for. He is not normally prone to humour, but I thought that was a bit of light-heartedness on his part.

The Minister with responsibility for disabled people paints a picture that, frankly, bears no relation to the reality of the lives of disabled people and their families and carers. When I heard her contribution, I wondered which world she was living in. She is a quiet and impressive speaker, although she showed today that she can sometimes be provoked. She somehow gives the impression that it will be all right on the night and that tens of thousands of people out there can be expected to say, “Well, that’s fine, Minister for Disabled People.

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We know that we are suffering”—as my hon. Friend the Member for Hayes and Harlington identified—“but we do not know what is in front of us; we have been vilified in the press, not just by media reporters, but by some ill-considered briefings from some politicians.”

The words of the Minister do not chime with the reality of what people are feeling out there. Over the past couple of years disabled people have been undermined and their confidence shattered, and they are living in a climate of fear. There has been an increase in hate crime. According to a recent report by the university of Glasgow for Inclusion London, the amount of negative reporting of disability in the print media has increased dramatically. People out there who are not claiming disability benefits now think that everyone who is claiming a disability benefit is a skiver. I hope that one day the Secretary of State will rebut the comments that are being made in some tabloid newspapers.

Let me dispel one or two of the myths that have been perpetrated here today. One is that lifetime and indefinite awards will never see the light of day again. In fact the lifetime award was replaced in 2000, because we recognised that it conveyed a mixed message. There has also been a dodgy use of statistics on all sorts of disability benefits, particularly by the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling). He said that 75% of incapacity benefit claimants were fit for work, but when the position was examined properly, the figure proved to be as low as 37%.

An image or background has been created to justify a welfare reform programme that is flawed, at least in its implementation. We talk in general terms about disabled people and those who receive disability living allowance, but hundreds of thousands of people who have arthritis, learning disabilities or psychosis rely on the additional cost payment provided by DLA for their everyday lives.

Let me deal very briefly with Remploy, which has already been dealt with extensively today. Yes, we had to wrestle with some of the difficulties—I am certainly not going to run away from that—but the Minister gave only part of the picture. Any Member who was in the House before the last modernisation programme for Remploy knows that we engaged in an extensive and lengthy consultation. All Members of Parliament had all the figures in front of them from the moment that we embarked on that modernisation programme. What we did not do was organise a 90-day consultation involving people who were already feeling vulnerable because of all the other stuff that was going on around them, and embark on a factory programme without building elements of support into it.

Particularly important is the cumulative impact, which has not been addressed today. The Joint Committee on Human Rights said in its report:

“Given the breadth of the current reforms, the Government should publish a unified assessment of the likely cumulative impact of the proposals”.

The Government replied:

“The ability to undertake cumulative analysis is limited because of the complexity of the modelling required”.

So a Government who have tens of thousands of civil servants in the DWP are telling disabled people that, despite all that expertise, they cannot put together a cumulative assessment of what is happening to their

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lives. I think that it is to the shame of the Secretary of State that he is not prepared to put the big picture out there in front of people. The Joint Committee also said that we were in danger of breaching our commitment under the United Nations convention on the rights of persons with disabilities by posing a threat to their right to independent living.

Let me put a very brief cumulative impact assessment before the House. The DWP’s own analysis concluded that the benefit cap would have a disproportionate impact on households containing a disabled person, which were

“more likely to be affected”.

The Prime Minister has always dodged and weaved on this, but the reality is that the sum will be reduced by half under the new universal credit. The “Counting the Costs 2012” report by Contact a Family found that it costs three times more to raise a disabled child, and 73% of its respondents said they believe welfare reform will make them poorer. Mencap says 32% of local authorities have cut day care services in the past three years. The cumulative effect is growing. Some 57% of people with a learning disability currently receive no services at all, despite being known to their social care departments. Disability Rights UK has highlighted how losing DLA will impact on disabled people’s opportunities to get a job.

Matthew Hancock: The right hon. Lady talks about the need to see the big picture. Will she therefore correct something the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) said in his opening speech? He said unemployment is rising, when today’s figures show a fall in unemployment and a rise in employment, and that should be welcomed.

Mrs McGuire: I know the hon. Gentleman from our days serving together on the Public Accounts Committee, so I know how good he is with figures, and how he can bandy them around. The reality is that £9 billion more will be needed to pay for unemployment benefit. That is the real statistic.

Matthew Hancock indicated dissent.

Mrs McGuire: That is the real statistic. We in this House bandy figures around, but the reality is that we are talking about people who are finding themselves—day after day, week after week, month after month—being unable to get a job. That is the reality: 2.5 million unemployed.

Ian Lavery: In my constituency, and in the north-east region, unemployment has increased again, yet the Minister with responsibility for employment did not even turn up to a Westminster Hall debate today to respond to the comments of MPs from the north-east whose constituencies face serious problems. That is a total disgrace.

Mrs McGuire: And that is the issue this Government need to attend to. We have a crisis in social care. The directors of adult social care services have identified in excess of £1 billion of cuts to social care budgets.

What in this motion do the Government disagree with? It recognises there should be reform of DLA. It raises concerns about the WCA. It recognises the role of

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carers. It promotes independence, choice and control for disabled people. It asks the Department to restore, in writing, its commitment to equality for disabled people. It calls for a full cumulative impact assessment of the effect of what is happening on the lives of disabled people. It asks for reform of the WCA descriptors.

I always think it is faintly amusing that when we talk about disabled people in this House, Cabinet Ministers often find more time to talk among themselves—as some of them are doing now on the Treasury Bench—than to listen to the debate. I hope the Minister replying to this debate will recognise that this is a sensible motion that is looking for consensus, and that he will respond in keeping with that spirit of consensus.

4.8 pm

The Minister of State, Department of Health (Paul Burstow): First, I want to say on behalf of my colleague, my hon. Friend the Member for Basingstoke (Maria Miller), who has responsibility for disabled people, that she has had to attend a Westminster Hall debate to respond to the hon. Member for Sheffield, Heeley (Meg Munn). She would have liked to attend the conclusion of our debate, however.

Last week, the House debated mental health on a Backbench Business Committee motion, and it made a powerful statement about the need to challenge stigma in mental health—a topic we have also touched on today. That earlier debate was made all the more powerful by a number of personal stories told by Members on both sides of the House. It was a debate that will be long-remembered by those who participated, and I know from the many e-mails and letters I have received that it reached well beyond the usual suspects who avidly follow our proceedings. That is also the case in respect of some of the issues raised in today’s debate.

Let me begin by referring to an issue raised in the opening speech by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne). It is an issue very dear to my heart as Minister with responsibility for mental health, and in respect of which the Government will shortly be coming forward with a suicide prevention strategy. I am talking about the issue of concerns that some constituents bring to our surgeries. I cannot talk about the individual case, but I will make sure that a ministerial colleague writes back to him once the details are known. What I can assure him and other hon. Members is that all staff are trained in dealing with vulnerable groups, including those with potential for self-harm. Occurrences of self-harm are rare, as are suicides. It is also worth saying that Atos has appointed mental health and cognitive intellectual champions to provide advice on handling any aspect of these cases, including dealing with cases of potential self-harm and suicide. I wanted to put that on the record because talk about suicide can itself be damaging, and I want to ensure that we address these issues correctly.

Ian Lavery rose

Paul Burstow: I have so little time—I have minus 10 minutes, in theory—that I would like to ensure that I respond to the points that have already been made.

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Disability living allowance has been mentioned by a number of hon. Members. It is worth saying that Labour left the assessment process as a piece of unfinished business; it did not properly take into account all those with sensory, mental health and cognitive impairments. The move that this Government are making to the personal independence payment gives us the opportunity to ensure that we do take proper account of the impact of mental health needs and fluctuating conditions. The right hon. Member for Stirling (Mrs McGuire) said in her summing up that the Labour Government dealt with the issue of life awards in 2000. Yes they did—they changed the name to “indefinite awards”. Some 70% of those are still on the case load and they have just been given a different name. The reality is still the same.

The hon. Member for Edinburgh East (Sheila Gilmore) talked about PIP assessments, and I want to tell her that the Government are still considering the findings of the consultation on the assessment process. The consultation closed on 30 April and we will be publishing the response to it, along with the current consultation that we are doing on the detailed design, in the autumn, before this House properly debates those matters as part of the regulations.

My hon. Friend the Member for Chippenham (Duncan Hames) talked about Labour’s legacy of subcontracting out to Atos the decision-making process, and fettering, in a way, the way in which decision makers could act. He is absolutely right about that, which is why we have given back flexibility to decision makers. Indeed, we have moved away from the hard, harsh and tough approach taken on work capability assessments by the previous Government. We have taken the recommendations of Professor Harrington’s independent reviews seriously and implemented all of them. We are building on his recommendations, following his engagements with charities, on how we make sure that the assessment process is more accurate and does properly reflect fluctuating conditions and takes into account those with mental health conditions. Again, that point was raised by my hon. Friend.

Sheila Gilmore rose

Paul Burstow: I cannot give way during this debate. A question was asked about whether Professor Harrington will continue to undertake reviews. He will be conducting a third and final review—the legislation commits to two further reviews—but I think that after three reviews he gets time off for good behaviour. The Government are not telling him to go—if he wanted to stay, we would be happy for him to do so. The reality is that he has done a good piece of work on behalf of this Government and we want to make sure that that is followed through.

The hon. Member for Wansbeck (Ian Lavery) asked a number of questions, as did my hon. Friend the Member for Chippenham and others, about Remploy. Let me be clear about the consultation process: the objective is to preserve jobs. We made a number of announcements, on wage subsidies and on the £10,000 to support employee-led bids. We did that in response to expressions of interest that we have already received. Discussions have taken place between Remploy and bidders, as part of the normal commercial process. My hon. Friend asked about social enterprise businesses, and there has been engagement with them. The whole process will run for five and a half months. The previous Government’s

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modernisation plan was meant to turn this sector around, but we still face a £68 million loss, which is why we are making the changes that we are having to make now. My hon. Friend asked whether the consultation report will be published. Yes, it will. We are also making sure that when individual discussions take place with employees, there is a discussion about the contribution that the £8 million support package constitutes. The hon. Gentleman also asked a question about the accrued rights of existing members of schemes, and I can assure him that those will be protected.

The hon. Member for Aberdeen North (Mr Doran) made a very good point about independent advisory groups, and there will be one to examine all the business plans and advise the Remploy board prior to decisions being made about those plans. I also understand the importance of ensuring that any conflicts of interest are carefully handled, and my ministerial colleagues at the Department are certainly very focused on that.

