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House of Commons

Monday 11 March 2013

The House met at half-past Two o’clock


[Mr Speaker in the Chair]

Oral Answers to Questions

Work and Pensions

The Secretary of State was asked—

Get Britain Working

1. Chris Skidmore (Kingswood) (Con): How many young people have received support through the Get Britain Working programme to date. [146846]

The Minister of State, Department for Work and Pensions (Mr Mark Hoban): Between January 2011 and November 2012, about 106,000 young people aged between 18 and 24 received support through Get Britain Working, including work experience and sector-based work academies. Many young people have also benefited from the help offered through volunteering, and work and enterprise clubs.

Chris Skidmore: Job clubs and job fairs play an important role in the Get Britain Working scheme. In Kingswood, as the local Member of Parliament, I have organised four job fairs so far, as well as running a weekly job club. Does my hon. Friend agree that we as MPs have a vital role to play in Get Britain Working by organising job fairs and job clubs and getting our constituents back to work?

Mr Hoban: My hon. Friend is well known for his support for getting young people into work, and I commend him on the job club and job fairs that he has run. As a result of the collective effort between employers, Members of Parliament, Jobcentre Plus and others, youth unemployment today is lower than it was in May 2010.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): Does the Minister not realise that however good some of these programmes are—and some of them are quite good—we are not doing enough? Nearly a million young people are unemployed. There must be more imagination. Could we not agree on a cross-party basis that we must not allow young people to fester in unemployment any longer?

Mr Hoban: No one should be complacent about the challenge that young people are facing, but I should point out to the hon. Gentleman that, if full-time students are excluded, 66,000 more young people have been in work over the last quarter. We are seeing more progress, but we must not be complacent, and we must not forget that the problem started some time ago.

Mr Philip Hollobone (Kettering) (Con): What progress is being made with sector-based work academies? Which sectors are being targeted, and in which parts of the country?

Mr Hoban: My hon. Friend is right to point out what an important part of our programme sector-based work academies represent. They provide a combination of work experience, training and a guaranteed job interview. Jobcentre Plus will work closely with employers throughout the country to organise the right type of sector-based work academies, but I encourage Members to work with jobcentres to identify good opportunities in that regard.

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Sheila Gilmore (Edinburgh East) (Lab): A constituent of mine, aged 20, has spent a year and a quarter on the Work programme, and has had six meetings with three different advisers during that time. He still has no job, and has had no job offers. He eventually found a Barnardo’s course, but was told that he would not be allowed to go on it because he was on the Work programme. Is the programme not failing such young people?

Mr Hoban: I think the hon. Lady should raise issues about training in Scotland with the Scottish Government, who are responsible for it. They will not allow people on the Work programme to go on Scottish Government-funded courses, and I suspect that that is where the problem lies.

Pension Liberation Schemes

2. Grahame M. Morris (Easington) (Lab): What steps he is taking to tackle the increased use of pension liberation schemes. [146847]

The Minister of State, Department for Work and Pensions (Steve Webb): We take the issue of so-called pension liberation very seriously. The Pensions Regulator is currently investigating 21 cases, and scheme assets worth over £50 million have been protected as a result of regulatory action.

Grahame M. Morris: Many pension liberation schemes are skimming off thousands of pounds in charges and commissions, and leaving customers exposed to punitive tax penalties. In the wake of mis-selling scandals such as that involving payment protection insurance, what action is the Minister taking to ensure that future pensioners are protected?

Steve Webb: The hon. Gentleman is right. When people transfer money from a pension, they must fill in transfer forms. We have established a “scorpion sting in the tail” information campaign, producing very eye-catching literature which people wishing to transfer their money receive before signing on the dotted line. It is a “buyer beware” measure, and is one of a suite of measures that we are taking to crack down on such fraud.

Andrew Bridgen (North West Leicestershire) (Con): Many participants in pension liberation schemes pay extremely high interest rates on any loans that are taken out, and residual funds are invested at the discretion of the trustees, which can lead to insecure or poor investment decisions. Does my hon. Friend agree that that is in no one’s long-term financial interests?

Steve Webb: My hon. Friend is right. We are warning people to be extremely wary. In general, they should not get their money out before they reach the age of 55, except in the event of, for instance, terminal illness. Trustees need to be wary, and participants need to be wary. Those who spot fraud should report it, and we will continue to crack down on it.

19.[146865] Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): Some £400 million has been liberated illegally from pension funds, and all that the rather incurious Minister is saying is that he has produced some rather catchy literature. Is that sufficient?

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Steve Webb: If that were all we had done, no of course it would not be. Many of the Government’s anti-fraud authorities, including, among others, the Serious Fraud Office, are working with us. One of the challenges is that the money is sometimes transferred overseas, where we have less jurisdiction. However, what we need is trustees not to be transferring money—authorising the transfer of money—out into suspicious pension funds. So trustees have a part to play, as do scheme members.

Women’s Single-Tier Pensions

3. Ian Murray (Edinburgh South) (Lab): What recent assessment he has made of the effects of the Government’s proposal for a single-tier pension on women born between 6 April 1952 and 6 July 1953. [146848]

6. Catherine McKinnell (Newcastle upon Tyne North) (Lab): What recent assessment he has made of the effects of the Government’s proposal for a single-tier pension on women born between 6 April 1952 and 6 July 1953. [146852]

7. Kate Green (Stretford and Urmston) (Lab): What recent assessment he has made of the effects of the Government’s proposal for a single-tier pension on women born between 6 April 1952 and 6 July 1953. [146853]

16. Heidi Alexander (Lewisham East) (Lab): What recent assessment he has made of the effects of the Government’s proposal for a single-tier pension on women born between 6 April 1952 and 6 July 1953. [146862]

The Minister of State, Department for Work and Pensions (Steve Webb): With permission, I will answer this along with Questions 7, 8 and 16.

We have today published a document analysing the pension outcomes of this group of women. Overwhelmingly, women in this group—who reach state pension age up to three years before a man born the same day—would get more pension benefits over their lives than a man with the same national insurance record.

Mr Speaker: The Minister is a man of formidable intellect and therefore I hesitate ordinarily to disagree with him, but I think that the grouping is with Questions 6, 7 and 16. I hope he does not mind.

Ian Murray: The Minister may have a formidable intellect but I am going to disagree with him. As he will know, half a million women born between 1952 and 1953, many of whom will have celebrated mother’s day yesterday, will lose out on this single-tier pension. Will he apologise to the 700 women in my constituency who are affected and have written to me? Will he do something before they lose out?

Steve Webb: I take your correction on the question numbers, Mr Speaker.

I think that the hon. Gentleman should apologise to the 700 women in his constituency, as he seems to be asking us to treat them the same as a man born on the same day—that appears to be the essence of his problem.

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If we did that, those women would have to wait up to three years longer for their pension, and they would not thank him for that.

Catherine McKinnell: Some 1,700 women in Newcastle will miss out on the single-tier pension, yet men born in the same period will qualify. Claiming that those women are better off because they are allowed to retire earlier is simply not good enough. If they are retired for 20 years, they could lose up to £38,000, which is well over twice what they would receive through benefiting from retiring earlier. What message does this send out to the hard-working women of Newcastle, many of whom celebrated not only mother’s day yesterday, but international women’s day on Friday?

Steve Webb: The message it sends out is that their MP did not listen a moment ago. We have published research today that shows that 85% of these women will do better over their entire retirement—both the first few years and their entire retirement.

Catherine McKinnell indicated dissent.

Steve Webb: Unless the hon. Lady has read the research, I do not know why she should be shaking her head. It says that 85% will do better by being treated as women than they would by being treated the same as men.

Kate Green: You and I, Mr Speaker, have just had the great pleasure of welcoming a rather beautiful portrait of Emmeline Pankhurst to Parliament, and I hope that all colleagues will want to go to admire it in the Upper Waiting Hall. It is important that we remind ourselves that women’s political interests can sometimes be different from men’s, and I am grateful to have the chance to ask the Minister about his pension proposals and their implications for women today. Many women will struggle to achieve 35 years of full employment and full contributions, partly because of caring responsibilities and also because of labour market discrimination. What steps does he intend to take to address that disadvantage?

Steve Webb: As the hon. Lady says, we have a system of not only paid contributions, but credits. Although 35 years will be needed for the full £144, even a woman with 30 years will get thirty thirty-fifths of £144, which is more than the current basic pension of £107. So, many women will benefit from the new rules.

Heidi Alexander: The Minister says that 85% of women will benefit under the proposals that he has announced today, but what about the 15% who do not?

Steve Webb: It is gratifying that the main Opposition response to our proposals is that they want more people to benefit from them. The hon. Lady is right: there is a set of women—a small number of women—who would do better under the new system than the old, but overwhelmingly the vast majority will do better under the current system. She raises an issue about allowing people to choose whichever was the better, but it is not always certain—at the moment—what the better answer would be for their entire retirement. So we could not actually advise people in advance which category they would be in.

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Jane Ellison (Battersea) (Con): The Minister might be aware that during the pre-legislative scrutiny of the Bill there has been considerable confusion about how much some of these women would lose. There is considerable misunderstanding out there, so could he provide some clarity in this area?

Steve Webb: I am looking forward to two hours with the Select Committee this afternoon after this warm-up. My hon. Friend is absolutely right, in that some of the women in the group we are talking about will miss out on nearly £20,000 of pension if they were to be treated the same as a man born on the same day. I think that very few of them would think that a good deal.

Gordon Birtwistle (Burnley) (LD): Does my hon. Friend agree that the reforms to the state pension will be advantageous to women in the future?

Steve Webb: Absolutely. The process of state pension reform was happening at a glacial pace and equality between men and women was many decades away. We have brought that equality forward and men and women on both sides of the House should welcome that fact.

Nigel Mills (Amber Valley) (Con): We look forward to seeing the Minister later. Does he agree that one of the problems is that people just do not understand what the change will mean for them? What plans do the Government have to write to everybody to tell them what pension they would have received under the old system and what they will receive under the new one?

Steve Webb: My hon. Friend is right to say that information will be crucial. One thing we have been doing with the changes to the state pension age, for example, is writing to the individuals affected so that they know exactly what position they are in. All too often in the past, laws have been passed, no one has been told and it has taken many years for people to find out about it. An information campaign will be central to taking forward these excellent proposals.

Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab): The Minister has so far provided cold comfort for the 429,000 women who will not benefit from the new state pension when men of precisely the same age will. May I ask the Minister about a specific group of 80,000 women who are represented in Parliament today? Under the Pensions Act 2011, which this Government passed, their retirement age increased with little notice. Now they will miss out on the Government’s proposed new pension with an average loss to the tune of £9 per week. Is it fair to penalise these women twice in two years?

Steve Webb: To be clear about the particular group to which the hon. Gentleman refers, their pension ages increased by a maximum of six months under the 2011 Act. The vast majority of those 80,000 would be worse off if we treated them the same as men, which is what he seems to be calling for. I was not clear what else he was calling for, but treating them the same as men would leave them worse off than they are now.

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Housing Benefit Changes

4. Mr Adam Holloway (Gravesham) (Con): What assessment he has made of the availability of one-bedroom homes for single-person households to downsize to following the housing benefit changes due to take effect in April 2013. [146849]

The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): There are about 400,000 working age households on housing benefit in under-occupied social housing in Great Britain who require just one bedroom according to the size criteria. There are more than 1.1 million one-bedroom properties in the social rented sector in England and 730,000 one-bedroom properties in the private rented sector. The availability of housing varies from area to area and is constantly changing. During 2011-12, there were about 112,000 new lettings of one-bedroom properties in England in the social rented sector alone.

