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As we have argued on previous amendments, it is the vulnerable who are most affected by the Bill. This is particularly so for those on ESA for two specific reasons. They are much less able to increase their income through work and their living costs are generally higher. This is particularly so for those in the support group, who are furthest from the labour market, but also for those in the WRAG. It is worth remembering that there is a rigorous testing process for people who are unable to work due to ill health or disability. We know that the gateway to this benefit is tough. Although the process involving Atos has been improved, there are still many who end up on ESA only after a successful appeal.
Although individuals in the WRAG are closer to the labour market through their conditionality or otherwise, the route to paid work is not easy, as the noble Lord, Lord Low, said. We know that the Work Programme has not covered itself in glory in this regard. As things currently stand, individuals in the WRAG will lose something like £191 a year by 2015 as a result of this Bill. Those in the support group will fare little better in terms of income, being some £138 a year worse off by that date.
Macmillan has specifically drawn our attention to how these measures will affect people with cancer. Its estimate is that in excess of 40,000 cancer patients will be claiming ESA by 2015 with the presumption that they will be placed in the support group. Macmillan particularly stresses the impact of rising energy bills on this group. Like the noble Lord, Lord Low, I remind the Secretary of State that he should fulfil his commitment to make sure that people on ESA are being fully protected.
The noble Lord, Lord Brooke, challenged me to say where we think the money should come from. I thought I made it clear in the first debate that we think the Government should not proceed with the tax cut that is proposed for those earning £150,000 a year. The proposed tax cut from 50% to 45% would be a source of revenue. The Government say that this will not produce very much, but that assumes that people can get away with planning their income to defeat the thrust of that change. If the Government are alert to that, they could garner that revenue and we believe they should.
There is a wider argument about the extent of debt that can be sustained. The point I come back to is that the greater the failure of the Government in their economic policy-the greater the paucity or lack of growth in the economy-the more it will be necessary for the Government to borrow. If the Government can get growth back into the economy, that begins to ease the debt burden. There is another source there.
I also remind the noble Lord that these amendments take ESA out of the fixed uprating-the collar that this Bill puts around them-so a judgment would have
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It is clear from that combination of reasons that this proposal can and should be supported. It is not constrained by the economic position of the Government. It is the Government that have got themselves into a bind because they have failed to generate growth in the economy.
Lord King of Bridgwater:As the noble Lord understands some of the complexities of this matter which many others may find more difficult, what does he assess the cost of this amendment would be over the next few years?
Lord McKenzie of Luton: The total cost is certainly less than that proposed for the totality of the arrangements in the Bill. It would be a portion of that. The number of people in the support group is something like 200,000 and there are around 300,000 in the WRAG. If you assumed you were looking at a difference between uprating by inflation and uprating by 1%, that would be the calculation. I stress that this amendment is saying that you simply take ESA out of the 1% collar, and it leaves open the question of whether uprating next year and the year after should be by whatever inflation is then. However, this amendment does not put a figure on it.
Lord King of Bridgwater: The noble Lord is a signatory to this amendment. He is speaking for the Official Opposition and it obviously represents a cost. I wonder what that cost is. I do not see how the House can vote if it is not clear what extra costs are envisaged. If he is suggesting that there is no extra cost at all, I do not imagine the Government will find great difficulty with the amendment. Presumably there is a cost; I wonder if he knows the figure.
Lord McKenzie of Luton: It depends on what the alternative proposition would be. I have tried to stress that this amendment takes ESA outside this 1% fixed uprating-outside that collar-so we would have to judge the impact at each uprating period thereafter. A judgment would have to be made in the light of inflation and general economic circumstances at that point in time. That seems a very clear proposition, is it not? It is certainly a basis on which we are very happy to support this amendment.
Baroness Stowell of Beeston: My Lords, all of us want to protect those who are furthest from the labour market or who have additional costs because of disability, and I think that all of us who have contributed to this debate so far and all of us in the Chamber today share that view. There is no disagreement among us on that.