I am the Minister responsible for social care and so I want to address those parts of the debate. We should be honest: successive Governments have failed to tackle social care. In the past 13 years, in a time of plenty, Labour failed to get a grip on the issue. We have a system in this country governed by laws that were written in the 1940s and look back to Poor Law principles. Social care and social work should enable disabled people, older people and their carers to live the lives they want to and that is why we will shortly set out a comprehensive overhaul of social care law in this country, placing people’s wellbeing at the heart of decision making and focusing on goals that matter to individuals. We will build on the excellent report by the Law Commission on social care law reform to ensure that we have a legal framework that supports a much more personalised approach.

As the Government consulted with charities last year and worked with families, carers and others, we heard many criticisms of the social care system we inherited. We heard a long and deep-seated set of concerns about the variability of quality, about people feeling bounced around different systems and not always getting the personalised support that they wanted, and about the system being focused too heavily on crisis and not enough on prevention. We will address those issues in the White Paper we will publish shortly.

My hon. Friend the Member for West Suffolk (Matthew Hancock) and others spoke about funding reform and we will publish a progress report on that matter. We certainly understand the point made in the debate about the unfairness inherent in the system we have today. The flaws in that system penalise thrift and hard work and lead to people facing catastrophic costs. Those hon. Members who have said that we need a cross-party solution are absolutely right and the Government are committed to talks so that we secure just that.

Some hon. Members have talked about social care funding. The truth is that the Government took some difficult decisions during the spending review, but they were the right decisions and social care budgets were protected through the investment of an extra £7.2 billion up until 2014. It is clear that councils that have broadly the same resources available are making very different decisions. Some are cutting services, but many are being smarter and are working with disabled people, older people and carers to come up with better ways of

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delivering care and support in their communities. Indeed, the most recent survey of councils by the Association of Directors of Adult Social Services found that councils were getting smarter and finding more efficiencies than they had in previous years, as well as fewer cuts. Indeed, this year 77p in every pound that councils have saved in social care budgets has come from smarter working and greater efficiency.

My hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) rightly talked about the need to break down the silos in health, social care and housing and we will break them down to ensure that people are not bounced around the system and are treated with the respect and dignity they deserve.

In conclusion, I want to talk about carers, who have been mentioned—rightly, as this week is carers week—by my hon. Friend the Member for Chippenham and others. It is right that we should pay tribute this week to the immense contribution of family carers, but, as others have said, we need to ensure that we do not focus on carers only in carers week. That is why the Government have committed £400 million through the NHS to provide breaks for carers and it is why we are requiring primary care trusts to draw up the plans to demonstrate how they will provide support to carers. This September, they will have to publish those plans and set out how breaks will be provided for carers as well as how many will be provided. Just this Monday, I had the opportunity to visit Crossroads Care in Cambridgeshire to see for myself the difference that those breaks make. A scheme has been introduced whereby GPs can prescribe carers’ breaks. We have discussed carers staying in employment, and tomorrow we will host with employers a carers summit to focus specifically on how we break down barriers so that we can ensure that carers do not feel tipped into crisis and find themselves out of work as a consequence.

The coalition Government are clearing up the mess left by the previous Labour Government—a huge deficit and an unbalanced, debt-ridden economy, after tough decisions had been ducked time and again. The Leader of the Opposition’s motion lacks vision. It shows Labour running away from its responsibilities and record, but the coalition Government are committed to reforming the way in which the country works so that people are in a situation in which work pays. We will ensure that disabled people are included in society and able to contribute to it, and that social care, after decades of neglect by successive Governments, is at long last reformed.

Question put.

The House divided:

Ayes 236, Noes 298.

Division No. 20]

[4.19 pm


Abbott, Ms Diane

Abrahams, Debbie

Ainsworth, rh Mr Bob

Alexander, rh Mr Douglas

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Anderson, Mr David

Ashworth, Jonathan

Austin, Ian

Bailey, Mr Adrian

Bain, Mr William

Balls, rh Ed

Banks, Gordon

Barron, rh Mr Kevin

Beckett, rh Margaret

Bell, Sir Stuart

Benn, rh Hilary

Benton, Mr Joe

Berger, Luciana

Betts, Mr Clive

Blackman-Woods, Roberta

Blenkinsop, Tom

Blomfield, Paul

Blunkett, rh Mr David

Bradshaw, rh Mr Ben

Brennan, Kevin

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Bryant, Chris

Buck, Ms Karen

Burden, Richard

Burnham, rh Andy

Byrne, rh Mr Liam

Campbell, Mr Alan

Campbell, Mr Ronnie

Caton, Martin

Chapman, Mrs Jenny

Clark, Katy

Clarke, rh Mr Tom

Clwyd, rh Ann

Coaker, Vernon

Coffey, Ann

Cooper, Rosie

Cooper, rh Yvette

Corbyn, Jeremy

Crausby, Mr David

Creagh, Mary

Creasy, Stella

Cruddas, Jon

Cryer, John

Cunningham, Alex

Cunningham, Mr Jim

Curran, Margaret

Dakin, Nic

Danczuk, Simon

David, Mr Wayne

Davidson, Mr Ian

Davies, Geraint

De Piero, Gloria

Denham, rh Mr John

Dobbin, Jim

Dobson, rh Frank

Docherty, Thomas

Dodds, rh Mr Nigel

Donohoe, Mr Brian H.

Doran, Mr Frank

Dowd, Jim

Doyle, Gemma

Dromey, Jack

Dugher, Michael

Durkan, Mark

Eagle, Ms Angela

Eagle, Maria

Edwards, Jonathan

Efford, Clive

Elliott, Julie

Ellman, Mrs Louise

Engel, Natascha

Esterson, Bill

Evans, Chris

Farrelly, Paul

Field, rh Mr Frank

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Flynn, Paul

Fovargue, Yvonne

Francis, Dr Hywel

Gapes, Mike

Gilmore, Sheila

Glindon, Mrs Mary

Godsiff, Mr Roger

Goodman, Helen

Greatrex, Tom

Green, Kate

Griffith, Nia

Gwynne, Andrew

Hamilton, Fabian

Hanson, rh Mr David

Harman, rh Ms Harriet

Harris, Mr Tom

Hendrick, Mark

Hepburn, Mr Stephen

Hilling, Julie

Hodgson, Mrs Sharon

Hoey, Kate

Hopkins, Kelvin

Howarth, rh Mr George

Hunt, Tristram

Irranca-Davies, Huw

Jackson, Glenda

Jamieson, Cathy

Jarvis, Dan

Johnson, Diana

Jones, Helen

Jones, Mr Kevan

Jones, Susan Elan

Jowell, rh Dame Tessa

Joyce, Eric

Kaufman, rh Sir Gerald

Keeley, Barbara

Kendall, Liz

Khan, rh Sadiq

Lavery, Ian

Lazarowicz, Mark

Leslie, Chris

Lewis, Mr Ivan

Lloyd, Tony

Llwyd, rh Mr Elfyn

Long, Naomi

Love, Mr Andrew

Lucas, Caroline

Lucas, Ian

MacNeil, Mr Angus Brendan

MacShane, rh Mr Denis

Mahmood, Mr Khalid

Mahmood, Shabana

Malhotra, Seema

Mann, John

Marsden, Mr Gordon

McCarthy, Kerry

McClymont, Gregg

McCrea, Dr William

McDonagh, Siobhain

McDonnell, Dr Alasdair

McDonnell, John

McFadden, rh Mr Pat

McGovern, Alison

McGovern, Jim

McGuire, rh Mrs Anne

McKenzie, Mr Iain

McKinnell, Catherine

Meale, Sir Alan

Mearns, Ian

Michael, rh Alun

Miliband, rh David

Miliband, rh Edward

Morden, Jessica

Morrice, Graeme


Morris, Grahame M.


Mudie, Mr George

Munn, Meg

Murray, Ian

Nandy, Lisa

Nash, Pamela

O'Donnell, Fiona

Onwurah, Chi

Osborne, Sandra

Owen, Albert

Paisley, Ian

Pearce, Teresa

Perkins, Toby

Phillipson, Bridget

Pound, Stephen

Qureshi, Yasmin

Raynsford, rh Mr Nick

Reed, Mr Jamie

Reeves, Rachel

Reynolds, Emma

Reynolds, Jonathan

Riordan, Mrs Linda

Ritchie, Ms Margaret

Robertson, Angus

Robertson, John

Robinson, Mr Geoffrey

Rotheram, Steve

Roy, Mr Frank

Roy, Lindsay

Ruane, Chris

Ruddock, rh Dame Joan

Sarwar, Anas

Seabeck, Alison

Shannon, Jim

Sharma, Mr Virendra

Sheerman, Mr Barry

Sheridan, Jim

Shuker, Gavin

Simpson, David

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Angela

Smith, Owen

Spellar, rh Mr John

Straw, rh Mr Jack

Stringer, Graham

Stuart, Ms Gisela

Sutcliffe, Mr Gerry

Tami, Mark

Thomas, Mr Gareth

Thornberry, Emily

Timms, rh Stephen

Trickett, Jon

Turner, Karl

Twigg, Derek

Twigg, Stephen

Umunna, Mr Chuka

Vaz, rh Keith

Vaz, Valerie

Watson, Mr Tom

Watts, Mr Dave

Weir, Mr Mike

Whiteford, Dr Eilidh

Whitehead, Dr Alan

Williams, Hywel

Williamson, Chris

Wilson, Phil

Winnick, Mr David

Winterton, rh Ms Rosie

Wishart, Pete

Wood, Mike

Woodcock, John

Wright, David

Wright, Mr Iain

Tellers for the Ayes:

Mr David Hamilton and

Graham Jones


Adams, Nigel

Afriyie, Adam

Aldous, Peter

Amess, Mr David

Andrew, Stuart

Baker, Norman

Baker, Steve

Baldry, Sir Tony

Baldwin, Harriett

Barclay, Stephen

Barker, Gregory

Baron, Mr John

Barwell, Gavin

Bebb, Guto

Beith, rh Sir Alan

Benyon, Richard

Beresford, Sir Paul

Berry, Jake

Bingham, Andrew

Binley, Mr Brian

Birtwistle, Gordon

Blackman, Bob

Blackwood, Nicola

Blunt, Mr Crispin

Boles, Nick

Bone, Mr Peter

Bradley, Karen

Brady, Mr Graham

Brake, rh Tom

Bray, Angie

Bridgen, Andrew

Brine, Steve

Brokenshire, James

Browne, Mr Jeremy

Bruce, Fiona

Buckland, Mr Robert

Burley, Mr Aidan

Burns, Conor

Burns, rh Mr Simon

Burstow, Paul

Burt, Alistair

Burt, Lorely

Byles, Dan

Carmichael, rh Mr Alistair

Carmichael, Neil

Carswell, Mr Douglas

Cash, Mr William

Chope, Mr Christopher

Clappison, Mr James

Clarke, rh Mr Kenneth

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Collins, Damian

Colvile, Oliver

Cox, Mr Geoffrey

Crabb, Stephen

Crouch, Tracey

Davies, David T. C.