Mr Holloway: Will there be an improvement in the position of disabled children in Gravesham under the spare room subsidy?

Mr Duncan Smith: My hon. Friend makes an important point. As the law stands, when a local authority agrees that a family needs an extra bedroom because their child’s disability means that they are unable to share, the family can be entitled to the spare room subsidy in respect of that extra bedroom. As with housing benefit claims, the determination of whether their disability requires them to have an extra bedroom is a matter for the local authority to decide with the help of DWP guidance and medical evidence. This week we will issue final guidance to local authorities on a number of areas, including this one, that will confirm the position that the judgment in Burnip, Trengove and Gorry applies to both the social rented sector and the private rented sector.

Bill Esterson (Sefton Central) (Lab): One effect of the Secretary of State’s policy is that foster carers who have a spare bedroom and are waiting for a child to be placed must move to a smaller property without the space for them to foster. Is that what he intended?

Mr Duncan Smith: As the hon. Gentleman will know, we have made discretionary payments of £5 million available for foster carers to ensure that that does not happen. The effect for foster carers, as we move forward, will be that they will not have to change the number of rooms or their property as they will be able to remain there and to foster. That is what the policy will be.

Greg Mulholland (Leeds North West) (LD): My right hon. Friend and the Prime Minister have acknowledged that some of the spare rooms are not spare by acknowledging the need for discretionary housing payments. May I urge my right hon. Friend to reconsider whether some of those categories could and should be covered by genuine full exemptions?

Mr Duncan Smith: As I have just explained, one of those categories—severely disabled children—is covered and the guidance coming out tomorrow will make it very clear that we will apply that judicial judgment

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across the board to children with severe disabilities who need that extra room as they are unable to share. I shall keep everything under review and I guarantee to my hon. Friend that we will ensure that the intent of the change is bound up in how it takes effect in so far as the spare rooms will be kept for those who need them. Honestly, however, when so many houses have spare rooms and when so many people are in queues to get housing, it would seem wrong to go on subsidising everybody to stay the same.

Dame Anne Begg (Aberdeen South) (Lab): Is it fair to penalise someone who had wanted a one-bedroom property, had asked their local authority for a one-bedroom property, but instead was given a two or three-bedroom property because there simply were no one-bedroom properties available?

Mr Duncan Smith: The purpose of the policy is to readjust the disparity that exists and that lay there under the previous Government. Local housing allowance for social tenants in the private rented sector does not and did not allow people to have spare rooms. In the social sector there are a large number of houses that people occupy without occupying all the rooms, so the purpose is to get that smoothed out. A number of councils have people waiting for housing, people in overcrowding, while others are subsidised to have spare rooms in housing that they do not need.

Andrea Leadsom (South Northamptonshire) (Con): Will my right hon. Friend confirm that there will be discretionary payments available to councils to meet particular needs? Does he agree that it is despicable for Opposition Members to be scaremongering unnecessarily and scaring people who are in a vulnerable position already?

Mr Duncan Smith: The Opposition know what they have been about over the past few weeks. They have deliberately set about trying to confuse people with their ridiculous title. They have tried to confuse people that they will all come under this change, when only those on housing benefit will be affected, and they also seemed to indicate to many others, such as pensioners, that they were not exempt. They are exempt.

Ian Austin (Dudley North) (Lab): Is it not the case that there just are not enough homes for people hit by the bedroom tax? The Government promised, and the Secretary of State said a moment ago, that pensioners would not be affected, but those on universal credit will be. Soldiers’ families will not get full housing benefit, but someone who is sent to prison could keep every penny. The Government are hitting pensioners but safeguarding prisoners, so how can it be right that if someone has worked hard all their life and loses their job, or if someone is serving their country or is disabled or a pensioner, they could lose out?

Mr Duncan Smith: I do wish the hon. Gentleman would get his facts right. Convicted prisoners are not exempt, so he is wrong. With respect, he does not know the difference between someone on remand and someone convicted—[Interruption.]

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Mr Speaker: Order. The hon. Member for Dudley North (Ian Austin) is noisier in heckling the Secretary of State than he was in heckling me at Essex university 30 years ago. He needs to calm down.

Mr Duncan Smith: With respect, Mr Speaker, the hon. Gentleman’s noise covers a complete lack of intelligence. That is what I would say. Let me bring something forward—[Interruption.] No, monkeys can jump around, but the noise they make is not necessarily relevant. Let me tell the hon. Gentleman about his own area. In Dudley, which I think he might know, the National Housing Federation estimates that there are 2,000 households under-occupying—in other words, with spare rooms. It also estimates that there are 1,500 families in overcrowded accommodation. In other words, if property is properly managed, we might get those who are overcrowded into decent-size accommodation. When will the Opposition moan about that?

Under-occupancy (Disabled People)

5. Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): What recent assessment he has made of the likely effects of the under-occupancy penalty on households that include a disabled person. [146851]

The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey): Let us be clear. The spare room subsidiary is not a penalty and it is not a tax. It is the result of, and a solution to, the inequality of treatment between those in the private rented and the social rented sector. The fact that housing benefit doubled in the past 10 years and the sheer imbalance in the system that we inherited resulted in 1.8 million people on waiting lists, 250,000 in overcrowded houses, and 1 million spare rooms in the system, when 180,000 claimants who are claiming disability living allowance, or whose partners are doing so, have spare rooms.

Cathy Jamieson: I thank the Minister for that answer, although I do not think it addresses the question. Disabled people in my constituency are coming to see me terrified about the implications of having to find additional money every week, so what can the Minister say about the disabled people who are contacting the local authority in my area to be told that they may not get a discretionary payment and that, even if they do, it may not last for the full year? Does she have any words of comfort for them?

Esther McVey: The hon. Lady, like all of us, has a duty to allay those fears, and it is something that we can all do. We know that so many specific instances could not be regulated clearly in law, hence we have trebled the discretionary payment to take into account all these factors. We know that pensioners are exempt and that we are helping, obviously, severely disabled children, and we have made clear all those who are being assisted. It is our duty to make sure that facts are clearly spelled out, and those who are most in need will be supported.

Duncan Hames (Chippenham) (LD): I know from my own constituency case load that Wiltshire council is often persuaded that families with disabled children can require an additional room in order to meet their needs. Will the Minister clarify the earlier answer to the

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hon. Member for Gravesham (Mr Holloway)? Is it the Government’s position that these families will be reliant on discretionary payments, or is it indeed the case that they will not see their housing benefit cut?

Esther McVey: If the disabled child cannot share and there is impact on another child, if they need that room, that room will be provided for, as the Secretary of State has said and in accordance with the local authorities.

Ian Paisley (North Antrim) (DUP): I thank the Secretary of State and the Minister for their answers today. This policy will affect all parts of the United Kingdom irrespective of the devolved settlement in Northern Ireland. On the assessment and the figures that have been presented today, is the Minister able to say something about how many people will be affected in Northern Ireland, given that there is a complete lack of single bedroom homes, both in the private and public sector, in Northern Ireland?

Esther McVey: I will be very happy to write to the hon. Gentleman with the exact numbers for Northern Ireland. I can say, from the money that has been made available through the discretionary payments, that we will be supporting those most in need, as we have said so clearly throughout today.

Mrs Anne McGuire (Stirling) (Lab): Given that the Prime Minister continues to state that families with disabled children or with family members as carers will somehow be exempt from the bedroom tax—and before the Minister reaches for her brief and tells me once more about the discretionary fund, she needs to realise that it is time limited and there is not enough in the fund—will the Minister advise the House whether the Prime Minister is pulling the wool over the public’s eyes, or has she abrogated her responsibilities as the Minister with responsibility for disabled people and not told them the exact impact of his Government’s policies?

Esther McVey: In line with the judgment, the Prime Minister was correct. We have clarified today that they will have the room and they will not need to move.

Troubled Families Programme

8. Ann Coffey (Stockport) (Lab): What recent representations he has received on the sharing of data on missing children in the Troubled Families programme. [146854]

The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): My Department plays a vital role in the cross-Government programme to turn around the lives of our most troubled families, a matter on which the hon. Lady has a long track record. Although I have not received any representations on sharing data on missing children, as we do not deal with them particularly, we are committed to building a clearer picture across Government of how many children are missing from care and where they go. We will begin piloting new arrangements shortly.

Ann Coffey: I thank the Secretary of State for that answer. As he will be aware, children going missing is a key indicator of being at risk of child sexual exploitation,

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and he will also know that information on children going missing from troubled families is under-reported. Will he ensure, together with his colleagues in other Departments, that data on missing and absent children is collected and shared properly, so that children from troubled families at risk of coming to harm can be identified, helped as early as possible, and not end up in the care system?

Mr Duncan Smith: Yes. I congratulate the hon. Lady on focusing on this across all the Departments, as I am aware that she has asked this question to a number of Departments. She is absolutely right. We do need to co-ordinate much better between Departments. As she knows, this is an historical issue for different Governments. The Department for Education chairs the data working group, which includes the Home Office, the Serious Organised Crime Agency, and the Children’s Society. I understand that my right hon. Friend the Secretary of State for Communities and Local Government is also involved. That should help to improve the collection and publication of data. The pilot will begin shortly to see that we sort this out. She is right that we must do more to improve data as part of the missing children strategy and make sure that we get it right.

Housing Benefit (Under-25s)

9. Mr Peter Bone (Wellingborough) (Con): If he will bring forward proposals to restrict eligibility for housing benefit for people aged under 25. [146855]

The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): In June last year the Prime Minister commenced a debate on the cost to the taxpayer of meeting the £2 billion bill for automatic entitlement to housing benefit for people aged under 25. Although that is not current Government policy, I have had a number of representations on the issue—not from the Opposition, but from others.

Mr Bone: If the Prime Minister and the Secretary of State are in favour, I cannot understand why that is not Government policy. With so many under-25s who are hard-working having to stay at home with their parents, why are the Government spending £1.8 billion a year housing under-25s who are on benefits? I cannot see how that is fair.

Mr Duncan Smith: My hon. Friend is right that the bill for under-25s in receipt of housing benefit is in the order of £2 billion a year. Some 370,000 under-25s claim housing benefit, and 42% of them are without children. However, the reality is that when we looked at that in the round prior to the spending review, it was agreed that it was not a priority area for the coalition. No doubt he will continue to campaign for it to be a priority area, and I am very happy to discuss the matter with him.

Mr David Lammy (Tottenham) (Lab): The Secretary of State has decided to move forward with his benefit cap in four pilot areas in London. How much has he decided to compensate Haringey council for making it a guinea pig in that way?

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Mr Duncan Smith: I do not believe that there is any need to compensate anybody. We have already told all those councils that they are not guinea pigs; they are actually getting very close support and advice. I think that it will be a tremendous success story. What they are doing is learning, along with us, about any issues that might arise, and we have already said very clearly that we will support them through any extra costs and expenses. The right hon. Gentleman’s party has to recognise that the reality is that the cap is right. The public support it because they are tired of seeing people getting more on benefits that those who are in work, so setting the cap is right. He needs to ask why his party keeps voting against it.