That is what the Government are doing. We have not included key disability benefits, including disability living allowance and attendance allowance in the
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In one of the exchanges that has just taken place, the noble Lord, Lord McKenzie, referred to cancer sufferers and made the point that we want to make sure that we provide them with the support that they need. It is worth reminding noble Lords that earlier this year, in January in fact, we introduced changes that will mean that more people with cancer will now qualify for the support group, which is protected, whereas before they might have been placed in the work-related activity group. We have taken on board the concerns in that area. They were valid concerns, and we were glad to be able to act on them.
Let me explain, however, why we have included the personal allowance and the work-related activity component of ESA in the Bill. The ESA personal allowance, which is subject to the 1% cap, is there to provide temporary basic support for everyday needs. It does not reflect disability or the additional costs of disability: hence it is set at the same rate as the personal allowance for the other working-age benefits such as jobseeker's allowance, income support and housing benefit. The work-related activity group component-the additional component on top of the personal allowance-which is also subject to the 1% cap, is paid to those who are able to take steps to prepare for a return to work. As such, they will be referred for appropriate support, training and provision to ensure that they get the help that they need. It is the support group component that is paid in recognition of the fact that more severely ill and disabled people are less likely to be able to increase their income by moving into work and may have additional needs. That is why it is paid at a higher rate than the WRAG component, as the noble Lord, Lord Low, referred to it, and why it has been excluded from the Bill.
I will give noble Lords some comparison. The WRAG component goes on top of the personal allowance, which for a single person at the moment is £71 per week. For those who are considered perhaps to be ready, with some support, to be able to start thinking about moving back into work, that is £28.15 a week at today's rate, while the support component is currently £34.05 a week. The noble Lord, Lord Low, questioned whether we were right to describe the work-related activity component of ESA as a temporary benefit. He may find it helpful if I remind him and other noble Lords that when the last Government introduced ESA-it was a new benefit that they brought in-the Command Paper that they published said:
Reference has been made to universal credit and to the component of it that is paid to parents of disabled children. In universal credit, a similar distinction is drawn between people who are in what we are currently calling the WRAG group and those who are in the support group: hence, the disabled child additions and their adult equivalents in universal credit are to be paid at a lower and a higher rate. The lower rate of the disabled child addition reflects that the parents are more able, with the right support, to move towards work. That is why it is part of this Bill. It is a payment that is made to the parents of children. However, the higher rate of the disabled child addition reflects the fact that parents of a severely disabled child who are entitled to the higher rate may not be able to increase their incomes through work. That is why it is not part of the Bill. That distinction is mirrored across into universal credit.
However, because I recognise the concerns that noble Lords have raised, I will stress again that the personal allowance-the payments for which increases will be capped at 1%-are not those that are paid to cover the additional costs associated with a person's disability. There are fundamental distinctions here between additional cost disability benefits, such as DLA, which we have protected, and employment and support allowance; between the ESA support group component, which we have protected, and the WRAG and the personal allowance; and, finally, between parents providing care to a child receiving the higher rate of the universal credit disabled child addition, which we have protected, and the lower rate that is paid to parents who, with some support, could return to work.
Because all of us are concerned to see disabled people receive the support they need, it might be helpful for me to outline for noble Lords some of the wider support that the Government provide for disabled people. The Government are spending nearly £50 billion a year supporting disabled people. One of the ways in which we are doing this is by investing £320 million on disability employment programmes. I hear the comments that were made by the noble Lords, Lord Low and Lord McKenzie, about the Work Programme, but I disagree with them. I would also say that we have a scheme for disabled people called Access to Work, which in 2011-12 supported over 30,000 people at an average cost of over £3,200. We have invested more, another £15 million, in this area for this spending review. We have another programme called Work Choice, which provides tailored support to help disabled people facing the most complex barriers to employment find and stay in work. It is voluntary, and payable regardless of any benefits being claimed.