Davies, Glyn

Davies, Philip

Davis, rh Mr David

de Bois, Nick

Dinenage, Caroline

Djanogly, Mr Jonathan

Dorries, Nadine

Doyle-Price, Jackie

Drax, Richard

Duddridge, James

Duncan, rh Mr Alan

Duncan Smith, rh Mr Iain

Dunne, Mr Philip

Ellis, Michael

Ellison, Jane

Ellwood, Mr Tobias

Elphicke, Charlie

Eustice, George

Evans, Graham

Evans, Jonathan

Evennett, Mr David

Fabricant, Michael

Fallon, Michael

Farron, Tim

Foster, rh Mr Don

Fox, rh Dr Liam

Francois, rh Mr Mark

Freer, Mike

Fullbrook, Lorraine

Fuller, Richard

Gale, Sir Roger

Garnier, Mr Edward

Garnier, Mark

Gauke, Mr David

George, Andrew

Gibb, Mr Nick

Gilbert, Stephen

Gillan, rh Mrs Cheryl

Goldsmith, Zac

Goodwill, Mr Robert

Gove, rh Michael

Graham, Richard

Grant, Mrs Helen

Gray, Mr James

Green, Damian

Greening, rh Justine

Griffiths, Andrew

Gummer, Ben

Halfon, Robert

Hames, Duncan

Hammond, rh Mr Philip

Hammond, Stephen

Hancock, Matthew

Hands, Greg

Harper, Mr Mark

Harrington, Richard

Harris, Rebecca

Hart, Simon

Harvey, Nick

Haselhurst, rh Sir Alan

Hayes, Mr John

Heald, Oliver

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Hendry, Charles

Hinds, Damian

Hollingbery, George

Hollobone, Mr Philip

Holloway, Mr Adam

Hopkins, Kris

Horwood, Martin

Howarth, Mr Gerald

Howell, John

Hughes, rh Simon

Hunt, rh Mr Jeremy

Huppert, Dr Julian

James, Margot

Javid, Sajid

Jenkin, Mr Bernard

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, Mr David

Jones, Mr Marcus

Kawczynski, Daniel

Kelly, Chris

Kirby, Simon

Knight, rh Mr Greg

Kwarteng, Kwasi

Laing, Mrs Eleanor

Lamb, Norman

Lancaster, Mark

Laws, rh Mr David

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Leech, Mr John

Leigh, Mr Edward

Leslie, Charlotte

Letwin, rh Mr Oliver

Lewis, Brandon

Liddell-Grainger, Mr Ian

Lilley, rh Mr Peter

Lloyd, Stephen

Lopresti, Jack

Lord, Jonathan

Loughton, Tim

Luff, Peter

Lumley, Karen

Macleod, Mary

Main, Mrs Anne

Maude, rh Mr Francis

May, rh Mrs Theresa

Maynard, Paul

McCartney, Jason

McIntosh, Miss Anne

McLoughlin, rh Mr Patrick

McPartland, Stephen

McVey, Esther

Mensch, Louise

Menzies, Mark

Mercer, Patrick

Metcalfe, Stephen

Miller, Maria

Mills, Nigel

Milton, Anne

Mitchell, rh Mr Andrew

Mordaunt, Penny

Morgan, Nicky

Morris, Anne Marie

Morris, David

Morris, James

Mosley, Stephen

Mowat, David

Mulholland, Greg

Mundell, rh David

Munt, Tessa

Murray, Sheryll

Neill, Robert

Newmark, Mr Brooks

Newton, Sarah

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

Offord, Dr Matthew

Ollerenshaw, Eric

Opperman, Guy

Ottaway, Richard

Parish, Neil

Patel, Priti

Paterson, rh Mr Owen

Pawsey, Mark

Penning, Mike

Percy, Andrew

Phillips, Stephen

Pickles, rh Mr Eric

Pincher, Christopher

Poulter, Dr Daniel

Prisk, Mr Mark

Pritchard, Mark

Pugh, John

Raab, Mr Dominic

Randall, rh Mr John

Reckless, Mark

Redwood, rh Mr John

Rees-Mogg, Jacob

Reevell, Simon

Reid, Mr Alan

Rifkind, rh Sir Malcolm

Robathan, rh Mr Andrew

Robertson, Hugh

Robertson, Mr Laurence

Rosindell, Andrew

Rudd, Amber

Ruffley, Mr David

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Shapps, rh Grant

Sharma, Alok

Shelbrooke, Alec

Shepherd, Mr Richard

Simmonds, Mark

Simpson, Mr Keith

Skidmore, Chris

Smith, Miss Chloe

Smith, Henry

Smith, Julian

Smith, Sir Robert

Soames, rh Nicholas

Soubry, Anna

Spencer, Mr Mark

Stanley, rh Sir John

Stephenson, Andrew

Stevenson, John

Stewart, Bob

Stewart, Iain

Streeter, Mr Gary

Stride, Mel

Stuart, Mr Graham

Sturdy, Julian

Swayne, rh Mr Desmond

Swinson, Jo

Swire, rh Mr Hugo

Syms, Mr Robert

Tapsell, rh Sir Peter

Teather, Sarah

Thurso, John

Timpson, Mr Edward

Tomlinson, Justin

Truss, Elizabeth

Turner, Mr Andrew

Tyrie, Mr Andrew

Uppal, Paul

Vaizey, Mr Edward

Vickers, Martin

Villiers, rh Mrs Theresa

Walker, Mr Charles

Walker, Mr Robin

Ward, Mr David

Watkinson, Angela

Wharton, James

Wheeler, Heather

Whittaker, Craig

Whittingdale, Mr John

Wiggin, Bill

Williams, Mr Mark

Williams, Roger

Williams, Stephen

Williamson, Gavin

Willott, Jenny

Wilson, Mr Rob

Wollaston, Dr Sarah

Wright, Simon

Young, rh Sir George

Tellers for the Noes:

Mr Shailesh Vara and

Mark Hunter

Question accordingly negatived.

20 Jun 2012 : Column 933

20 Jun 2012 : Column 934

20 Jun 2012 : Column 935

20 Jun 2012 : Column 936

Madam Deputy Speaker (Dawn Primarolo): I now have to announce the result of a deferred Division on the motion relating to the draft regulations on community right to challenge. The Ayes were 282 and the Noes were 196, so the Question was agreed to.

[The Division list is published at the end of today’s debates.]

20 Jun 2012 : Column 937

Regional Pay

Madam Deputy Speaker (Dawn Primarolo): I advise the House that Mr Speaker has selected the amendment in the name of the Prime Minister.

4.34 pm

Rachel Reeves (Leeds West) (Lab): I beg to move,

That this House notes that the national pay review bodies have been an effective way of setting pay while allowing for appropriate regional and local variation consistent with the need to recruit, retain and motivate staff and to keep tight control of public spending; believes that seeking to alter existing frameworks for negotiating and setting public sector pay could increase costs for the taxpayer as well as exacerbating regional inequalities; further notes that unanswered questions about Scottish separation risk uncertainty for the thousands of staff employed in Scotland under UK-wide pay negotiations and bargaining mechanisms; further believes that co-ordinated national negotiations can also reduce uncertainty, help financial planning and reduce costly and time consuming bureaucracy, local negotiations and disputes; and opposes moves intended to weaken or dismantle efficient and stable arrangements for negotiating and setting public sector pay.

We have called this debate today to give Members on both sides of the House an opportunity to raise concerns and ask questions about the Government’s plans for regional pay and to send a message that there is no appetite among nurses, teachers, police officers or, indeed, businesses in our constituencies for disrupting or dismantling the systems we have in place and going down a path that would escalate costs to the taxpayer and exacerbate regional inequalities. We are giving the Government an opportunity to dispel the confusion that they have created, and perhaps to get out of the hole that they have dug themselves into by executing another of the U-turns that have become something of a speciality of late.

Last autumn, the Chancellor announced his desire to make public sector pay

“more responsive to local labour markets”. —[Official Report, 29 November 2011; Vol. 536, c. 802.]

At the time he described it as a “very significant reform”, and one newspaper said that the Treasury regarded it as

“one of the most important measures it can introduce to rebalance the economy.”

The Chancellor’s supporters were excited. The hon. Member for Tamworth (Christopher Pincher) said enthusiastically that

“a truly local…negotiating structure”

would make wage rates in economically depressed communities more competitive.

More recently, there have been signs that the Liberal Democrats and, perhaps, 10 Downing street have become worried about the new mess that the Chancellor has got them into, with signals given out that nothing is decided and, in the words of the Deputy Prime Minister,

“there is no proposal on the table”.

In response, the hon. Member for Cannock Chase (Mr Burley) has called on the Chancellor to “hold firm”, and the hon. Member for South Northamptonshire (Andrea Leadsom) has said that national pay bargaining is the reason why businesses are struggling at the moment.

Kevin Brennan (Cardiff West) (Lab): My hon. Friend may not be aware of this, but the Federation of Small Businesses in Wales has also come out against the

20 Jun 2012 : Column 938

Government’s proposals for regional pay. Should it not be a warning to them that they are on completely the wrong path?

Rachel Reeves: I am not surprised at all, because in reality, if regional pay were introduced and pay were cut in Wales and in other areas of the country, businesses would suffer because people would have less money in their pockets to spend with local companies.

Given the concern that the proposal has caused, the Government have a responsibility today to clarify their position and their plans. Was the Chancellor right when he said that it is a “very significant reform”, or was the Business Secretary right today when he said that there is no question of the Government imposing lower pay on people simply because they happen to live in poorer parts of the country? Those mixed messages have created confusion: confusion about the degree of localisation and variation being proposed; confusion about whether the Government propose to differentiate pay into regions, zones or local markets, which could itself mean many different things; and confusion about whether national bargaining structures would be maintained, replaced with local bargaining processes or dispensed with altogether.

All that we have from the Government is the evidence that the Treasury has submitted, alleging that in many parts of the country public sector workers are paid upwards of 10% more than their private sector equivalents.

John Robertson (Glasgow North West) (Lab): Does my hon. Friend agree that the confusion being caused by the regional pay strategy, added to the fact that so many people are unemployed—unemployment is growing in my constituency—and that we are trying to get people into work, raises the question, “What are the Government trying to do?”? Do they want to get people into work, or do they want to ensure that people have jobs that they can afford to live with?