Dr Julian Huppert (Cambridge) (LD): I and my Liberal Democrat colleagues are delighted that that proposal did not become Government policy and will happily keep making representations on it. Although it would be wonderful if all under-25s had a loving and stable family to live with, does the Secretary of State accept that that is simply not the case? Will he meet the YMCA to understand the realities facing many under-25s and continue to provide them with the support they need to have somewhere to live?

Mr Duncan Smith: Yes, I would be very happy to meet my hon. Friend and any group of people, such as the YMCA, he wishes to bring to me. I simply say this: we have a significant problem, because we inherited a welfare budget approaching £200 billion that had risen out of control under the previous Government. He is fully aware that we have to reform it both to get people back to work and to ensure that we get the cost under control. Those are all areas we have looked at, but in those discussions we decided that, in the round, it was not a priority.

Stephen Timms (East Ham) (Lab): On Friday morning I met a 19-year-old autistic young women whose family home, which is rented from the council, with housing benefit, has been adapted at public expense, but now they are very worried because they are deemed to have one bedroom too many. Surely the bedroom tax should not apply when a council house has been specifically adapted for the occupants at public expense.

Mr Duncan Smith: The right hon. Gentleman knows very well that that is the point of discretionary housing payments—[Interruption.] Opposition Members can groan, but we have put more money into discretionary payments to sort these things out than they ever did when they brought these in. The reality is that there is money for them to do just that. I remind him that the National Housing Federation has estimated that in his area of Newham some 3,000 people are under-occupying and some 5,000 are overcrowded. Perhaps he would like to take his own side to task for never doing a thing for those struggling in overcrowded accommodation.

Long-term Unemployment

10. Mr Stephen Hepburn (Jarrow) (Lab): What steps he is taking to tackle long-term unemployment. [146856]

The Minister of State, Department for Work and Pensions (Mr Mark Hoban): Long-term unemployment fell by 15,000 last month. Our main initiative to help get

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people who are long-term unemployed into work is the Work programme. In the period to September 2012, 200,000 people found work as a consequence of the Work programme.

Mr Hepburn: Long-term unemployment in my constituency went up by 67% last year. Does that not tell us exactly what the Tories are like in this country today? Will the Minister stand up, put his hands up and admit that the policies of the millionaires in government are totally failing the ordinary people of this country?

Mr Hoban: I would have thought that the hon. Gentleman would want to celebrate the fact that an additional 21,000 people in the north-east are in work compared with a year ago. Yes, there are deep-seated challenges in the north-east, but I am confident that progress is being made in rebalancing the economy, and that is down to the strength of the private sector.

Mr Nick Gibb (Bognor Regis and Littlehampton) (Con): May I ask my hon. Friend what happens when someone who is long-term unemployed rings Worthing benefits centre given its failure to return calls within even the three-hour performance target and its failure to meet the target of processing 85% of employment and support allowance payments within the target of 16 days? What action is being taken to remedy the position, and when does he anticipate that the centre will be meeting all its performance targets?

Mr Hoban: My hon. Friend is right to highlight the issues at Worthing benefits centre. As a consequence of a very high level of applications for ESA, there is some pressure on performance at the centre. Work is being done to help tackle the backlog and to get back to the 85% level. Managers from the Department are happy to meet my hon. Friend to discuss the situation.


11. Robert Halfon (Harlow) (Con): What assessment he has made of recent trends in unemployment. [146857]

13. James Wharton (Stockton South) (Con): What assessment he has made of recent trends in unemployment. [146859]

The Minister of State, Department for Work and Pensions (Mr Mark Hoban): Unemployment has been falling in each of the last 11 months; on the International Labour Organisation measure it is down by 156,000. The unemployment rate is now lower than it was in 2010. This is testament to the strength of the private sector, which has created 1 million net new jobs since May 2010.

Robert Halfon: My hon. Friend will be aware that Tesco has announced the closure of a huge depot in Harlow, with the possible loss of 800 jobs. Will he work constructively with the Union of Shop, Distributive and Allied Workers, which is trying to ensure that the workers who are offered jobs in other plants get the same pay and conditions?

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Mr Hoban: I can assure my hon. Friend that Jobcentre Plus is working with Tesco and has offered full rapid response team support. Discussions are focusing on redeployment and other opportunities to help the work force to secure new jobs.

James Wharton: In Stockton South youth unemployment has fallen from 11.3% to 9.6% January to January. This is a welcome trend, but I would like it to go further. What are the Government doing to ensure that it can continue over the coming year?

Mr Hoban: I am delighted to welcome the news of what is happening in Stockton South. That is in contrast to what has happened in Jarrow, but it demonstrates the resilience of the economy in the north-east. The fact that 40,000 extra private sector jobs have been created in the north-east over the past couple of years demonstrates that while there are difficult challenges, the economy is rebalancing, and that should be to the benefit of everyone there.

Wayne David (Caerphilly) (Lab): Will the Minister kindly tell the House how many young people are unemployed?

Mr Hoban: According to the ILO measure, 974,000 young people are unemployed, about 300,000 of whom are full-time students. Over the past few months there has been an increase of 66,000 in the number of young people in work.

Alison McGovern (Wirral South) (Lab): The Minister mentioned the so-called 1 million new jobs. With reference to the labour force survey, will he tell me how many of those so-called new jobs arise from reclassification and how many represent people who are under-employed?

Mr Hoban: If the hon. Lady looks at the labour force survey, she will see that the figure is 1 million net new jobs. She talks about people being under-employed. I hope that she is not being condescending to those of her constituents and mine who are working part-time and want to work part-time.

20. [146866] John Stevenson (Carlisle) (Con): Does the Minister agree that the economic success and, indeed, the social success of places like Carlisle depend on the creation of private sector jobs? Will he confirm that to help to achieve this he will ensure that it is always better financially to be in employment than on benefits?

Mr Hoban: That is absolutely at the heart of the roll-out of universal credit, which will mean that people know that they are better off in work, and better off working more hours and earning more than working fewer hours and earning less. That incentive to get paid work is at the heart of our welfare reforms.

Housing Benefit (Amendment) Regulations 2012

12. Katy Clark (North Ayrshire and Arran) (Lab): If he will reconsider the decision not to include residential properties owned by local authorities for temporary accommodation in the definition of temporary accommodation contained in the Housing Benefit (Amendment) Regulations 2012. [146858]

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The Minister of State, Department for Work and Pensions (Steve Webb): From 8 April, people living in temporary accommodation will, in most cases, be unaffected by the removal of the spare room subsidy in the social rented sector. However, where a local authority’s own temporary accommodation is used, the spare room subsidy will be removed if the tenant is placed in accommodation that is larger than they need.

Katy Clark: In North Ayrshire the council owns 63% of the accommodation used as temporary accommodation, and the bedroom tax will apply to approximately two thirds of those properties. Will the Minister look again at the definition of temporary accommodation, given that this policy will simply mean that local authorities end up spending a lot more on less suitable accommodation from the private sector?

Steve Webb: We think that local authorities using their own stock to discharge their homelessness function should, wherever possible, house people in appropriately sized accommodation. If there are short-term problems in matching families to accommodation size, discretionary payments are available and can be used to support any shortfall a local authority may experience.

Dr Eilidh Whiteford (Banff and Buchan) (SNP): Half of all the temporary accommodation in Scotland is council-owned and the accommodation size reflects the existing housing stock and a varying range of needs in that sector. The discretionary housing budget in Scotland will not even cover the cost of keeping disabled people in specially adapted homes, so in no way will it cover the needs of people in temporary accommodation. Will the Government look again at this and reconsider what I can only assume is an unintended consequence or an oversight?

Steve Webb: The hon. Lady raises the important issue of the mismatch between the housing stock and families who need housing. That has gone unaddressed for decades and we now need to address it. We recognise that there may be particular issues in Scotland, partly with rurality and partly with the housing stock, and we are happy to continue having that conversation with hon. Members.

Benefit Payment Methods

15. Mark Pawsey (Rugby) (Con): What arrangements his Department is making for benefit payments to people who are unable to receive them through a bank or building society account. [146861]

The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): People who are unable to receive benefit payments through a bank or building society account are paid under the new simple payment. The service is easily accessible and is available free of charge and over the counter at more than 10,000 PayPoint outlets across the UK. The phased roll-out of simple payment began in October 2012 and we are closely monitoring the service to ensure that people can access their payments.

Mark Pawsey: I recently met a constituent of mine who wishes to receive his pension payment in cash but has had some difficulty in doing so since the transition

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from cheques to simple payment. What support is available for people such as my constituent?

Mr Duncan Smith: The contract is working very well across the board at the moment. About 99% of all claimants are getting their money as required at the right time, and 95% are within 1 mile of outlets, or within 5 miles in rural areas. It is, therefore, better than the previous system and it is also cheaper. The last cheque system cost £30 million and was defrauded to the cost of about £5 million; this costs about £7 million.

Immediate responsibility for the individual mentioned by my hon. Friend lies with PayPoint and the bank. They have a responsibility to ensure that cash is available at every location. We take them to task over that and they will have to make restitution.

Disabled Entrepreneurs

17. Glyn Davies (Montgomeryshire) (Con): What plans he has to support disabled entrepreneurs. [146863]

The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey): We offer a range of support to help disabled people get and stay in work, including Work Choice, the Work programme and Access to Work. In fact, we have extended Access to Work to make it available to disabled people setting up businesses though the new enterprise allowance.

Glyn Davies: Investment in disabled people’s user-led organisations has proved very helpful to disabled people, but does my hon. Friend accept that it is crucial for the coalition Government’s commitment to delivering fairness that we build on this policy?

Esther McVey: I share my hon. Friend’s views about disabled people’s user-led organisations, which is why we have put £3 million aside—£2.2 million has been spent so far—to support programmes that are being built by such organisations. I have been impressed with the innovative designs that have resulted from that, including, most recently, an app called Georgie, which was designed by a blind person and is now being manufactured and used across the country.

Digital Exclusion (Universal Credit)

18. Michael Fabricant (Lichfield) (Con): What plans he has to tackle the potential for digital exclusion under his plans for universal credit; and if he will make a statement. [146864]

The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): It is important to recognise that 80% of existing benefit claimants already use the internet. For the minority who do not, we are helping them move online by, for example, working with digital champions, testing the new universal credit system with more than 6,200 real claimants to date, and developing a local support framework to ensure bespoke services. Even before universal credit is introduced, we are seeing the effect of this change.

Michael Fabricant: My right hon. Friend gives a good indication of the progress being made, but he will know that a number of people who are applying for universal

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credit and, indeed, other benefits will not have access to a computer, technical skills or even broadband. What sort of support is he giving them?

Mr Duncan Smith: We have put—and will continue to do so—large numbers of internet access devices in jobcentres, so people will automatically get help and support when they go in. We are talking and working with local authorities to ensure that people will be able to gain immediate access through libraries and all other local authority outlets. We are also working with individuals to make sure that those who have computers at home fully understand how to use the system. The truth is that this will be helpful. The Opposition seem to occasionally miss the fact that 92% of advertised vacancies require basic IT skills and that if people do not have the ability to go on a computer, they cannot apply for the job.

Mr Speaker: I call Mr Ruffley. Not here.