I know that many noble Lords are very familiar with the detail of different benefits that apply to disabled people and have been involved in debates and decisions in this area for many years. None the less, it is worth me making the wider point that the latest OECD figures show that the Government spend a
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This Bill seeks to make savings where we can, while protecting benefits that reflect additional costs. The Bill is expected to create savings of around £3 billion over the two years in question. My noble friend Lord King asked the noble Lord, Lord McKenzie, whether he was aware of the cost of the amendment that we are debating. It would reduce those savings by around £400 million, which would clearly put additional pressures on public services.
I believe that our proposals are proportionate and fair. I recognise, of course, that there are people who are affected by the changes that we are making here, but I hope that I have been able to demonstrate that, when seen in the wider context, we are also providing comprehensive support to people who are disabled, which is right and which we will continue to do. I hope, therefore, that the noble Lord, Lord Low, feels able to withdraw his amendment.
Lord Low of Dalston: I am grateful to all those who have spoken and to the Minister for her full reply. A fair amount of the discussion has been taken up with where we are going to get the money. It is certainly not my job to answer for the Opposition as to where they would get the money from, but I would say here that without wanting to open up a general discussion again on the management of the economy, especially at this stage of the debate, I do take the view that you can borrow your way out of a recession. This is a paradox, of course, and it is not clear how it is the case at first blush. However, running a national economy, where one person's expenditure cut is a cut in someone else's income, is different from running a domestic economy.
There is a clear difference of view here with those on the Benches to my left. I am not an economist but I would ask people to accept that there is a very respectable and quite populous strand of opinion that supports the proposition that I have just enunciated. It is not so self-evidently barmy, as was suggested earlier in the debate, to say that the Government would be able to meet the cost of these amendments by borrowing more. There is respectable opinion to support that. To those who say that the Government are already more in debt and borrowing more than they would like to be, I simply say that there is no reason why they should not borrow a bit more. If the amount of extra borrowing that they are engaging in is still not achieving lift-off for the economy, they just have to borrow a bit more until they do. I know that that will not commend itself to this side of the House, but it is a respectable point of view and it is the position that I take.
We have been asked about the cost of the amendment. As the noble Lord, Lord McKenzie, has said quite clearly, that obviously depends on a range of factors. One of those factors is certainly the rate of inflation. Therefore, it cannot be precisely quantified. In any case, the question about what we would do to get the extra money is answered by what I have already said in response to the Minister. A more pertinent question
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The only other thing I want to say in response to the Minister is that the Government have essentially been peddling a myth when they say that they are protecting disabled people in this Welfare Benefits Up-rating Bill. They are only partially doing so. The Government ought to be straight with the British people. I repeat: they are only partially protecting disabled people. It is because I believe that the Government should deliver on their pledge to fully protect disabled people with this benefits uprating measure that I have brought this amendment to the House. It is also why I ask the House to support it, and why I would like to test the opinion of the House.
"( ) Subsection (1) does not apply in relation to a tax year if, on the review in that tax year under section 150(1) of the Social Security Administration Act 1992, the Secretary of State determines that the general level of prices, measured by the Consumer Price Index, for Great Britain has increased by 3% or more over the period under review."
Lord Kirkwood of Kirkhope: My Lords, my Amendments 4 and 9 in this group take us into much lighter territory. I hope that the noble Lord, Lord Forsyth of Drumlean, will understand and relax, because the purpose of the amendments is not to attack the savings which it is the principal purpose of the Bill to achieve but only to protect the position of benefit recipients should the Office for Budget Responsibility's estimates for inflation be exceeded by 3%, which is the figure that I have chosen for the purposes of the amendments.