Rachel Reeves: I thank my hon. Friend for that intervention. As a result of that confusion, many people who are in work are worried about spending money, because they are not sure what is going to happen to their pay, and that uncertainty is also making economic recovery harder to secure.

Comparing rates of pay in the public and private sectors involves a notoriously complex and controversial analysis. It is difficult to be sure that one is comparing like with like, because the jobs done by teachers, police officers or emergency workers have so few private sector equivalents.

Geraint Davies (Swansea West) (Lab/Co-op): My hon. Friend may be interested to know that inward investors to whom I have spoken are concerned to have decently funded public services in education and health; they do not want a GP in Swansea, for instance, to up sticks and go to Bristol. Does she agree that in many instances that analysis, concluding that different pay for the same job throughout the country will help the private sector, undermines the confidence of inward investors and is counter-productive?

Rachel Reeves: My hon. Friend speaks powerfully on behalf of his constituents in Swansea. In my area, many people commute from Bradford to work in Leeds and

20 Jun 2012 : Column 939

the other way round. Would their pay be determined by where they work or where they live? If the Government say that their starting point is these differentials, they cannot blame people for concluding that their ultimate aim is a reduction of 10% or more in the relative pay of public service workers in some parts of the country.

Mr Brian H. Donohoe (Central Ayrshire) (Lab): When there is regional bargaining, in which I was once involved in a trade union, the complexities mean that there are more likely to be added costs. Indeed, the situation is the opposite of everything that happens as a result of what was created in 1908 by Whitleyism.

Rachel Reeves: My hon. Friend is absolutely right, and I will come on to deal with some of the evidence that backs up his point.

Mr Ben Bradshaw (Exeter) (Lab): This is not just a cause for concern in Scotland, Wales and the northern regions of England. There is also deep concern in the south-west, where we have the biggest gap between wages and house affordability. Any regional pay structure is bound to involve a huge transfer of public money from regions such as the south-west to the wealthy south-east, and that is exactly the opposite of what the Government should be doing.

Rachel Reeves: I thank my right hon. Friend for that intervention. Indeed, a 1% pay reduction for public sector workers in the south-west would cost that region £140 million a year.

If the Government were to achieve their objective of reducing pay to what they say is the equivalent in the private sector, a real-terms cut in pay, year after year for a decade or more, would be needed. It is no wonder, then, that people are worried and are calling on the Government to come clean on what their plans really are. It is no wonder that people think this is a deliberate attack on public sector workers and on the parts of the country that have already been hardest hit by the recession.

Chris Ruane (Vale of Clwyd) (Lab): Regional pay was mentioned this morning in the Welsh Grand Committee, when I quizzed the Secretary of State for Wales about it. The terminology that Government Members are using is not “regional pay” but “local-facing pay”. I asked for an explanation of what local-facing pay was, but got no response. Does my hon. Friend agree that if local-facing pay is introduced, there will be sad faces in Wales and happy faces in Buckinghamshire?

Rachel Reeves: The problem is that the Government are being a bit two-faced, with one person saying one thing and another saying something else.

The reality is that we are in a recession made in Downing street and it is hitting some parts of the country particularly hard. I quote from a recent report by the Institute for Public Policy Research on the state of the northern economy:

“The double-dip recession has hit the North hard, with unemployment rising and business confidence falling. This lack of confidence among employers has maintained the hiring freeze across the North, implying that upward pressure on unemployment is likely to continue for the rest of the year.”

20 Jun 2012 : Column 940

The difficulties faced by workers and businesses in many parts of the country as a result of the recession that this Government have landed us in are being made all the more desperate by the Government’s short-sighted decision to dispense with policies and processes put in place by the Labour Government to support more balanced development across the UK. This is a Government who got rid of regional Ministers, shot down regional development agencies, and cut back on vital regional investments such as the loan for Sheffield Forgemasters. The only regional policy that they have left is regional pay, which will take more money out of some of the most deprived areas of the country.

Elizabeth Truss (South West Norfolk) (Con): In the 1990s, Sweden moved from national pay scales to individual contracts. That was supported by the unions and resulted in a rise in some salaries for jobs where there was a shortage of workers—for example, kindergarten teachers—and it has been very successful. Is it not the case that other countries are moving to more competitive labour markets while we are moving backwards, as we did under the previous Government?

Rachel Reeves: I am sure that the 11,500 public sector workers in the hon. Lady’s constituency will know that she is sticking up for them.

Mike Freer (Finchley and Golders Green) (Con): If the Opposition are so vehemently opposed to regional pay, will the hon. Lady be instructing Labour London MPs to give up their London weighting?

Rachel Reeves: I will come to the regional flexibility that is already in the system in inner and outer London for teachers and those in the health service. The point is that it is not necessary to dismantle the national system in this way to get the flexibility that we need.

We can imagine the impact that these changes might have on regional economies. If the north-east had a further year’s pay freeze imposed on it next year and the 1% increase that the Chancellor has announced was concentrated in more favoured areas, it would deprive the region’s economy of £78 million a year. If the same happened in other regions, Wales would lose £97 million a year, Yorkshire and the Humber £130 million, the south-west £140 million, as I said before, and Scotland £162 million.

Does the Minister really think that this policy will contribute to economic rebalancing? Is it really the best that the Government can come up with? Their only policy for jobs is to make it easier to fire people and their only policy for the regions is to cut the pay of public sector workers. It is no wonder that we are back in recession. It would be laughable if it was not so depressing.

There is no credible evidence to support the claim that the difficulties faced by the private sector are the result of national pay frameworks in the public sector.

Margot James (Stourbridge) (Con): On that subject, the hon. Lady may be aware that the difference between private and public sector pay scales is as much as 18% in parts of the country. She talks about money being taken out of the economy, but does she not accept that if the pay scales were not so divergent, there would be additional private sector investment in those areas?

20 Jun 2012 : Column 941

Rachel Reeves: I am sure that the 10,300 public sector workers in Stourbridge will be pleased to hear that the hon. Lady wants their pay to be cut.

Paul Callaghan CBE, the Sunderland technology entrepreneur and owner of the Leighton Group who was recognised in the recent Queen’s birthday honours list for services to the north-east, has said:

“I’m very concerned about the negative impact on the North East economy of regional pay rates.”

He went on to say that the

“freezing of regional public sector pay must reduce demand for local goods and services, further dampening an already depressed economy. I have seen no credible research to show that this move will have anything but a negative impact on both the region’s private and public sector.”

James Ramsbotham, the chief executive of the North East chamber of commerce, has said that

“the Government should be working towards making the economy more equal across the regions and not entrenching further disparity by reducing spending power in the North-East.”

The chief economist of the Welsh Government, in reviewing the impact of public sector pay rates on businesses in Wales, said that

“there is no credible academic evidence or research to indicate that crowding out has been happening in practice.”

Mr Aidan Burley (Cannock Chase) (Con): I am glad that the hon. Lady read my quotation in The Daily Telegraph this morning. As she has read out a couple of quotations, perhaps I may read one back to her:

“location-based pay systems offer increased flexibility and a systematic approach to addressing recruitment and retention issues at a local level.”

That is from Unison’s policy paper “Location-based pay differentiation”, which was published in September 2011. Does she agree with Unison, which I understand is a donor to her constituency party?

Rachel Reeves: The hon. Gentleman should speak to the 9,500 public sector workers in his constituency. That number is substantially larger than his majority.

What families and businesses in these parts of the country need is not an even tighter squeeze on the wages of the people who are keeping their public services running, but a Government with a proper plan for jobs and growth who will work actively with businesses to get investment flowing into the sustainable, competitive, high-value industries of the future. That is what we need to improve living standards and economic opportunities in every part of the country.

Jim Sheridan (Paisley and Renfrewshire North) (Lab): My hon. Friend has highlighted the enthusiasm of the hon. Member for South Northamptonshire (Andrea Leadsom) for these measures. It may be helpful to share with the House the fact that the same Member is asking for exemptions from the minimum wage for employers. Perhaps that is the real agenda here.

Rachel Reeves: I thank my hon. Friend for mentioning that. That is how the Government will get the economy moving again—by cutting the pay of the most vulnerable workers and introducing regional pay.

Andrea Leadsom (South Northamptonshire) (Con) rose

20 Jun 2012 : Column 942

Rachel Reeves: It will be interesting to hear what the hon. Lady has to say to the 10,800 public sector workers in her constituency and whether she wants them to have a pay cut.

Andrea Leadsom: I am grateful to the hon. Lady. I was going to say that my 10,500 public sector workers will no doubt agree with me that the way to get our economy going again is by a private sector-led recovery, which requires that businesses begin to thrive. Does she accept that it is a private sector, business-led recovery that will turn around our economy?

Rachel Reeves: Perhaps those 10,500 public sector workers can give their verdict at the ballot box. Yes, we do need a private sector recovery, but we will not achieve that by cutting the pay of the people who deliver our public services.

Phil Wilson (Sedgefield) (Lab): Can we put to bed the idea that public sector jobs crowd out private sector jobs? Between 2003 and 2008 the number of public sector jobs increased by 4.1% and the number of private sector jobs went up by 9.2%. That belies the case that the Government always make that public sector jobs crowd out private sector jobs.

Rachel Reeves: My hon. Friend makes a very important point.

Ian Mearns (Gateshead) (Lab): Given the perverse logic that Government Members put forward, will my hon. Friend reflect on the fact that despite the disparity in public and private sector pay rates in the north-east of England, unemployment is going up? We might have thought that investment would be flooding in on the basis of cheap wages in the private sector.

Rachel Reeves: I thank my hon. Friend for that point and look forward to hearing what the Minister has to say in response.

As well as the business people and other experts whom I have quoted, the key stakeholders have made their views clear. Not just the trade unions but employers and independent experts have expressed concerns. For example, NHS Employers notes that employers already have

“the option to pay recruitment and retention premia”—

that is related to the point made by the hon. Member for Finchley and Golders Green (Mike Freer)—

“to address…specific labour market issues.”

It states that a move to local pay bargaining would

“raise issues of local capacity, increase administration costs and risk pay inflation as employers compete directly for staff on pay. Getting rewards wrong could have a significant impact on the quality of patient care and safety.”

The National Employers’ Organisation for School Teachers states that

“the existing four national zones, plus the flexibility to pay recruitment and retention supplements…provide an appropriate balance between national determination and local flexibility…the existing framework provides a reasonable level of autonomy to set pay”.

It reports that 84% of its members

“considered that the number of pay bands was appropriate to reflect local labour market conditions; only 7% thought this was not the case.”