Out-of-work Benefits

22. Jeremy Lefroy (Stafford) (Con): How many people are in receipt of out-of-work benefits; and what assessment he has made of the level of inactivity in (a) Stafford constituency and (b) England. [146868]

The Minister of State, Department for Work and Pensions (Mr Mark Hoban): The proportion of people who are in work or looking for work is the highest for more than two decades, and the number of people who are claiming the main out-of-work benefits has fallen by 230,000 since 2010. In Stafford, about 5,000 people are claiming one of those benefits, which is down on the year and down since 2010.

Jeremy Lefroy: Last month, inactivity fell to the lowest rate since 1991 at just 22.3% of the working-age population. What has contributed to that fall?

Mr Hoban: There is a range of factors, including the resilience of the private sector in creating jobs and the fact that people are able to work more flexibly and thereby manage health conditions and look after children while working part time. The Government have had a relentless focus on using welfare reform to encourage more people to look for jobs and move into work. The benefit of that is starting to flow through.

Topical Questions

T1. [146871] Mr Clive Betts (Sheffield South East) (Lab): If he will make a statement on his departmental responsibilities.

The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): I welcome the recent introduction of mandation to universal jobmatch, which means that Jobcentre Plus advisers can mandate jobseekers to use the new service to help them find work and require them to demonstrate their progress. More than 2 million jobseekers are now registered, which is twice the number when I last updated the House. That shows just how quickly the system is revolutionising how jobseekers look for work.

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Mr Betts: This question was raised with me by my constituent, Mr Leonard Jolicoeur. He asked whether it is true that someone who is of pensionable age when the new single-tier pension comes in and who has a small occupational pension and therefore does not receive pension credit will get the existing state pension, but that someone who is in exactly the same financial circumstances and becomes of pensionable age after the single-tier pension comes in will get the new single-tier pension, which is some £40 a week more. What can the Minister say to persuade my constituent that it is fair or reasonable for somebody who is in exactly the same financial circumstances as his neighbour to get £40 a week more than him?

The Minister of State, Department for Work and Pensions (Steve Webb): That is not what would happen. People who have contracted out into an occupational pension, such as his constituent, currently get money off their state pension, which is called a contracted-out deduction. That will remain part of the single-tier proposition. Therefore, somebody such as his constituent who has contracted out would not get the £144. There is no cliff edge. There would be a deduction for past contracting out in both cases.

T3. [146873] Andrea Leadsom (South Northamptonshire) (Con): Does my right hon. Friend agree that for Opposition Members to talk of the spare bedroom subsidy as a tax shows a profound lack of understanding on their part of what a tax actually is?

Mr Speaker: Order. I say gently to the hon. Lady that Ministers have no responsibility for the Opposition’s use of terminology. It is better that we leave it there. There has been a very full exchange on that subject.

Mr Liam Byrne (Birmingham, Hodge Hill) (Lab): May I start by thanking the Secretary of State for briefing me and my right hon. Friend the Member for East Ham (Stephen Timms) on his plans for urgent legislation, about which his Department has commented in The Daily Telegraph this morning? Both he and I believe that sanctions are vital to give back-to-work programmes their bite. However, when he signed off the 2011 regulations that created sanctions for the Work programme, why did he not check that they were legally bullet proof?

Mr Duncan Smith: The right hon. Gentleman knows that the advice that we received made it very clear that the regulations would survive a challenge, and that was the view that we took. As he knows, the High Court upheld our position. It was the Court of Appeal that decided, on quite a technical line, to change that position. The position on human rights was upheld, as was the main point of our direction of travel.

Mr Byrne: I do not think that it is a technical challenge when three Court of Appeal judges unanimously quash the 2011 regulations because they are not in line with the law. That mistake puts in jeopardy about £100 million of sanctions that have been issued. I did not think that the Work programme could get any worse, but it has. We will support wise and sensible legislation that will fix the problem, but will the Secretary of State take personal responsibility and apologise for this mess, which may cost twice as much as the west coast main line fiasco?

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Mr Duncan Smith: The right hon. Gentleman knows very well that when Ministers make regulations, they take the fullest advice possible. That advice came to us; it was checked and it said that the regulations were fine. The High Court upheld them. It was the Appeal Court that decided that an element of that was not correct.

I do not wish to make this a political issue, and I take full responsibility for everything that goes on in my Department. I accept that we wish we were not in this position, but if the right hon. Gentleman supports the idea that people who have been mandated to do work, should take jobs and do work experience once they have volunteered without messing around otherwise they lose their benefit, I hope that we can look forward to his supporting the legislation that will ensure that we do not have to pay out money against a judgment that we never anticipated.

T4. [146874] Mr Edward Leigh (Gainsborough) (Con): Is the Secretary of State aware that Conservative Members support his courage and his battles in trying to reduce the crippling burden of the social security budget? In particular, may I commend his quiet courtesy this weekend in reminding the Archbishop of Canterbury that trapping people in dependency is not necessarily a Christian response? What the Secretary of State is doing is a good and positive way of making work pay.

Mr Duncan Smith: I am grateful to my hon. Friend. I have no issue whatever with the Church of England and the bishops saying whatever they believe. It is right and proper that they should argue with us and put pressure on us on a variety of issues. However, I do not agree that the way to get children out of poverty is to keep transferring more and more money to keeping people out of work. The reality is that we are having to reform a system that became completely out of control under the last Government and get in place a system that gets people back to work, because being in work is how people get their children out of poverty.

T2. [146872] Sheila Gilmore (Edinburgh East) (Lab): Mandatory reconsideration after employment and support allowance is refused and when somebody wants to appeal can lead to people being without either ESA or jobseeker’s allowance. Will the Minister ensure that a short time limit is set on reconsiderations so that people are not left without any income?

The Minister of State, Department for Work and Pensions (Mr Mark Hoban): Mandatory reconsideration is in place to help accelerate decision making, so that the Department can revisit a case rather than have to wait for it to go to the tribunal. We try to keep delays as short as possible to ensure that we get the right outcome and get the right support to people as quickly as possible.

T6. [146876] Paul Uppal (Wolverhampton South West) (Con): As the Minister may be aware, the number of private sector jobs in the west midlands decreased under the last Labour Government. Will he welcome the news, as I do, that Jaguar Land Rover is increasing investment in the engine plant in Wolverhampton by £150 million, creating an additional 700 high-skilled jobs?

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Mr Hoban: My hon. Friend is right to celebrate the achievements of Jaguar Land Rover. In national apprenticeship week, I commend him for his work to promote apprenticeships in his constituency. He is right, and he points the way towards how a private sector-led recovery can increase employment. That is why we have seen 107,000 additional jobs in the west midlands.

T5. [146875] Ann McKechin (Glasgow North) (Lab): Local housing associations in my area are deeply concerned about their ability to provide services as a result of this year’s welfare changes. What assessment will the Secretary of State make of their credit ratings, both this year and next? Does he expect them to go down the way?

Mr Duncan Smith: The best thing for me to do is to ensure that I write to the hon. Lady properly and place the reply in the Library of the House.

T7. [146877] Glyn Davies (Montgomeryshire) (Con): Last week we discussed in the House the treatment of women across the world. To deliver equality and fairness of treatment in the United Kingdom, we must ensure equal access to work and remuneration. Does my hon. Friend agree that it is important to make a continuing assessment of the number of women in work?

Mr Hoban: My hon. Friend will celebrate, as I did on international women’s day, the fact that there are record numbers of women in work and that the number of women unemployed has fallen by 29,000 over the past year. We need to do more to get women in work, and universal credit will help, but it is important also to celebrate the flexibility of the labour market, which enables more and more people to work part time to meet their responsibilities.

T9. [146880] Mr Jim Cunningham (Coventry South) (Lab): Why is the Secretary of State disregarding research by the National Housing Federation which shows that the discretionary fund to provide help with the bedroom tax is £100 million short of what is required?

Mr Duncan Smith: We are not. We listen to councils and everybody else who talks to us about these things, and ensure that we adjust accordingly. In reality, more than £280 million is going in discretionary payments direct to councils over two years to resolve these issues. That is more than ever before and I believe it is enough. We are asking councils to make sensible judgments that benefit the maximum number of people—tenants and those on housing benefit—in their areas.

T8. [146878] Mr Shailesh Vara (North West Cambridgeshire) (Con): What assessment has the Minister made of the support available to disabled people through the Access to Work programme?

The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey): Last year 30,000 disabled people were supported through Access to Work. We have extended that programme and added an extra £15 million, and it is working very well.

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Hywel Williams (Arfon) (PC): This afternoon I received a message in my inbox that was sent to all MPs and marked “importance: high”. It said that one-bedroom apartments, located in the most convenient and sought-after positions in the heart of St James’s, and including a spacious reception, double bedroom and fitted kitchen, were advertised at £390 per week although the landlord would take an offer to fall-in with the parliamentary allowance. Would the Secretary of State advise one of my Caernarfon constituents, currently luxuriating in a two-bedroom flat, to apply?

Mr Duncan Smith: No, I would not, and I hope that nobody else in the Chamber would be able to apply either—otherwise we may find out exactly what they are worth. The changes we are making with the spare room subsidy are to get rid of the subsidy that ordinary taxpayers are paying for people to under-occupy houses while many others live in overcrowded accommodation.

Mr Stewart Jackson (Peterborough) (Con): There is significant concern across the country about the likelihood of welfare dependency as a result of immigration from Romania and Bulgaria from January 2014. Will the Minister look urgently at the habitual residence test within the context of the free movement directive and ensure that such issues are addressed in good time?

Mr Hoban: I assure my hon. Friend that we apply a habitual residence test to see whether people moving from other EU states are entitled to means-tested benefits. We will continue to look at that test and at what more can be done to strengthen it.

Susan Elan Jones (Clwyd South) (Lab): Will the Secretary of State consider introducing a compulsory jobs guarantee for people who have been unemployed for two years or more?

Mr Hoban: The hon. Lady should be commended for trying to trot out a policy that I thought the Opposition had dropped two or three weeks ago. When such a scheme was piloted under the previous Government, it demonstrated that it was not good value for money or good for the unemployed. The hon. Lady should welcome the measures the Government are taking to get people into work. That is why record numbers of people are in work and unemployment has continued to fall for 11 months in a row.

Philip Davies (Shipley) (Con): Although the Labour party thinks that the benefit cap is too low, the majority of my constituents think it is far too high. May I urge the Secretary of State to ignore the left-wing bishops, who probably do not even speak for the majority of people who go to church each week, let alone the vast majority of the British people?

Mr Duncan Smith: I listen to everybody who gives me advice although I do not necessarily follow it. The Government are doing the right thing in bringing in a benefit cap, and for the first time ever people on low and average earnings will realise that at last those on benefits will not be paid more through their taxes than they themselves earn.

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Andy Sawford (Corby) (Lab/Co-op): I met the mother of Hayden, a three-year old boy in my constituency, who has just received a letter stating that she must now pay the bedroom tax. Hayden has sleep difficulties and often has disturbed nights. Should he be forced to share a room with his four-year-old sister who will now also be disturbed, or will it all be okay because there is a tiny amount of discretionary funding?

Mr Duncan Smith: I do wonder that the Labour party, which sat in government for 13 years, never once raised the issue of people living in overcrowded accommodation, and never once seemed to care that huge numbers of people were on the waiting list. Nevertheless, Labour Members bleat about those who are under-occupying and are being subsidised by poorer people who cannot find accommodation.

David Mowat (Warrington South) (Con): The Pensions Minister will have seen the recent press coverage about the high margins generated by annuity providers. That comes as no surprise given the complete market failure that has occurred in large parts of the private pension industry. Will he consider imposing a uniform product structure—as has been done in energy—and will he enforce legally the open market option?

Steve Webb: My hon. Friend has a good track record of challenging the issue of charges and value for money. The Association of British Insurers has just published its code of practice, to which members have to sign up, to ensure that instead of people just defaulting to the provider they save with, they shop around. We will monitor closely whether that makes the market more effective. [Interruption.] Opposition Members are shouting “Do something”, but they did not do something when they were in power.

Mr William Bain (Glasgow North East) (Lab): A constituent I met on Saturday is a divorced lone parent who works hard for a low income, and his children stay with him on three evenings a week. Why does the Secretary of State believe that such a hard-working individual should lose £12 a week under his hateful bedroom tax?

Mr Duncan Smith: Again, another hon. Member who does not know the difference between a subsidy and a tax. The reality is that those who do not occupy all the rooms in social housing are being subsidised by many of those who live in overcrowded accommodation. Let me remind the hon. Gentleman—Opposition Members do not like to be reminded—that under local housing allowance for the private social rented sector, which was introduced by the previous Labour Government, people were not allowed to occupy houses that had spare bedrooms.

Dr Julian Huppert (Cambridge) (LD): The Government’s under-occupancy policy relies on people being able to move into appropriately-sized housing, but in specific parts of the country that is very hard to achieve. Does the Secretary of State agree that no benefit reduction should take place until people have at least been offered somewhere appropriately sized and located? Will he make sure that there is enough discretionary housing budget for councils to ensure that that is the case?

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Mr Duncan Smith: I agree, particularly with the last part of the question. We have set aside £280 million over two years for councils to be able to negotiate and work out with their tenants the best and most amenable way to go. My hon. Friend’s question is constructive, in sharp contrast to the Opposition. All they can do is moan about a policy, but in 13 years they did nothing about overcrowding, with the lowest level of house building since the 1920s.

Helen Goodman (Bishop Auckland) (Lab): When the bedroom tax is introduced in my constituency, some people, who will be unable to move because properties are not available, will be left with £18 a week to live on. During the recess, I tried that to see what it would be

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like. I have had a lot of messages from members of the public asking me one question: will the Secretary of State try for a week to live on £18?

Mr Duncan Smith: When we made changes to local housing allowance, the hon. Lady and others prophesised that hundreds of thousands of people would be made homeless—they went up and down the country scaring everybody. The figures now show that our homeless figures are lower than the peak under the previous Labour Government.

Several hon. Members rose—

Mr Speaker: Order. I am sorry, but we must now move on.

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Overseas Aid (Private Sector Contracts)

3.32 pm

Mr Ivan Lewis (Bury South) (Lab) (Urgent Question): To ask the Secretary of State for International Development to make a statement on her Department’s policy on tied aid, and the criteria applied to private sector contracts in the light of briefings over the weekend and her recent speech to business leaders at the London stock exchange.

The Secretary of State for International Development (Justine Greening): I am delighted to update the House on my speech today. There is no change on the Government’s policy on tied aid. I was clear in my speech on 7 February, and again this morning when I said:

“I am not talking about tied aid. I do not believe that is the way to achieve good, sustainable development...It’s the wrong way to go about things.”

That answers the hon. Gentleman’s first point.

Department for International Development contracts are awarded in line with EU procurement regulations. The vast majority are subject to competitive tender. The evaluation process for large contracts includes an assessment of technical and commercial criteria, which are published at the outset of the tender. That answers his second question.

In relation to today’s speech on pursuing poverty reduction and an end to aid dependency through jobs, it is clear that economic growth is vital in developing countries. Wherever long-term per capita growth has been higher than 3%, we have seen significant falls in poverty. Sustainable public services in the developing world, as here in the UK, need a funding stream of tax receipts, and that means a thriving private sector. Today, therefore, I have been discussing how DFID will put increased emphasis on economic development, including through reducing overall barriers to trade and investment; unlocking the ability of entrepreneurs and business people in developing countries to drive economic growth through their own businesses; and fostering greater investment by business in developing countries and those in the UK. I want more businesses, including those in the UK, to join the development push with DFID. We all have the opportunity to help build up responsible trade with developing countries.

Finally, may I welcome the positive response from organisations such as CARE International and the Overseas Development Institute? The former said that

“it’s no longer an option for development agencies to view business as operating in a parallel universe”.

Mr Lewis: I would say to the Secretary of State that economic growth matters in all countries, although I thank her for her response, despite the fact that these policies should have been announced to the House first.

This year should have been a source of unity and pride for decent Members on both sides of the House and many campaigners across the country. This year, Britain should once again have been a light unto the nations, with the Government honouring Labour’s historic 0.7% commitment. Instead, over the past fortnight, we have seen two cynical interventions that threaten to undermine the UK’s global reputation for progressive development: first, the Prime Minister’s suggestion

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that holes in the defence budget would be plugged by aid money; and, secondly, the Secretary of State’s ill- advised briefings over the weekend, ahead of her speech today.

We support the private sector’s central role in stimulating jobs and growth in developing countries and welcome the fact that UK companies are seeking to access growing markets, but we are vehemently against tied aid, trickle-down economics and growth that has no focus on inequality or sustainability. I have several questions for the Secretary of State, therefore: first, why did she brief a return to tied aid over the weekend yet deny it today? Secondly, will she assure the House that no company engaged in tax dodging will receive any funding or support from DFID? Thirdly, will she confirm whether companies that are to receive DFID support will have to demonstrate decent employment practices, including acceptable levels of pay to workers in developing countries, throughout their supply chain? Fourthly, under what circumstances does she think that a British company should be awarded a contract in a developing country without having to compete in a fair and transparent tendering process?

As a substantial increase in the DFID budget is set to take effect, these interventions have nothing to do with the national interest or our commitment to the world’s poorest, but are an act of desperation by a Prime Minister who once earned cross-party respect for making the moral case for aid. He is now so weak that he is reduced to misleading the British people that UK aid in the future will largely be devoted to defence and UK business. The big society is gone, the green agenda is gone and now sound development policy has been undermined to satisfy the Tea party tendency in his party. It is the same old Tories.

Justine Greening: The Member asking an urgent question normally has some additional questions, but I do not think the hon. Gentleman asked any. He talked about the Daily Mail. We know from his time with the shadow Culture, Media and Sport brief that he is keen on muzzling the press. I noticed that, in spite of all his rhetoric, ultimately he supports what I am saying about getting business more involved in the development push. I must remind him, however, that it was this Government, not the previous Government, who set up a private sector department within DFID. He had 13 years to do that, but failed.

I also noticed how quickly the hon. Gentleman turned to highlighting the risks of businesses getting involved in development. The Government seek to mitigate those risks and are working hard on initiatives on transparency and governance. He will be aware of the ethical trading initiative, which looks at how we can ensure that companies get involved responsibly. I want to set out today not only how we can take steps to mitigate those risks, but how we can tap into the huge opportunities that business, particularly UK business, can offer developing countries to help them develop and, in doing so, lift the poorest people out of poverty. I believe that is not just in the UK national interest—although frankly it is in our national interest to be market-making and to see more economies in this world that we can trade in—but in those people’s interest too. Men or women in developing countries say they have one top priority: to get a job. We can work with business on that.

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Sir Gerald Howarth (Aldershot) (Con): I welcome my right hon. Friend’s statement this afternoon, but given that the £11 billion that she will have at her disposal this year comes entirely from the pockets of her, my and our collective constituents, is it not right that, wherever possible, it should be returned to British companies that offer first-class equipment and services to overseas countries, which are the beneficiaries of British taxpayers’ aid?

Justine Greening: UK companies have a key role to play. In fact, my hon. Friend will be interested to know that, in terms of their value, more than 90% of the contracts awarded by the Government go to UK companies. That is probably because those companies out-compete other companies, but also because we have a strong corporate governance structure, which many other countries seek to emulate.

Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): But is the Minister aware that there are genuine concerns that the objective of 0.7% of gross national income is being swallowed up—or might be—by it being diverted to the Ministry of Defence or some other Department? Does she not agree that development is about removing poverty and ensuring sustainable development? If we are to be convinced that the Government are on the right road, can we have some of the transparency that was promised, for example, in the International Development (Reporting and Transparency) Act 2006?

Justine Greening: On the right hon. Gentleman’s last point, we do have transparency. In fact, I think I am right in saying that my Department was rated as the most transparent organisation in the series of stakeholder organisations involved in development. In answer to his earlier question, he will be aware that the definition of official development assistance—as set out by the OECD and monitored by the development assistance committee, or DAC, the organisation that brings together donors—is clear cut, and we will stay within it.

Mr Peter Bone (Wellingborough) (Con): May I thank the shadow Minister for asking the question? I would like him to ask a lot more parliamentary questions such as that, because it is great to give the Secretary of State’s speeches a more widespread audience. She is absolutely right: the answer to the problem is not aid, but trade.

Justine Greening: I agree with my hon. Friend; indeed, so would the Indian Finance Minister, who said aid is the past, trade is the future. This is about ending aid dependency by driving growth and job creation.

Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op): The Secretary of State may wish to correct the record on the private sector team: there has been one in DFID for a number of years. After the Budget next week, will the proportion of the 0.7% commitment spent by Departments other than DFID—if they meet it—be increased, and if so by how much? Will she also confirm that all our spending will be in line with the terms of the International Development Act 2002?

Justine Greening: Our spending will be in line with the International Development Act 2002 and the ODA definition. The split of ODA across Departments can

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change. As the hon. Gentleman knows, we have done a lot of work with the Foreign Office and the Ministry of Defence in conflict and in fragile states. We will continue to look at how we can do that effectively, but I think I am less interested in where ODA sits than I am in the impact it has on the ground. If he really cares about getting the most out of the budget we have got, I hope he will prioritise that over taking cheap political shots.

Martin Horwood (Cheltenham) (LD): I welcome the Secretary of State’s statement. Drawing on my experience in Oxfam, rather than the Labour party’s sources in the Daily Mail, does she agree that private sector decisions have a disproportionate impact on people’s lives, for good or ill, and that we have to engage with the private sector to have a complete view of development?

Justine Greening: My hon. Friend is absolutely right. Major companies in the UK such as M&S know this as well—that is why it has NGOs such as Oxfam on its sustainable retail advisory board. It seems that the only people who have not caught up are the Opposition.

Gavin Shuker (Luton South) (Lab/Co-op): May I commend the Secretary of State for her courageous commitment to the 0.7% target, but say to her that the way to appease those on the Benches behind her who do not want that commitment to go through is not to try to sound right wing on aid, but to take on the argument?

Justine Greening: We have been making the case for international development, and I would say to the hon. Gentleman that what I have announced is what I think is the right thing to do; it is not about how I want to please anybody in the House.

Fiona Bruce (Congleton) (Con): I thank the Secretary of State for her announcement. Does she agree that many developing countries fundamentally aspire to the dignity of moving out of donor dependency, and that one of the best ways in which we can help them to do that is by strengthening their private sector? What role does she see for parliamentarians and for businesses in our local constituencies, following her policy announcement today?