20 Jun 2012 : Column 943

The National Governors Association reports that it is

“not aware of any evidence that suggests making pay locally responsive would improve recruitment and retention.”

It points out:

“Low cost of living indices tend…to be associated with social deprivation; these areas may also…have difficulty attracting the best staff… As the Government is rightly concerned to narrow the attainment gap between those children from disadvantaged backgrounds and those who are not, bringing teachers’ salaries in line with local market conditions…would possibly be counterproductive and create recruitment difficulties that do not currently exist.”

The evidence is clear, and so are the views of the experts, but the Chancellor’s posturing has created real worries for public service workers around the country. Nurses, teachers and police officers are already suffering the effects of the pay freeze and being hit by the sharp hike in pension contributions, and like everyone else they are suffering the effects of the Government’s recession, unfair tax rises and cuts. Now, the Chancellor is threatening to impose policies that for many people in many parts of the country would mean real-terms cuts in their income, continuing year after year. That would force them to pay the price for the Government’s economic failures. The millions of workers who are keeping our public services going in difficult times, the majority of them women on modest wages, deserve better than that.

Alison McGovern (Wirral South) (Lab): Does my hon. Friend agree that the people who are being hit by the speculation about regional pay are the self-same people being hit by the withdrawal of the regional development agencies and speculation about NHS funding? The total picture created by the Government is the crushing of demand and undermining of confidence in Wirral and Merseyside, the parts of the country that I represent.

Rachel Reeves: My hon. Friend speaks powerfully on behalf of her constituents in the Wirral, and I know they will appreciate that.

Chris Williamson (Derby North) (Lab): Would my hon. Friend care to comment on the fact that yet again the Chief Secretary to the Treasury has gone AWOL? We have had debate after debate in which the Government have rolled out junior Treasury Ministers, and now he has ceded his responsibility to the Cabinet Office. Can my hon. Friend shed any light on what on earth is going on?

Rachel Reeves: Given that the policies have such big implications for the public purse, especially as anticipated costs go up because of the extra bureaucracy, I would have thought the Chief Secretary had a clear interest in them.

I suggest that Ministers take this opportunity to call a halt to this exercise, end the uncertainty and confusion and put people’s minds at rest. They did that for charities, churches and caravans, and even for pasties. As the Prime Minister has said:

“When you’ve got something wrong, there are two things you can do in government: you can plough on regardless, or you can say, ‘No, we’re going to listen, we’re going to change it’”.

I therefore hope the Minister listens to what Members say in today’s debate and changes course before the Government get into even greater difficulty. Trying to

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make public sector workers in hard-hit parts of the country the scapegoats for our economic problems is disreputable and divisive, and it is a distraction from the task to which the Government should be giving their full attention—a plan for jobs and growth that can get us out of the recession they have got us into.

4.55 pm

The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude): I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“notes the importance of recruiting, retaining and motivating staff and keeping tight control of public spending; further notes that the then Chancellor of the Exchequer, the right hon. Member for Kirkcaldy and Cowdenbeath, first proposed a fair framework for local and regional flexibility for pay in his statement to the House of 9 June 2003; supports the Government in asking the widely respected independent pay review bodies to consider how public sector pay can be made more responsive to local labour markets; and believes the Government is correct in awaiting the conclusions of those deliberations before making a decision on bringing forward proposals in respect of public sector pay’.

The shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves), began by quoting the Chancellor, so let me quote the Chancellor a little more extensively:

“I can tell the House that the British economy is…better placed to recognise local and regional conditions in pay”.

He continued that, in future, we therefore plan that

“remits for pay review bodies and for public sector workers, including the civil service, will include a stronger local and regional dimension”.—[Official Report, 9 April 2003; Vol. 403, c. 283.]

That was the Chancellor in 2003, the previous Prime Minister. He set that proposal out at time when his advisers were the current Leader of the Opposition and the shadow Chancellor. I do not know whether the shadow Chancellor wrote that passage for the Budget speech—a lot of the Budgets around that time turned out to be “Balls”. Did he write it? Does he agree with it? If not, what has changed in the meantime? [Interruption.] It was clearly the best the right hon. Gentleman could do at that time. I shall come to the history behind the current Government’s approach, because the idea that it is a dramatic new departure is absurd. There is quite a long history, but we now have the opportunity to explore it.

Huw Irranca-Davies (Ogmore) (Lab): Will the Minister give way?

Mr Maude: I shall get started, but I will give way to the hon. Gentleman in due course.

Let me begin by setting out the Government’s approach to this important issue. First, we believe there is a strong case for looking at introducing local market-facing pay and at how that can be done, but let me say clearly that our approach is not about ending national pay bargaining. Pay can be made more responsive to local labour markets within a national bargaining framework. Any benefits from localising pay can be realised without any need to get rid of national pay bargaining.

Secondly, the proposal is not about making further savings. We will continue to operate within tightly constrained overall public sector pay remits.

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Chris Williamson: Will the Minister give way?

Mr Maude: I am going to make a little progress, but I will give way in due course.

Those pay remits are currently set at 1% a year. We need those constraints in order to address the appalling legacy of the biggest budget deficit in the developed world, which was left by exactly the people who now complain about its effects. Our approach is not about making further savings, but entirely about creating greater flexibility within those pay remit constraints.

Thirdly, this is not about cutting anybody’s pay. Even if we wanted to, we would not be legally able to do so.

Huw Irranca-Davies rose

Mr Maude: I will give way to the hon. Gentleman, who has been persistent.

Huw Irranca-Davies: Will the Minister speculate on why the Chief Secretary to the Treasury thinks the sun shines out the backend of this policy, while the Liberal Democrat leader in Wales has told him to stick it where the sun don’t shine?

Mr Maude: That was about as laboured a joke as I have heard in this place, but we will let the hon. Gentleman know.

Like the previous Government, we have said that it is important to look at the level at which public sector pay is set in each labour market over the longer term, which is why, in the autumn statement, the Chancellor announced that there was a case for considering how local pay could better reflect private sector labour markets. He invited the independent pay review bodies to consider the evidence, which is exactly what they are now doing.

Mr Donohoe: I do not know whether the Minister has ever been involved in wage negotiations, but if he looks at the public sector and then at the private sector, he will see that some multinational companies do national negotiations and do not have local rates. Is that not the case?

Mr Maude: They may well have national negotiations. If the hon. Gentleman had listened, he would have heard me say that our proposals do not involve a change to national pay bargaining mechanisms. Actually, though, plenty of companies have preferential pay rates in different parts of the country, as might well make sense in some circumstances. But he clearly did not listen to what I said earlier.

Pay decisions in the civil service, below the senior civil service, are delegated to individual Departments, so it is for each Department to consider the case as it applies to its own work force.

Bill Esterson (Sefton Central) (Lab): It has occurred to me that Conservative Members were against the national minimum wage when it was introduced. Will the Minister confirm beyond doubt that this is not the thin end of the wedge and that there will not be any attempt to undermine the national minimum wage through regional pay?

Mr Maude: We have made it clear that we support the national minimum wage. That has been the case for a long time.

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Richard Burden (Birmingham, Northfield) (Lab): I am trying really hard to understand what the Minister is saying. Will he please tell me whether I have got this right—he does not want to dismantle pay structures or cut pay, but he does want to introduce bargaining and flexibility? Does that mean that there could be no pay cuts for any current or future employee as a result of that flexibility? What would that mean in the west midlands, where to get a house, someone has to raise a deposit of twice the average regional salary? In practical terms, is he talking about those pay levels rising or falling?

Mr Maude: The hon. Gentleman has failed to listen either to what the previous Prime Minister and Chancellor said, to what his own Government introduced or to what we have said, which is that this is not about regional pay, and nor has it ever been.

Phil Wilson: I think the Minister has been a bit selective in quoting Treasury Ministers in the previous Government. Treasury guidance notes put out by Ministers in 2003 also stated:

“At the extreme, local pay in theory could mean devolved pay…to local bodies. In practice, extremely devolved arrangements are not desirable. There are risks of workers being treated differently for no good reason. There could be dangers of leapfrogging and parts of the public sector competing against each other for the best staff.”

In other words, the previous Labour Government were never going to do what this Government intend to do now.

Mr Maude: Given that the hon. Gentleman has not given me the chance to talk about our plans and approach, perhaps he will be patient and contain himself until that moment.

As I was about to say, nothing has yet been decided. Any proposals for each work force must be based on strong evidence. We want to hear from everyone with a contribution to make, and we are committed to making any future decision on the basis of evidence, which is the right way to approach the matter. That is why we have invited the various pay review bodies to consider the matter on that basis.

However, as I said earlier, we are not the only Government to think that there is a case for looking at this issue. The case was recognised by the last Government, and they gave it, I presume, serious thought. Indeed, in 2003, the then Chancellor announced a stronger local dimension to pay review body remits, noting that there was significant scope to increase the flexibility and responsiveness of public sector pay. He told the House:

“With this national framework for fairness in place, it makes sense to recognise that a more considered approach to local and regional conditions in pay offers the best modern route to full employment”.—[Official Report, 9 June 2003; Vol. 406, c. 412.]

Does anyone on the Opposition Benches disagree with that? It seems a considered and sensible approach to me.

Fiona O'Donnell (East Lothian) (Lab): Will the Minister give way?

Mr Maude: I will not give way, if the hon. Lady will forgive me, because I need to make some progress and Back-Bench contributions are already likely to be constrained because the debate started rather late.

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The then Chancellor also said that pay for the civil service should include a stronger local and regional dimension, while in that year’s Budget he set out

“action to increase regional and local flexibility in public service pay”.

As I have mentioned, the then Chancellor’s advisers included the current Leader of the Opposition and the current shadow Chancellor. It seems pretty opportunistic for Labour, at the 11th hour, to produce this motion, when its own Government took the public sector further down this path than we are at this stage contemplating.

Indeed, Labour did not just talk about localised pay; it actually introduced it. In 2007, the last Government introduced localised pay for civil servants across the courts service. They did so in response to the Treasury’s pay guidance, issued in 2007, at a time when, as far as I can make out, the current Leader of the Opposition was the Minister in the Cabinet Office responsible for civil service matters and the shadow Chancellor was the Economic Secretary to the Treasury. Yet that pay guidance, which went out across the civil service, asked Departments that operated across different locations to differentiate between pay levels across regional labour markets. Following that guidance, which was issued under the aegis of the current Leader of the Opposition and the current shadow Chancellor, the previous Government introduced localised pay in the courts service across the country. That was, if I may say so, a sensible and unusually well-judged move, and it has been successful.