Justine Greening: I agree with my hon. Friend about the impact that economic growth and jobs can have on reducing recipient country dependency. The President of Liberia, Ellen Johnson Sirleaf, has said that aid should not be an alternative to self-sufficiency. Developing countries want to plough their own furrow and take control of their own destiny. We want to reach out beyond the large companies with which we are already working, such as M&S, Diageo, Tesco, Sainsbury’s and other stock exchange-listed companies, to the small and medium-sized companies in Britain, to see whether we can get a broader base of companies to join the development push.

Richard Burden (Birmingham, Northfield) (Lab): Along with other members of the International Development Committee, I have just come back from Ethiopia, and I can tell the Secretary of State that DFID staff are already working with colleagues in other Government Departments to try to involve British business in development. There is nothing wrong with that, but will

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she accept that there is no easy line to be drawn between tied aid and untied aid? We have only to look at the way in which the United States’ development efforts work to understand the truth of that. The Tea party tendency that my hon. Friend the Member for Bury South (Mr Lewis) referred to is alive and well in her party, so how will she prevent her announcement today from being used in some quarters to—

Mr Speaker: Order. I think we have the gist of the hon. Gentleman’s question.

Justine Greening: The US Agency for International Development—USAID—would accept that part of its development spend takes the form of tied aid, but I have made it very clear that that is not what I am talking about here. I know that the hon. Gentleman finds this issue complex, and I accept that there are risks that we will need to manage, but they can be managed. Instead of seeing only the risks, we should see the opportunities too.

Tim Loughton (East Worthing and Shoreham) (Con): I commend my right hon. Friend for her patience when listening to such sanctimonious drivel from the other side. Does she agree that while well-targeted aid from agencies can alleviate poverty and suffering in the short term, it is only through private business helping to eliminate poverty through micro-finance and through using private ownership, private innovation and private employment that we can achieve a long-term solution to the poverty that she and I are both striving to eliminate?

Justine Greening: My hon. Friend is absolutely right. There is another reason that the involvement of the smallest companies in developing countries is so important. Many of them are agricultural smallholdings run by women, and we know that if they can invest in and grow those businesses, 90% of the income will be reinvested in their families and communities, providing a double bonus.

Fiona O’Donnell (East Lothian) (Lab): In her response to the shadow Secretary of State, the right hon. Lady rightly mentioned the need to increase tax receipts in developing countries and to have responsible trade. Has she had any discussions with the Chancellor of the Exchequer to advance those two causes ahead of next week’s Budget?

Justine Greening: The hon. Lady might have seen that I have today set out our plans to work with Her Majesty’s Revenue and Customs to set up a tax capacity-building unit, which will provide tax expertise to developing countries to help them to broaden their tax base and improve their tax collection. The Chancellor has made it clear that we want to see real progress on tax and tax transparency at the G8, which is why they are on the agenda.

Pauline Latham (Mid Derbyshire) (Con): The hon. Member for Birmingham, Northfield (Richard Burden) and I came back from Ethiopia last week. A company called Pittards is investing money from this country to upskill people there—it has helped 1,500 so far and it wants to get up to 5,000. It is paying more than the

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minimum wage. Does the Secretary of State agree that that is the best way for companies to invest, to get the right products coming back to this country and exported all over the world, and to get women into better jobs?

Justine Greening: I completely agree. My hon. Friend has provided a really good example of how this can work in practice. Another good example would be Taylors of Harrogate, which has worked to improve its tea collection and tea capability in Rwanda. It has not only improved things but brought about new products that benefit us all. This is a really practical way of lifting the poorest people in developing countries out of poverty—not just through cash transfers, but by genuinely providing them with what they want: a job.

Andrew Gwynne (Denton and Reddish) (Lab): I was pleased to hear the Secretary of State refer to ethical standards in her response to my hon. Friend the Member for Bury South (Mr Lewis). Will she outline what standards her Department requires private sector-led DFID projects to meet in respect of work and labour?

Justine Greening: In my answer to the shadow Secretary of State, I set out the criteria we use for giving out contracts. We need to engage with the CBI—we have already had initial meetings—on how to get a more structured approach to responsibly engaging business in the development push. It is right to point out that there is a good way and a bad way of doing this, as the hon. Member for Denton and Reddish (Andrew Gwynne) says. The key thing for today is to engage in a process, working with the CBI, industry federation bodies, non-governmental organisations and stakeholders, business schools around Britain and other communities, about how to develop a proper strategy for getting business involved in the development push. That is what I want to see happen. To date, we have done a number of ad hoc projects, but now we need to pull them together and develop a more holistic strategy.

Mr Henry Bellingham (North West Norfolk) (Con): I congratulate the Secretary of State on her excellent speech this morning, and I particularly welcome what she said about relieving poverty through trade. Does she agree that one of the best ways of unlocking wealth creation is through free trade agreements in developing countries? Would she particularly welcome Trademark East Africa, a Southern African Development Community- led tripartite agreement?

Justine Greening: Yes, I would. DFID has supported the Trademark East Africa initiative, and my hon. Friend will be aware that African Union leaders want to create a free trade area by 2017. It is an ambitious plan, but one that we should support.

Kevin Brennan (Cardiff West) (Lab): Last Friday, I received a group of constituents from the IF campaign, Enough Food for Everyone, who asked me to seek assurances from the Government and the Secretary of State that the commitment to the 0.7% gross national income figure remains as strong as ever, and that she will resist any attempts to overturn it. What words of assurance can she give to my constituents?

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Justine Greening: I think we can be judged by our deeds, and also by the fact that I am wearing an IF campaign bracelet here today.

Jeremy Lefroy (Stafford) (Con): As chairman of the all-party group on Tanzania, I can say that the UK is the biggest investor and one of the biggest traders with, and donors to, Tanzania. Does my right hon. Friend agree that aid does not need to be tied to be beneficial to the UK?

Justine Greening: My hon. Friend is absolutely right. We are talking about having a balanced approach with these countries, developing their public sector, but also helping them to develop their private sector. He is right to say that, ultimately, that is the best way to see change on the ground. I would like to see UK business and companies getting more involved with that as a means of supporting it.

Chris Bryant (Rhondda) (Lab): Contrary to some of the rhetoric we have heard from the Government on immigration, the vectors that lead to people from these countries coming to this country and elsewhere in Europe are not the benefit system, but poverty, famine, war and insecurity in their own countries. Surely, then, part of our argument to people who are worried about our spending money on development must be that it is in our best interests to enable people to live a decent, healthy life in their home and stay there.

Justine Greening: I never thought I would say this, but I agree with the hon. Gentleman!

James Duddridge (Rochford and Southend East) (Con): Does the Secretary of State agree that it is somewhat surprising to see the Opposition Front-Bench team being so negative, because this project builds on the good work done not just by this Secretary of State and the previous Secretary of State, my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), but by the last Labour Government? In fact, the best example I can find of this succeeding was started by the last Labour Government, so perhaps they should be praising us. I refer to the Vodafone and M-Pesa deal—the type of deal we should do a lot more of, yet exactly the type of deal they are criticising today.

Justine Greening: I agree: it is pretty bizarre. I think that we should ramp up this work, because it can have real benefits for people in developing countries. I thank my hon. Friend for his interest and his efforts, which have been incredibly important.

Dr Eilidh Whiteford (Banff and Buchan) (SNP): Last week the Secretary of State spoke about the needs of women and girls in the context of development. What explicit commitments to gender equality have been built into the Government’s plans to promote economic growth and responsible trade in developing countries, and how will that be measured?

Justine Greening: Ensuring that we understand the impact of our programmes on women and girls is increasingly dependent on our obtaining good facts—in other words, gender-disaggregated data. All our country programmes involve thinking about how the work that

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we do affects women and girls. When discussing our economic development strategy with business leaders this morning, I made clear to them that the issue of women and girls is perhaps the most powerful in driving changes on the ground, not just short-term changes through the alleviation of poverty but changes in attitudes towards women.

Mark Pritchard (The Wrekin) (Con): I congratulate the Secretary of State on her excellent statement. I believe that the current millennium development goals expire in 2015, and that—as discussed in Liberia—economic development may be one of the new goals. In my view, the public sector does not have all the answers and neither does the private sector. Might not a combination of public and private deliver some of the answers for sustainable development?

Justine Greening: My hon. Friend is absolutely right. No one can achieve this agenda on their own. We have been working on it, but we must increasingly work on it together, adopting a single strategy rather than disparate parts. I agree with CARE that we should stop working in, as it were, a parallel universe with businesses, and start working in the same world.

Jane Ellison (Battersea) (Con): Before entering Parliament, I worked for one of many good private sector companies, the John Lewis Partnership, which, through both John Lewis and Waitrose, does terrific work with suppliers overseas. Does my right hon. Friend agree that it is rather depressing that the Labour party has so little faith in the ability of such private sector companies to do good in relation to this agenda?

Justine Greening: My hon. Friend is very well placed to ask that question, and she is entirely right. I think that we should be proud of the work of companies such as John Lewis and Waitrose, which not only makes business sense for them but makes a huge difference to the thousands of young people whom they are not only employing but “skilling up” in countries such as South Africa. We are delighted to be working with Waitrose. It is projects of that kind that have led me to announce today that I want to do more, and to do it in a more structured way.

Let me also thank my hon. Friend for the incredibly important work that she has been doing in raising awareness of female genital mutilation.

Geoffrey Clifton-Brown (The Cotswolds) (Con): Does my right hon. Friend agree that the public sector is often too large in the poorest countries in the world? Is not the best way in which her Department can help to release people from poverty sustainably to create a climate in which the private sector in those countries can flourish? Has that not been proved in countries such as Vietnam?

Justine Greening: My hon. Friend is right. Part of DFID’s work involves helping to create developing-country environments that are, as it were, “investable in”. That means pursuing the Prime Minister’s “golden thread” agenda in relation to the rule of law, the ability to set up contracts and the establishment of the right legal base. Those will all be key ingredients if we are to see business flourish in developing economies.

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Damian Hinds (East Hampshire) (Con): Does my right hon. Friend agree with the business leaders who are quoted in today’s Financial Times as saying that the prospects of the world’s poorest people are increasingly being defined by what businesses do, alongside the established work of Governments? Cannot private sector development simultaneously help those people, and economies throughout the rest of the world—including our own—through specialisation, trade and economic growth?

Justine Greening: The short answers to that question are yes and yes. As was pointed out in the Financial Times, aid and business constitute a crucial alliance, which we must try to bind more closely.

Richard Fuller (Bedford) (Con): It is no surprise, is it, that the Labour party’s hostility to the private sector led Opposition Members to miss my right hon. Friend’s observation that ignoring that sector’s role in development was like trying to win a football match by leaving half one’s team on the bench? Can she add to her excellent list of initiatives an initiative to tap the entrepreneurial potential of Britain’s various diaspora communities by supporting development in their countries of origin?

Justine Greening: My hon. Friend will not be surprised to hear that this issue was raised after my speech in this morning’s question and answer session, and it is an incredibly powerful one. I believe that this country has more natural links to many of these developing economies than almost any other country in the world. We should be making the most of those and allowing our diasporas also to be part of helping the countries to which they have family links to develop.

Mr Graham Stuart (Beverley and Holderness) (Con): Trade with the developing world was an insufficient priority of the previous Administration, yet it is economic dynamism, not dependency, that our development spend should be seeking to encourage. I congratulate my right hon. Friend on her speech. Does she agree that British education companies have a key role to play in developing the economic strength of developing countries, which will be good both for them and for us?

Justine Greening: I do agree and, for example, we are talking with Pearson about how we can work more closely with it in places such as Pakistan. A number of sectors in our country’s economy have real value to add. We have talked a lot about retail today, but education is yet another sector where we have so much knowledge and so many skills. We can pass those things on to developing economies, and it is in everybody’s interests to do so.

Andrew Jones (Harrogate and Knaresborough) (Con): I welcome my right hon. Friend’s statement, and I noted her mention of my former employer, Taylors of Harrogate, in both her speech this morning and in the

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House this afternoon. Does she agree that trade and partnership, thus creating sustainable economic growth, is the key to taking people out of poverty?

Justine Greening: It certainly is, and statistically we have seen that that equation absolutely holds. As anybody who has ever been to Harrogate will be aware, it is definitely worth while dropping into Bettys, where people can sample some fantastic Taylors of Harrogate tea.

Glyn Davies (Montgomeryshire) (Con): I congratulate the Secretary of State and the Prime Minister on their continuing commitment to standing by our international obligations to United Nations targets. Does the Secretary of State accept that it is crucial to focus on effectiveness, flexibility and value for money in each situation? Does she agree that that will be done sometimes through supporting security and sometimes through humanitarian aid, but always by using the dynamism of the private sector to maximise the long-term impact?

Justine Greening: My hon. Friend is right. Even when we are building up core basic services, the innovation of the private sector has a real role to play, and my Department has sought to tap into that. There is a strategic question about what we need to do for ourselves and what expertise we buy in from outside, but there is no doubt a key role for the private sector to play.

Gavin Williamson (South Staffordshire) (Con): Will my right hon. Friend use her position to encourage both her Department and the many aid organisations that it supports and funds to start buying more British-manufactured vehicles? Far too often we see foreign-manufactured vehicles being purchased by aid organisations, even though we all know that the best 4x4s are manufactured in the midlands and have a Land Rover badge on the front of them.

Justine Greening: My hon. Friend has made his point, and I am sure that the non-governmental organisations will have been listening to this urgent question and will have taken note accordingly. As I have said, we aim to get best value for the taxpayer, and I am sure that in many cases that best value is indeed British.

David Mowat (Warrington South) (Con): Fifty years ago, South Korea had the same GDP per head as Ghana and now its figure is about the same as the UK’s. This has been achieved by trade, not principally aid. What more could the Department do to ensure that there are more South Koreas—we hope in sub-Saharan Africa—in the next 50 years?

Justine Greening: In the past decade, sub-Saharan Africa has probably had one of the fastest growth rates in the global economy. As my speech set out, and as my hon. Friend rightly says, we need to do more work in this area and to work in the business environment to really drive economic development and jobs.

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Point of Order

4.4 pm

Chris Bryant (Rhondda) (Lab): On a point of order, Mr Speaker. You will recall that last year the Prime Minister said that he wanted to be as open and transparent as possible about public meetings held by Ministers and that Ministers would publish all meetings with outside bodies on a quarterly basis. You will also recall—I remember you were in the Chair at the time—that earlier this year the Secretary of State for Culture, Media and Sport said that they were being published in the usual fashion and that if they were not she would ensure that they were. It now transpires that the Prime Minister’s meetings with the proprietors and editors of national newspapers were not published until very recently for any date beyond last June. Now we have the information for up until September. This very afternoon, serious decisions are being made about what should be done to implement the Leveson inquiry and to introduce legislation to this House. Will you confirm that the Secretary of State for Culture, Media and Sport could, if she wanted, either hasten the publication of further information so that we all know exactly who the Prime Minister has been meeting with, or correct the record, as what she said earlier this year was not strictly speaking accurate?

Mr Speaker: It would be open to the Secretary of State to opt for either of the courses of action that the hon. Gentleman has helpfully described. We will leave it there.

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Financial Services (Banking Reform) Bill

[Relevant documents: The First Report from the Parliamentary Commission on Banking Standards, HC848, and the Government response thereto, Cm 8545; and the Second Report from the Parliamentary Commission on Banking Standards,Banking reform: towards the right structure, HC 1012.]

Second Reading

4.5 pm

The Financial Secretary to the Treasury (Greg Clark): I beg to move, That the Bill be now read a Second time.

The Bill has a simple objective at its heart, which is to answer what the Chancellor has called the British dilemma: how can Britain be one of the world’s leading financial centres without exposing ordinary working people in this country to the terrible costs of banks failing?

Let me illustrate both sides of the dilemma. The financial services sector is one of our most important industries. Together with related services, it employs around 2 million people in this country, two thirds of whom work outside London. Even in the recession, financial services contribute about £1 in every £8 of government revenue to pay for public services. The industry is by far our biggest exporter, generating last year a £47 billion surplus from overseas trade and providing us with vital foreign exchange earnings.

Mr Andrew Love (Edmonton) (Lab/Co-op): The Chancellor is on record as saying that this is a critical piece of legislation if we are to get the banking system right, yet he chooses not to appear before us today. There has been no explanation of why the Chancellor is not in the Chamber. Could the right hon. Gentleman give us one?

Greg Clark: I should have thought it was reasonable for the Financial Secretary to the Treasury to introduce a Bill on financial services.

Let me continue to make my point. The financial services sector is of great importance to Britain, but that importance carries risks for this country. At their peak, the banks’ balance sheets amounted to 500% of UK GDP, compared with 100% in the US and 300% in France and Germany. In 2008, for example, the Royal Bank of Scotland was the biggest bank in the world and, as we all know, Britain also witnessed the first bank run for more than a century, with depositors queuing in the streets to get their savings out of Northern Rock. RBS and HBOS had to be bailed out, with £65 billion of taxpayers’ money needed to shore up the banks.

The system of regulation failed, as did the culture of the banking sector, in not preventing and resolving the crisis without recourse to taxpayers’ money or otherwise putting people’s deposits at risk. That is why fundamental reform was needed, the first pillar of which has been put in place through the passage of the Financial Services Act 2012, which received Royal Assent in December and establishes a clear and distinct role for prudential regulation and conduct regulation, a role that was blurred and ineffective.

The Bill is the second pillar of those reforms and it reflects the considered views of no fewer than two expert commissions. The first, chaired by Sir John Vickers, was the Independent Commission on Banking, whereas

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the second, chaired by my hon. Friend the Member for Chichester (Mr Tyrie), was the Parliamentary Commission on Banking Standards, on which many Members of the House served.

Let me say something about the process we followed, briefly summarise how the Bill reflects the recommendations of each commission and then explain in some detail the rationale for the few remaining areas in which the Government’s proposed approach differs.

Alison McGovern (Wirral South) (Lab): In his discussion of the process, will the Financial Secretary explain why, given that the crash in 2008 to which the Bill is a response was one of the most momentous economic events in my lifetime and the lifetimes of many people, and given the importance of its proposals, the Chancellor did not see fit to lead the debate today?

Greg Clark: I am disappointed that my presence here does not satisfy the hon. Lady. The Chancellor trusts his Financial Secretary to speak at the Dispatch Box. I do not know how it is in the Opposition.

Chris Leslie (Nottingham East) (Lab/Co-op): Will the Minister at least tell us where the Chancellor is? Is he watching on television? Is he doing some shopping or knitting? What is going on? Where is the Chancellor right now?

Greg Clark: I should have thought that the hon. Gentleman would reflect on the fact that the Chancellor has many serious responsibilities and he is discharging them at the moment.

Let me talk about the process that we have followed, then I will address in some detail the particular aspects of content. The process that we have followed has sought to come up with the best possible way to address the dilemma that I described, and to do so by building, as far as possible, a broad consensus. That may not be there—yet—on every particular, but I think most Members would concede that Sir John Vickers’ commission has come closer to achieving that than many people thought possible.

The Independent Commission on Banking was established as soon as possible after the general election, in June 2010. It took extensive evidence before publishing an issues paper in September 2010 and an interim report in April 2011, on which it consulted, before publishing its final report in September 2011. The Government gave, and consulted on, an initial response in December 2011, before issuing a White Paper for consultation in June 2012. In the light of the responses to the consultation, a draft Bill was published last October and the Parliamentary Commission on Banking Standards was asked to subject it to pre-legislative scrutiny. The parliamentary commission’s report was published on 21 December last year and many of its recommendations were accepted in the Bill published in February and laid before the House.

At the time of introduction, I made it clear from the Dispatch Box that we would table further amendments in response to the commission’s future recommendations as the Bill proceeds through both Houses. I hope that Members on all sides would agree that this has been an exceptionally extensive process of both policy development and scrutiny of emerging proposals, and I repeat what

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I said to the right hon. Member for Wolverhampton South East (Mr McFadden) last month, that I will personally insist on taking a constructive and open-minded approach to the views of this House throughout the Bill’s passage. To the extent that the Bill reflects the unanimous views of Parliament, it is immeasurably strengthened.

Kelvin Hopkins (Luton North) (Lab): Does the Minister accept that one of the major factors in the 2008 crisis was the complete failure of the auditing sector to get a grip on what banks were doing? Will he be putting forward proposals for strengthening audit for the future?

Greg Clark: That was not a set of particular recommendations in the reports that were commissioned, but I know that it is of some interest to members of the parliamentary commission and, as I will go on to say, we stand ready to consider their further recommendations, and I dare say they might have something to say in that respect.

Chris Leslie: I want to pick up on the Minister’s statement that he wants to take this parliamentary process seriously and listen to the debates. If that is the case, why on earth has he ignored the clear recommendation of the Parliamentary Commission on Banking Standards that there should be a three-month gap between the publication of the Bill and the Committee stage in the House of Commons? We will not have a Committee stage at a time when we can fully take account of the final recommendations of the commission. Is that not totally contemptuous of the Commons parliamentary procedures? Perhaps that is why the Chancellor has not turned up for the debate.

Greg Clark: I just said that I intend to be constructive and to pursue the approach that we have taken. If the hon. Gentleman will be patient, I will respond shortly to that particular recommendation.

Let me summarise the principal contents of the Bill where they reflect the advice of one or both of the commissions, before I set out the areas in which we take a different view. One of the central recommendations of the Independent Commission on Banking is that the UK banks should ring-fence

“those banking activities where continuous provision of service is vital to the economy and to a bank’s customers.”

That recommendation has attracted widespread support, and the Bill creates the basic architecture of the ring fence by making it an objective of the regulator—the Prudential Regulation Authority and, if necessary, the Financial Conduct Authority—to secure the continuity of core services by preventing ring-fenced bodies from exposing themselves to excessive risks, by protecting them from external risks, and by ensuring that, in the event of failure, core activities can carry on uninterrupted, the so-called resolution objective. The core activities are defined, as recommended by Vickers, as the taking of retail and small and medium-sized enterprise deposits and overdrafts, but they can be added to if required through secondary legislation.

In response to the parliamentary commission’s recommendations, the Bill is now clear that to be ring-fenced means that the five so-called Haldane principles of separation should be followed, namely that the ring-fenced

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bodies should have separate governances, including boards; remuneration arrangements; treasury and balance sheet management; risk management; and human resource management. As the parliamentary commission has also recommended, directors of banks will be held personally responsible for ensuring that the ring-fence rules are obeyed. The parliamentary commission also made a recommendation that the ring fence should be electrified. That is to say that, if the rules are breached, the banks should be forcibly split.