Chris Williamson rose

Mr Maude: I am going to make progress now.

That policy was introduced at a time when those who are now on the Opposition Front Bench were intimately involved, so it is worth the House asking itself what happened. Did devilish civil servants somehow slide this wicked measure through, as the attention of the current shadow Chancellor and Leader of the Opposition was elsewhere, no doubt overly occupied in trashing the then Prime Minister?

Why is the shadow Chief Secretary to the Treasury taking up valuable parliamentary time attacking in opposition a policy that her own leaders actively promoted in government? It is not as if the Labour party immediately abandoned the idea in opposition that local and regional variations in the cost of living are important. In January, The Guardian reported that the right hon. Member for Birmingham, Hodge Hill (Mr Byrne)—another previous holder of my post—told a private meeting of Labour MPs that housing benefit

“varies locally and so should a benefit cap”.

In fact, he was reported to have said:

“It makes much more sense to have localised caps…in different parts of the country”.

That revealed that the Labour party still recognises in private the very principle that it is today seeking to oppose. It is humbug, Madam Deputy Speaker. Yet again, the Opposition oppose policies that they introduced in government and that they still support in private.

We know what is behind this. It is the Labour party’s union paymasters who are calling the tune. We know that the Labour party ask their union backers which amendments to vote for and which to oppose. We know that under the current Labour party leader more than 80% of Labour’s donations come directly from trade

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unions—even more than under the last Prime Minister. No wonder Charlie Whelan boasted that it was Unite that won the current Labour party leadership. Yet again, it is Unison and Unite that are calling the tunes. But even the unions are confused on this matter. As my hon. Friend the Member for Cannock Chase (Mr Burley) said, Unison itself has made the case for local variations.

There is a serious case to be made for local market-facing pay. While private sector pay is typically set according to local markets, public sector pay is usually set on a one-size-fits-all basis at national level. As a result, public sector workers are often paid more than private sector workers in similar jobs in the same area. According to the Institute for Fiscal Studies, the overall gap between public and private sector pay averages 8.3%. However, the gap can be as low as virtually minimal in some places and as high as nearly 20% in others.

Academic research also shows that public sector pay is only 40% as responsive to local labour markets as private sector pay. That has potentially damaging consequences for the public sector and the economy. A one-size-fits-all system for public sector pay could limit the number of public sector jobs that could be supported in lower-cost areas. It militates directly against the relocation of public sector jobs to more deprived parts of the country. Private employers looking for staff to set up or grow their businesses might need to compete with much higher public sector wages. The evidence has yet to be examined, but the public sector could be crowding out the private sector in that way, and holding back the private sector-led recovery that the economy needs. Arguably, this makes private sector job creation less attractive. Importantly, it also makes it less attractive to move public sector jobs out of London and the south-east because, without any differential in pay rates to reflect the differential in living costs, it is much less easy to justify the relocation costs and loss of continuity that relocating inevitably involves.

So this approach is about investigating whether this could be another way of supporting local economies, by helping to provide more public sector jobs for the same level of spending and by helping the local private sector to become more competitive and to expand. This could help poorer areas to grow—[Interruption.] Exactly that point was recognised explicitly by the previous Prime Minister. He made exactly that argument. The hon. Member for Leeds West might want to argue with him, but we think that this is one of the few things on which he was right.

More broadly, this Government are determined to support regional private sector growth. Since the last election and the formation of the coalition Government, 843,000 private sector jobs have been created, and promoting regional growth—[Interruption.]

Madam Deputy Speaker (Dawn Primarolo): Order. I am sorry, Minister. It is not necessary for Members on either side of the House, especially those on the Front Benches, continually to shout across the Floor. This is an important and heated debate—[Interruption.] I do not know why you are tut-tutting, Ms Bray; you have been doing a fair bit of shouting as well.

Mr Maude: We would have made better progress if, every time anyone stood up, the hon. Member for Leeds West had not recited the number of public sector workers

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in their constituency. She could just have laid the document before the House and we could have taken it all as read. It was a pretty poor substitute for an argument, but I suppose it was the best that she could do.

We are committed to supporting regional private sector growth. As I was saying, 843,000 private sector jobs have been created since the general election, and promoting regional jobs is at the very heart of our growth strategy. In the autumn statement, we announced an additional £30 billion of investment—

Rachel Reeves: Will the Minister give way?

Mr Maude: Only if the hon. Lady promises to read out the number of public sector workers in my constituency.

Rachel Reeves: I do not think that the Minister wants to cut their pay. Does he think that teachers in Horsham should be paid more than those in Leeds West?

Mr Maude: Under the hon. Lady’s own Government’s policy of introducing academies, it will increasingly be a matter for the management of those academies to set their own pay rates. So the policy that her Government set in train will, over time, lead to differentials coming into existence. Perhaps she will tell us whether she supports the policy of giving academies more freedom to make their own decisions—or is that another subject on which she is going back to her old, left-wing, statist ways?

Rachel Reeves: The last Labour Government did not give less money to schools in Leeds than they did to schools in Surrey. Is that this Minister’s policy?

Mr Maude: Under the last Government, a lot of schools in a lot of places found they were getting a lot less support than they were in other places—funny, that. The fact is that we announced an additional £30 billion of investment in major infrastructure projects across all regions of the UK, and in the Budget we laid out an additional investment of £420 million to stimulate local economic growth.

We have already taken considerable action to achieve strong sustainable and balanced growth that is more evenly shared across the country, but there is a lot more to do. It is not easy, but we have not shirked our responsibility and we will leave no stone unturned to promote a sustainable balance and fair private sector recovery across the UK. First and foremost, that has meant tackling the record deficit that we inherited, ensuring that the UK remains to the greatest extent possible insulated from the storm that undermines our eurozone neighbours. Public sector pay restraint has to play a vital role in that fiscal consolidation. At the same time, by considering the case for local public sector pay, we can ensure that we continue to have high-quality public services across the entire UK and help to support a private sector recovery. I commend the amendment to the House.

Several hon. Members rose

Madam Deputy Speaker (Dawn Primarolo): Order. A large number of Members wish to participate in the debate, so it is necessary to change the time limit to a

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maximum of five minutes for all Back-Bench contributions. It might be necessary to review that before the end of the debate and to reduce it further.

5.16 pm

Grahame M. Morris (Easington) (Lab): I was rather perplexed by the Minister’s response. My impression is that if it walks like a duck, talks like a duck and quacks like a duck, it is a duck. The Minister, however, says he is in favour of national pay negotiations, but wants to change how they are delivered regionally. As I say, I am confused about whether this is a U-turn, or is it two U-turns so that the Minister is facing in the same direction? It seems as if that is exactly what has happened.

Any decision to allow regional pay differences for low-paid workers in the public sector would only exacerbate the economic and social north/south divide. In fact, we recently had a Westminster Hall debate in which some of the relevant statistics and factors were put on the record. The announcement in the autumn statement that this was on the Government’s agenda came without any prior evidence base for such a move. When Ministers talk about how public sector pay might better reflect local markets, they mean only one thing—pay less to people in poorer areas such as ours.

Rebalancing our economy for the future and addressing the north/south divide should be a Government priority. However, these proposals for regional or local pay differentials—whatever the terminology—would simply entrench that divide. The north-east is facing a double-dip jobs crisis. Government policies of slash and burn in the public sector are hitting the north-east hardest, and the promised private sector-led recovery was always a Tory mirage. [Interruption.] Let me remind Conservative Members who are heckling from a sedentary position that the figures for the north-east show unemployment now standing at 145,000—up 8,000, providing a regional figure of 11.3%, which is an absolute disgrace. Regional pay in the public sector would only make things worse, turning the north-east, and indeed other peripheral regions, into low-pay ghettos.

David Mowat (Warrington South) (Con): I thank the hon. Gentleman for giving way, as I have been trying to intervene for a while. He makes a point about the north/south divide, about which many hon. Members on both sides are concerned. Will he concede that in the last year of the previous Government, the gross value added difference between London and the north-east reached the highest level for a decade and a half? I do not think that was due to the present Government, so what was it due to?

Grahame M. Morris: I shall come to that point. Under the last Government, the GVA differential was considerably reduced over 10 years. I do not have much time, but if the hon. Gentleman reads the Hansard report of the Westminster Hall debate, he will find all the information there.

In trying to justify his proposals, the Minister mentioned the evidence base, as did the hon. Member for Stourbridge (Margot James). That worries me. Pay review bodies and police boards oversee a pay bill of about £95 billion, and any changes in the distribution of that money would have major consequences. The reverse multiplier

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and the taking of moneys from local economies are a huge issue, and the benefit changes have already had a terrible effect on the economy in the north-east.

I refer the Minister and the hon. Member for Stourbridge to the Government’s own evidence to the current review, which includes some key sets of figures that I found intriguing. According to that evidence, statistics from the Office for National Statistics on regional price levels relative to national price levels show that, if London is excluded, price levels throughout the United Kingdom vary by only 5.3%, from 97% in Yorkshire and the Humber to 102.3% in the south-east. In my region, the north-east, the price level is 98.2%. Those figures show the smallest variation in price increases throughout the United Kingdom. If the Government proceeded with their proposal to vary pay levels in the public sector, those in the poorest regions, such as the north-east, would be worse off while the wealthiest regions benefited to the tune of billions.

Ian Mearns: All of us in north-east England are calling for an economic stimulus to create demand and grow the economy. This measure would apply an economic sedative to regions such as ours.

Grahame M. Morris: I agree with my hon. Friend’s analysis.

The other likely negative impact of the Government’s policy is a brain drain from the regions with lower pay to those with higher pay. In my opinion, the Tory party has never understood the values and principles of our public services, which were founded on fairness and equity. What is truly outrageous is that Ministers waste their time targeting low-paid public servants when the real crisis is in the private sector. I believe that those are diversionary tactics, and that, if implemented, they would take more money out of the northern regions, which are already suffering from a lack of demand throughout our economies.

The United Kingdom is crying out for a serious new industrial policy that would reduce regional inequalities and close the north-south divide. A regional pay policy of the sort that the Government propose would only make the position worse, and it lacks an evidence base. Any comparison between public and private sector pay is a very crude measure. There are far more highly qualified workers in the public sector, there is a smaller gap between the top and bottom levels of pay, and there is a smaller gender pay gap. The majority of low-paid work in catering or cleaning, for example, is in the private sector. Similar roles in the public sector are often outsourced, which skews the figures still further.

The hon. Member for Warrington South (David Mowat) asked about figures relating to growth rates and relative performance. Under the last Labour Government, the rate of growth in my region, the north-east, went from being the lowest in any region during the 1990s to being the second highest during the last decade. Between the mid-1990s and the global economic downturn of 2008, employment growth increased by 11.2% in the north-east and by 9.2% nationally. Between 2002 and 2008, private sector employment in the north-east rose by 9.2% while public sector employment grew by 4.1%, a point made by my hon. Friend the Member for Sedgefield (Phil Wilson). Between 1999 and 2007, the number of businesses

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in the north-east rose by 18.7%, which compares favourably with London’s business growth of 19.6% during the same period.

Madam Deputy Speaker (Dawn Primarolo): Order. The hon. Gentleman’s time is up.

5.24 pm

Mr Aidan Burley (Cannock Chase) (Con): First, I want to say how grateful I am to Her Majesty’s Opposition for choosing this topic for debate. Regional pay is an issue that has been swept under the carpet for far too long, and it is about time it was debated in this House. It is an issue that affects many businesses in my constituency, and local business leaders have repeatedly raised it with me since I first became an MP.

The simple truth is that private sector firms have to compete with public sector employers, who in many parts of the country currently offer a comparative premium on salaries, not to mention better pensions and other benefits such as job security. This means competition is distorted and the private sector is stifled because it cannot afford to employ new people or employ the best local people.

There is no way around the fact that private sector pay is, on the whole, set locally, and public sector pay is usually set nationally. It is simply a fact of modern life that public and private sector organisations compete for employees in different markets across the UK. The Opposition and their union supporters are quick to paint regional pay as an attack on the public sector or a race to the bottom, but that is offensive to the millions of people who work in low-paid private sector jobs. [Interruption.] This is not a race to the bottom; it is a race to reality—the reality of what people are paid in the real world. [Interruption.] Opposition Members who are chuntering from a sedentary position should remember that without a flourishing private sector in all parts of our country, there could be no public sector jobs, well paid or otherwise, because without the private sector, there could be no public sector. I therefore say this to Opposition Members: anyone who cares about the public sector should also care about creating the right environment for the private sector. That is why tonight’s debate is so important.

Richard Burden: The hon. Gentleman and I represent west midlands constituencies. Will he answer this simple question: does he want to bring down public-service pay in our region, and if so, by how much?

Mr Burley: I want the private sector in the west midlands to flourish. One of the most astonishing facts I have learned since becoming an MP is that between 1997 and 2007 the number of jobs in the private sector in the entire west midlands region fell. During the boom years of the hon. Gentleman’s Government, private sector employment went down, and I do not want to crowd out private sector growth in the west midlands. That is why this regional pay debate is so important.

I read an amazing article on the ConservativeHome website, with which I totally disagreed. It stated:

“Many Tory MPs with small majorities need to keep as many public sector workers onside as possible in order to keep their seats at the next election…For this reason, expect Lib Dems and low-majority Tory MPs to have grave concerns about any regional pay proposals—and expect the plans to be significantly changed or dropped altogether.”

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Well, I am a low-majority Tory MP, and I believe this House is at its best when it is at its boldest, and I would be greatly saddened if everything we did was driven by narrow regard for our own majorities and saving our own skin and seats.

The fact that the shadow Chief Secretary to the Treasury, the hon. Member for Leeds West (Rachel Reeves), read out the number of state workers in each of our constituencies says all we need to know about Labour’s approach: stuff their mouths with gold and buy votes. That is the approach of the Labour party, and the hon. Lady did precisely that tonight.

We must do what is right for the country, and what is right for the country is for the Government to do everything they can to enable the private sector to flourish, so that it can pay the taxes that fund the vital public services that all our constituents rely on, not just fund the pay of the public sector workers who happen to live in our constituencies.

Phil Wilson: What advice would the hon. Gentleman give to his party colleague, the hon. Member for Hexham (Guy Opperman), who has a substantial majority and who has said that there is no economic case for regional pay?

Mr Burley: I am sure we will hear from my hon. Friend in due course, and I will let him make his own arguments, but in the very short time I have left I want to focus on the principle behind this debate, which is whether there are different costs of living in different parts of the country and, if so, whether that should be reflected in state pay. The simple answer to both those questions is yes.

Someone commented in response to the ConservativeHome article to which I have referred:

“Perhaps an experiment over a 2 year period to prove Regional Salaries are such a great idea? Begin with MPs and their staff. No doubt they will jump at the chance to lead by example?”

I propose to do exactly that. I have to hand the Independent Parliamentary Standards Authority bandings for accommodation expenditure—the amount that can be claimed by MPs to live in their constituency. Guess what? Yes, they vary by constituency. As MP for Cannock Chase I could claim £10,950 a year to pay my rent and bills, if I were to claim expenses for living locally, which I do not. The Member for Cambridge can claim £15,150—nearly 50% more than I can claim. The Members for North Somerset and North West Hampshire can claim £13,750, whereas the Member of North Swindon can claim just £12,350. So there we have it: there is regional variation in what MPs can claim to live, based on the cost of living in their area. If it is good enough for MPs, why should it not be reflected in the pay packets of other public sector workers?

Let us examine the arrangements for employing our staff. If I employ a senior caseworker in the London area, I have to pay him £23,000 to £31,000. If I employ him in my constituency, I have to pay him only £19,000 to £28,000. A senior parliamentary assistant can be paid up to £42,000 in London, whereas they can start on just £30,000 in my constituency. So the answer to the blogger is that MPs and their staff are already subject to regional variations in pay and allowances, and are living

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proof of the established principle of regional pay born out of different regional costs of living.

Let us put it the other way round: if the Opposition truly believe in national pay bargaining and public sector salaries being set nationally, will they intervene on me now to say that my staff in London should have their salaries reduced to match those of my staff in Cannock? Or should I be able to claim as much to live in a house in Cannock as to live a house in Cambridge? Of course not. Today’s debate is about whether public sector pay should be relative to private sector wages, and the simple truth is that it must.

The shadow Chief Secretary to the Treasury has said that regional pay will

“prove costly to the public purse and exacerbate regional inequalities”.

On the contrary, crowding out the private sector in the regions of our country is what will exacerbate regional inequalities, and setting a higher than locally appropriate wage bill means that public sector money is not allocated as effectively as it could be within local areas. I noted that she did not reply to the quote in my intervention, so I will repeat it to her now. Unison has said in its location-based pay differentiation paper of September 2011 that

“location-based pay systems offer increased flexibility and a systematic approach to addressing recruitment and retention issues at a local level.”

Government Members agree with Unison in that analysis, and I shall be interested to hear whether any Labour Members, many of whom will doubtless be taking donations from Unison to their constituency Labour parties, also do.

The Government are right to look at more local, market-facing pay and to end the anomaly of national pay bargaining—

Madam Deputy Speaker (Dawn Primarolo): Order. I call Russell Brown.

5.32 pm

Mr Russell Brown (Dumfries and Galloway) (Lab): Thank you, Madam Deputy Speaker. I regret that once again in this House I have to make mention of the fact that my constituency is a low-wage economy area. We talk about the “race to the bottom” and my locality does not have far to go in terms of it being a low-pay area. One of the greatest benefits to come to the area was the introduction of the national minimum wage in the late 90s. I sat on that Bill Committee, which sat through the night on more than one occasion. At that time, only one party was saying that we should have regional variations; I look across to the Liberal Benches because that was the case put by Lib Dem Members at that time. I am delighted that some on those Benches have had a change of heart.

Some 11,400 people are employed in the public sector in my area, which is some 28% of those employed in the constituency. We depend on the public sector in rural localities, so much so that there are occasions when we struggle to employ highly skilled people, be that in the NHS or in the local authority. The Government may be looking at reducing people’s salaries, but we already pay golden hellos for people to come to work in my area, such is the difficulty in recruiting quality people to the area.

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The public sector pay arrangements support local and regional economies, ensure fairness and transparency, and support the whole concept of equal pay. When we introduced the national minimum wage in the late 90s, the greatest benefit came to those who were employed in the private sector. We went from scurrilously low wages of £1.50, £1.75 and £2 an hour to a wage that was recognised as being absolutely necessary to take people out of poverty. What came off the back of that? Additional money went into the local economy. It was calculated at the time that for every £1 million that went into a local economy, 39 jobs were created. What the coalition Government are considering would reverse that.

The hon. Member for Cannock Chase (Mr Burley) made his case and I would love to hear what he would recognise as reasonable pay for any kind of job. He said that between 1997 and 2007, private sector jobs went down in number. His party recognises those years as the years of plenty, so if such jobs went down in number then, where on earth are we going now? If he is dependent on the private sector to get this country back on its feet, I am afraid that he is living in dreamland.

The debate is about regional variation, so I want quickly to mention Scotland. Although Scottish Ministers set pay policy for devolved bodies, some 30,000 public sector workers in Scotland are employed by UK Departments and could be affected by the UK Government’s policy on regional pay. Furthermore, there are many unanswered questions about Scottish separation risking uncertainty for those thousands of staff employed in Scotland.

Dr Eilidh Whiteford (Banff and Buchan) (SNP): I would have liked to have been more supportive of what the hon. Gentleman is saying this afternoon, but I find the language and tone of the last part of his speech very disappointing. Does he welcome the minimum wage of £7.20 an hour that the Scottish Government introduced for public sector workers for whom they control pay?

Mr Brown: I mentioned that I was up through the night when the national minimum wage was introduced, and I must tell the hon. Lady that her colleague, Alasdair Morgan, who was the Member for Galloway and Upper Nithsdale at the time, was in his bed while the rest of us were battling for a national minimum wage in this country. She mentions the wage of £7.20 an hour and I am delighted that the SNP Government have followed the lead of Glasgow city council, which was where it originated.

The TUC has estimated that even a 1% reduction in public sector pay would hit 680,000 public sector workers. In Scotland, that would reduce incomes by £162 million. Again, I tell the hon. Member for Cannock Chase that if we take £162 million out of the local economy that must have an impact on private sector businesses. If we take the money out, the marketplace will collapse around it and further jobs will be lost.

I mentioned the Liberals and I am delighted that the hon. Member for Southport (John Pugh) is in the Chamber today. On 15 January this year, he said in the Financial Times that what the Government were considering was a “deliberate ploy” to fragment the public sector. He said:

“It is an unsound and untested economic theory to suggest that the national pay structure is crowding out private sector employment in the north and north-west.”

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That goes for the length and breadth of this country. The proposals are a bad idea, verging on absolute insanity.

5.38 pm

John Pugh (Southport) (LD): I thank the hon. Member for Dumfries and Galloway (Mr Brown) for that introduction; I am not used to it.