While the Bill is before the House, the Government will bring forward amendments to provide a power to require the full separation of a banking group, where, in the opinion of the regulator and the Government, such separation is required to ensure the independence of the ring-fenced bank. As hon. Members know, the parliamentary commission made a further recommendation for a power to trigger separation of the entire system, which I will come to shortly.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): How confident is the Minister that over the coming years the all-powerful financial lobby will not water down the ring fence and return to a business as usual scenario?

Greg Clark: That is a principal source of concern. Sir John Vickers, the author of the report, has given evidence in public that he is confident that the arrangements are robust, but we reflected on one of the recommendations of the parliamentary commission to provide this electrification so that there are consequences for a bank that tries to game the system. That is right and it is a valuable contribution from the commission.

Mr Andrew Tyrie (Chichester) (Con): Sir John Vickers has in evidence to us also endorsed in full our proposals for electrification, part of which the Government are rejecting.

Greg Clark: I will deal with the important recommendation made by my hon. Friend’s commission very shortly.

For the sake of completeness, let me summarise the Bill’s other main provisions.

Stewart Hosie (Dundee East) (SNP): The Minister said that electrification would work because the regulator—the PRA or the FCA where a financial institution is not PRA-regulated—will be given the power to ensure core services. Does he see any issues arising if the PRA and the FCA perhaps take a different approach to what they might do to the same institution? Is there a concern about two different regulators looking at different institutions on the same matter?

Greg Clark: The hon. Gentleman makes an important point, which we considered in drafting the Bill. We would expect all of these activities and institutions to be regulated by the PRA. The FCA was included in the Bill as a means of ensuring that if some other activities were to take place in the future—although we do not envisage that happening—it would not be necessary to come back to the House. That is our clear intention.

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Let me summarise what the Bill does include before I go on to talk about what it does not. As proposed by the independent commission, the Bill provides that deposits protected by the Financial Services Compensation Scheme—the deposits of individuals and small businesses up to £85,000—will be preferential debts in insolvency. The Bill provides the regulator with the power to require ring-fenced banks to maintain a buffer of at least 17% of what is referred to as the primary loss absorbing capacity—that is, equity, other non-equity capital instruments, and debt that can be written down or converted into equity in the event that a bank fails. This allows losses to fall on the bank’s wholesale creditors—sophisticated financial investors—rather than on ordinary taxpayers, as was the case with RBS.

A legitimate question arises as to whether additional loss absorbency requirements should apply, in an international financial centre such as the United Kingdom, to the overseas operations of UK-based global banks. This has been much debated in the House, both before the parliamentary commission and elsewhere. It is obviously right that where the overseas businesses of a UK-based bank could pose a threat to UK financial stability, or to the British taxpayer, that bank should issue loss-absorbing debt against the entirety of its group operations. Equally, where overseas units do not pose such a threat they should be exempt from loss-absorbing debt requirements, not least to avoid creating a false impression that the UK somehow stands behind those overseas businesses.

The question that has exercised the commission is this: who should decide? The Government have listened to the Financial Services Authority and the parliamentary commission on how that should work. We agree that the requirement should follow the strategy for managing the failure of each group, know as the resolution strategy. Where a UK parent company will provide support to resolve failing overseas operations, the regulator must ensure that the parent company issues loss-absorbing debt against the entire group. However, where a bank’s overseas subsidiaries would be resolved locally by overseas regulators without reliance on the UK parent, the parent company should not be required to issue loss-absorbing debt against those overseas subsidiaries. Crucially, it will not be the bank’s call but the decision of the regulator and the Treasury as to whether group primary loss-absorbing capacity—PLAC—should be held.

Mr Love: Of course, the UK regulator will have to know whether the third-country regulator will accept responsibility for the subsidiary. How does the Minister intend to ensure that the UK regulator can be reassured that the third-country regulator will accept responsibility for the subsidiary should it get into trouble?

Greg Clark: The hon. Gentleman is absolutely right. That will be one of the requirements—the regulator, and indeed the Treasury, will need to be satisfied by the bank that the overseas regulator has accepted, and credible arrangements are in place, to ensure that no liabilities will fall on the UK taxpayer.

Mr Tyrie: I apologise for interrupting the Minister a second time. Just to be clear, will it be the regulator or the Treasury that will ultimately decide what constitutes adequate PLAC? A moment ago he referred to the regulator and the Treasury. Which will it be?

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Greg Clark: The resolution plans have to be agreed between the regulator and the Treasury, so both will have that responsibility.

Stewart Hosie: Just to get some clarity on the previous point about the relationship with overseas regulators, if both the Treasury and the regulator are required to be convinced of the plan, how will that work in the relationship with, say, the single supervisory mechanism in Europe? Will it, too, not be required to be convinced, or at least will discussions not have to take place, to determine first where liability might lie and then whether the resolution plans are adequate?

Greg Clark: The reason for arranging this through the resolution plans is that they should be agreed in advance and everyone should be clear who will be responsible. It is no good the Treasury or the regulator in this country thinking that an overseas jurisdiction will pick up the bill if they were actually blissfully ignorant of it, so the hon. Gentleman is absolutely right that there has to be that clarity.

As I promised on 4 February, I have provided Parliament with drafts of the principal statutory instruments so that the House, while scrutinising the Bill in detail, can understand more clearly how the powers that the Bill grants are intended to be used. As a further aid to scrutiny, I will also make available to the House, in advance of consideration in Committee, a so-called Keeling schedule giving a consolidated text of those parts of the Financial Services and Markets Act 2000 that will be amended by the Bill, including the amendments the Bill will make.

Let me turn to some of the relatively few recommendations of either the Independent Commission on Banking or the parliamentary commission on which the Government have not been persuaded. There are four main areas to consider. The first is the timing of scrutiny, which the hon. Member for Nottingham East (Chris Leslie) mentioned. I hope that hon. Members will accept, from the process I described earlier, that these proposals have already benefitted from an exceptional degree of consideration, both in the amount and, if I may say so, in the august quality of its scrutineers. It will soon be three years since the Vickers commission began its work, and it is less than two years until all the secondary legislation must be enacted if this work is to be completed in this Parliament, as I think we all hope it will be. The Bill is comparatively short—20 clauses— and the time envisaged for its Committee stage is not unreasonable for consideration of all the amendments proposed by the parliamentary commission in its report published today.

However, I know that the parliamentary commission has other advice to give, and I welcome its commitment to produce its final report by the middle of May. Once we have received the commission’s advice, we will of course want the chance to be able to take it. I therefore give this commitment: subject to the usual channels, I will make sure that this House has enough opportunity to consider and debate whatever further recommendations the commission makes in its final report.

Mr Love: I thank the right hon. Gentleman for that commitment. Another issue that made life more difficult for the parliamentary commission was the lack of any

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knowledge of the delegated legislation that he has said will go through the House. Will he give some indication as to when that will be published so that although the parliamentary commission might not have that information available to it, the Public Bill Committee may?

Greg Clark: I am grateful for the hon. Gentleman’s point. As I said, I have published some of the principal statutory instruments and more will be available before the Bill goes into Committee. I will make sure that the House has access to the principal measures; as he knows, minor measures will sometimes follow. I repeat that it is absolutely my intention that the Bill should be properly considered and scrutinised by this House. The strength of these arrangements will benefit from their being exhaustively considered and enjoying the full confidence of the House.

Mr Tyrie: I apologise for interrupting for a third time, but I want to clarify the scrutiny question. The Government intend to get the Bill out of Committee before the date that the Banking Commission had proposed that it should go into Committee. Therefore, this all boils down to how much time we are going to get on Report. Will the Minister now, at the Dispatch Box, give a commitment to two days on Report?

Greg Clark: I cannot do that, but I repeat my commitment that this House will have the opportunity fully to consider the amendments proposed by my hon. Friend’s commission. He has not yet produced his report, so we do not know what he has in mind, but I have been as clear as I can at the Dispatch Box that there is no intent to avoid scrutiny; quite the opposite.

Chris Leslie: The Minister talks in very emollient tones, because he likes to sound moderate, but this is a series of instances of contempt for the House of Commons’ powers and our ability to scrutinise the Bill. The Government ignore the recommendation of the parliamentary commission, they then try to whisk the thing out of Committee before we have even had a chance to consider the recommendations of the commission, and now, when asked for a mere two days on Report, the Minister will not even give that commitment. The Chancellor is not here, either. In what seriousness do the Government hold this Bill? There is a sense that it is just part of a rubber-stamping exercise for them.

Greg Clark: The hon. Gentleman will discover that through our debates in Committee he will have plenty of opportunity to scrutinise the Bill. When we have the commission’s recommendations, if we think that they need more than a day on Report then I will make the case for that. Whatever happens, I will ensure that this House has the opportunity fully to consider these matters.

Mr Pat McFadden (Wolverhampton South East) (Lab): I am afraid that I want to press the Minister further on the same point. He said that the Government would ensure that there was full consideration in this House of further recommendations from the Parliamentary Commission on Banking Standards, yet the timetabling motion that he will move later says:

“Proceedings in the Public Bill Committee shall…be brought to a conclusion on Thursday 18 April”.

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That is before the date of the parliamentary commission’s final report. How meaningful will be his commitment to full consideration of those proposals, given that he is rushing the Bill through Committee before the commission, which I remind the House was set up by the Chancellor, has even issued its final report?

Greg Clark: The right hon. Gentleman will find that he is satisfied with the scrutiny that is available. It is a question of chickens and eggs. We have not yet had the recommendations of the commission, on which he serves. When it makes its recommendations, if we think that they require more time then we will certainly make sure that there is plenty of opportunity for the House to scrutinise these matters.

Ed Balls (Morley and Outwood) (Lab/Co-op): Will the Minister give way?

Greg Clark: I will give way for the last time.

Ed Balls: I remind the Minister that, around the time of the LIBOR scandal a year ago, a serious proposal by the Opposition for a full, open public inquiry into these issues was rejected by the Chancellor in favour of a parliamentary commission. The commission’s recommendations on process as well as substance and the House of Commons’ scrutiny of its recommendations —which will not even have been made by the time the Committee stage is complete—are being treated in a way that is very much against the spirit of the Chancellor’s announcement last summer, when he rejected a full public inquiry. If the Minister can get hold of the Chancellor before the vote at 10 pm, he should tell him that the Government should reconsider the contemptuous way in which they are treating the House of Commons and the all-party parliamentary commission of both Houses. It is not in line with the spirit of the discussions that the Chancellor had last summer with the chair of the commission, the hon. Member for Chichester (Mr Tyrie).

Greg Clark: The right hon. Gentleman will find that he will be perfectly satisfied with the degree of scrutiny that the recommendations, which have not yet been made, will receive. I have made that commitment and he will see it in time, even if he is not very trusting at this stage. I hope he will change his view.

One of the parliamentary commission’s policy recommendations was for a general reserve power to split up the entire banking system if it were considered to be appropriate in future. The Chancellor, the chairman of the commission—my hon. Friend the Member for Chichester—and, indeed, the Archbishop of Canterbury had a learned and erudite discussion about the origin of the sword of Damocles metaphor. The Government’s view is that such a power would, in effect, introduce a different policy—one that was considered and rejected by the Independent Commission on Banking, which concluded that full separation would have higher costs for a gain