The battle over regional and local pay is one, frankly, that in the current circumstances the coalition could do without. It would be a battle—a gruelling, energy sapping and pointless battle between and within parties. Even the Labour party is divided on its proposals for regional welfare. Opposition among the Liberal Democrats to the underlying principle and philosophy behind the suggestions is now widespread. We are not against the collection of evidence, but the evidence means that we are against the proposals. Shortly I and a number of colleagues will submit evidence that we hope will convince further. There was no problem recently getting 22 Liberal Democrat Members to sign a letter to The Times opposing regional pay, and of course those numbers were limited because our ministerial colleagues could not be asked to participate.

The politics of the proposal are lethal and divisive. It pits region against region, abandons the principle of equal pay for equal work, and treats the low-paid and local differently from the high-paid and mobile. The economics of it are nonsense, too, being bolstered largely by clichés and prejudice from the usual suspects—the Institute of Directors to name but one.

Kelvin Hopkins (Luton North) (Lab): It is refreshing to hear some common sense from the Liberal Democrats. The hon. Gentleman might be aware that a survey reported by the CBI suggests that 94% of private sector employers are concerned, above all, about markets and consumer demand for their goods and services, and the proposal would reduce consumer demand.

John Pugh: That is certainly true, and a lot of UK national firms—building societies, banks and the like—do not have regional pay structures.

No one can dispute that reducing public sector pay in low-wage areas necessarily reduces the money spent, and therefore demand, in those areas. No one can dispute that putting relatively more money into the pockets of public sector workers in high-wage areas increases the money in circulation in those areas, and thus demand. Ultimately, economic division will be cemented in and, frankly, a good reason would be needed for doing that.

Jacob Rees-Mogg (North East Somerset) (Con): The hon. Gentleman said that no one would dispute his points, but I will. If more private sector employment is created, greater total pay is created in the region, thus increasing demand.

John Pugh: That is my next point, because the only good reason for taking forward the approach would be if it was thought that it would improve private sector job opportunities in the poor regions on the basis that public sector jobs appear to be relatively well paid and crowd out private sector employment. If that is happening, one piece of essential evidence—one killer fact—is needed

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to show that, but it is not differences in the rates of pay in the two sectors, because that reflects a range of things such as job profiles and qualifications. We need evidence to show that as the number of public sector jobs increased in such regions, the number of unfilled vacancies for comparable employment in the private sector grew. That would be the clinching fact, but there is no such evidence. In fact, vacancies in the public sector in the north take longer to fill, because 50% of them are out for eight or more weeks compared with 15% in the private sector. Jobs that pay a living wage and for which skills exist get snapped up. Vacancies do not abound in the private sector except where there are definite skills shortages, and that is because of unemployment. There is no parallel difficulty with failing to fill public sector vacancies in better-off areas.

In the absence of that one piece of clinching evidence, which simply is not there, one could take a barrow-boy view that one could none the less get away with paying people less in the public sector in less advantaged areas, and especially get away with lower pay for the less well-paid, thus banking a cash saving for the state. I understand that argument, but it would be a wholly inappropriate way for a state to behave. It would be inappropriate for the state to discriminate simply by doing what can it get away with. We do not pay women or ethnic minorities less because they might be willing to work for less. If it was easy to get people to take the king’s shilling in the north, would we offer them sixpence instead?

Mr Burley: We already pay every public sector worker outside London less because of the long-established principle of the London weighting. Would the hon. Gentleman abolish the London weighting and pay everyone the same as people working in London?

John Pugh: The special housing problems connected with London have been recognised for about 30 years. No one is arguing about that—it is not what the Government are arguing for, and it is not what divides the House.

I have been in politics for quite a long time and worked hard in my region. I have met oodles of people, worried and fretted about regional regeneration, met industrialists, attended forums and spoken to experts. However, no one outside London has ever said to me, “Do you know what we want in this area? What we really need is regional pay.”

5.44 pm

Bill Esterson (Sefton Central) (Lab): Most business people I know want to pay well because they know that if they look after their staff, their staff will do a good job and help their businesses to thrive. If we apply the same principle to the public sector, paying people well and treating them well are both critical factors in delivering good public services, but undercutting pay, making it easier to fire people, and cutting 40,000 public sector jobs in the north-west are all decisions that sap morale and make people more fearful, making it less likely that services will be delivered well. It is also less likely that people will spend money when they are fearful, and that will harm the private sector businesses whose customers work in the public sector.

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Many of my constituents work in the public sector and would like to know why regional pay is being proposed. For staff and their families in the north-west of England, regional pay would most likely mean that they would be paid less than colleagues elsewhere. There would be several consequences of such a change, and I shall explore some of the concerns about a move to local and regional pay.

The likelihood is that we would see regional inequalities made worse. Where unemployment is already high and where the recession has hit communities hardest, the introduction of regional pay would make matters worse. Lower pay in the poorest areas is what regional pay means, and the consequences are that the best performing staff would be able to earn more elsewhere. That means that it would be harder to recruit and to retain staff where they are most needed, unless the Minister wants to tell us that regional pay means higher pay in poorer areas. I do not think that is what we heard earlier.

Lower pay means less money going into the economy, again where it is most needed. Less money from lower pay means less money being spent in local businesses already struggling under the pressure of being in deprived areas suffering from a Downing street-made recession.

Ian Swales (Redcar) (LD): Labour-led Redcar and Cleveland was one of the councils that failed to implement the April 2011 pay rise for low-paid workers, meaning that their workers are now paid less than those in other localities. Did the hon. Gentleman’s council implement the pay rise? What does he think about councils that did not?

Bill Esterson: The hon. Gentleman represents a Government who have cut the funds to councils in the north of England more than ever in history. Those cuts were front-loaded and we still have not seen the end of them, so he is not in any position to tell people on the Opposition Benches about the way that councils operate.

My hon. Friend the Member for Sedgefield (Phil Wilson) made the point that public sector jobs help to create private sector jobs. Indeed, there is research suggesting that every pound spent on public sector pay generates up to £1.50 elsewhere in the economy. When we consider the implications of regional pay, I start to see it as yet another way for the Government to make matters worse, not better, in the areas that need the most help. It will encourage staff, when choosing where to work, to go to the better-off areas and spend their money in places that have fared rather better in the recession.

I am sure Ministers take an evidence-based approach to their policies, so where is the evidence that a more fragmented system would be more efficient? A national negotiating system means a structured set of negotiations and a co-ordinated approach across regions. What, I wonder, is the analysis by Treasury Ministers of the cost of multiple pay review bodies at a local level? I wonder whether Ministers had made those calculations before they made their commitment in the autumn statement. It seems to me that we would see a complex and bureaucratic process for setting local pay that would take time and resources away from delivering vital public services.

If regional pay is introduced, it will mean lower pay in the north-west. In answer to the hon. Member for Redcar (Ian Swales), 40,000 jobs have already gone in

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the north-west as a result of cuts in the public sector. The north-west has seen twice the national average in cuts in jobs in the public sector, and any measure that cuts pay in the north-west will depress the economy and hit the living standards not just of the staff who lose pay but of the businesses that rely on them and of the people who work in those businesses too.

Lower pay for poorer regions will make it harder to attract the best staff and to keep them. It will mean less money for the staff and their families in already poor areas, and it will take more money out of the hardest hit local economies. As we have seen, the increased bureaucracy will mean higher costs.

The Government point to a gap between public and private sector pay, but the reality is that cutting public sector pay will make it easier for private sector employers, too, to cut pay in order to maintain the differential. In fact, the removal of money from the economy would put pressure on some private employers to do just that because of the depressing effect it would have on the economy. The Government say they want to rebalance the economy. If pay is cut in the poorest parts of the country for lower-paid and part-time public sector workers, many of whom have already lost their tax credits, the economy will be rebalanced all right, but not in a good way. It will be rebalanced so that it is further away from a fair and equal distribution than ever.

The Government should have nothing to do with regional pay. They should continue to work with the staff who do a good job serving our communities up and down the country. They should support those staff to ensure that they can continue to deliver excellent services, not undermine them by sapping their morale with such crazy suggestions.

5.50 pm

Guy Opperman (Hexham) (Con): My entire career has been spent being part of the national health service. My grandmother was an NHS matron, and I came into politics when the hospital in which I was born and which saved my mother’s life was threatened with closure. In 2011 I was diagnosed with a tumour and spent several weeks in London NHS hospitals. I saw all that was good in those hospitals and literally owe my life to the treatment I received. I will be for ever grateful.

If I took one thing in particular away from that experience, it was an understanding of just how many individuals are involved in making the whole process work. From the porter and the nurse to the physiotherapist, the care lady and the cleaner, everyone is just as important as each other. I think that all Members of the House should remember that when we talk about the public sector, we are talking about not only the unions and Unite but the care lady who looks after our mothers and the dinner lady who keeps our children safe at lunch time and provides them with food. It is much more personal than the dry debates we engage in.

There are two key arguments in the debate, the first of which is economic. Having worked as a legal aid barrister or state prosecutor for 15 years, I should declare that I, like many public sector workers, am still owed money by the state, notwithstanding the fact that I stopped working for the state on a legal aid basis two years ago. It was during that time that I saw the effects of local pay, as it is described, and took into account the argument of the right hon. Member for Kirkcaldy and Cowdenbeath

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(Mr Brown)—as usual, he is absent from his place—who first contemplated it in 2003 and then forced it on the courts service in 2007.

As with so many of the right hon. Gentleman’s economic policies, I see little evidence that local pay was a success. I have tried to study the economic argument behind it, which is based on the Heckscher-Ohlin factor proportions theory and various academic studies performed by august institutions such as the London School of Economics. I do not support such arguments, which are obscure at best and have not been shown to work in real terms. Also—surely this is the crucial point—it is not supported by businesses in my constituency, none of which has come to me to press for it.

Andrew Percy (Brigg and Goole) (Con): I agree entirely with everything my hon. Friend has said so far. The other reason we do not support regional pay is the facts. In my region, the Humber, we cannot get NHS workers to come and work and have to consider paying them more. A few years ago we could not get teachers to teach in the city of Hull and had to give them an enhanced salary to do it. Whatever the economics, the reality is that we cannot get some public sector workers to come to my region. How we would do that if we paid them even less is beyond me.

Guy Opperman: I also believe that regional pay is divisive and manifestly unfair. Members who read The Daily Telegraph today—obviously, that includes many on the Opposition Benches—will know that it has criticised me personally for leading the opposition to these divisive plans. It must be very rare to be criticised by The Daily Telegraph and praised by the hon. Member for Sedgefield (Phil Wilson) all on the same day. I was interested when I read on to find that its argument is that pay distortions are