The amendments are different from those which have gone before because, apart from anything else, they are much less susceptible to attack on grounds of financial privilege. A problem that I had with some of the earlier amendments, and I share some of the analysis, was that they were prone to attack on those grounds. I think that those of us who participated in consideration during the passage of the Welfare Reform Act last
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Amendment 4 would simply disapply the 1% limit on benefit uprating in the event of inflation reaching 3%. I would be interested in the view on this of the noble Lord, Lord Forsyth, because he knows a lot more about it than do. Judging where inflation will come out in September 2013 and September 2014 is an inexact science. We will learn tomorrow what the Office for Budget Responsibility and the Chancellor think about the situation, but the two years covered in the Bill, September 2013-14 and September 2014-15, are considered to be facing inflation increases of 2.6% and 2.2% respectively. The purpose of the amendment is to ask what happens if those estimates are wrong. They are forecasts; they are not scientifically worked through. We have therefore to ask ourselves what we do as a legislature if inflation reaches 3%.
Change in the real-terms value of benefits is very sensitive to inflationary increases. I have said that the Office for Budget Responsibility's baseline is 2.6% for September 2013 and 2.2% for September 2014. That reduces the real value of benefits by 4% and produces a saving of £3 billion; that is already agreed and is in the Bill. However, checking Library figures, I am advised that if inflation exceeds Office for Budget Responsibility estimates by 1% in the two years covered by the Bill, it will reduce the real value of benefits in the hands of claimants by 6% and result in a windfall saving to the Treasury not of £3 billion, which is what the deficit reduction programme is looking for, but of £5.1 billion. You can multiply the figures. If the OBR baseline is exceeded by 2%, that reduces the real value of benefits by 8% and produces a windfall saving for the Treasury of £7.2 billion. I have no way of knowing whether any of that will happen. All I seek with this amendment is to ask what the Government will do if it does.
The financial context is slightly worrying and has been getting worse since the coalition Government promulgated this policy some months ago. We will learn more about this in the Budget tomorrow. The Budget may well be-and some of us will argue that it should be-looking to promote growth and loosen some of the constraints on inflation that the Bank of England's Monetary Policy Committee is required to oversee. However, we have a Bank Governor-designate in Mr Mark Carney, who comes with a reputation of being prepared to live with higher levels of inflation. If that happens, then the 3% figure in the amendment may well be breached sooner rather than later. In some of the earlier debates the noble Lord, Lord McKenzie, rightly adverted to the fact that the markets are already pricing in higher inflation in the short term over the two years that the Bill covers.
As a legislature, we now face an increasing risk of inflation for these two financial years; I put it no higher than that. We very much need to take that into account. The CPI calculation of inflation is a national figure, worked out with average figures on a statistical basis, but someone said to me the other day that
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I am grateful to my noble friend for the considerable discussion that we had about this. He was generous in considering what I said, but it would be helpful if the House knew what the Government would do if the 3% inflation figure was breached. I am reasonably content that there are overriding powers in the Social Security Acts, but I do not think there are in the Tax Credits Acts; I might be wrong about that. What happens if something untoward happens to inflation and we end up in the 2014 and 2015 fiscal years with something unexpected suddenly coming over the horizon? Surely some of these reductions in the value of benefits that I have alluded to would be quite unconscionable as a windfall increase to the Treasury's coffers in a way that is not intended, as I understand it, but may well happen by mistake?
Lord Forsyth of Drumlean: I have looked carefully at my noble friend's amendment and listened to his speech with care, but he does not provide the remedy in the amendment. It simply says that the uprating limited to 1% is cancelled if inflation reaches 3%. Would he indicate why he chose 3% and what the remedy would be? If he specifies a remedy, then we are back into the argument about cost.
Lord Kirkwood of Kirkhope: The remedy would simply be that if 3% was breached, then the clauses in the Bill fall and there would be the default position of an annual uprating process. It would be at the Secretary of State's discretion with the usual provisions of Section 150 of the Social Security Administration Act 1992. It would be taken year by year and would say that inflation was forging ahead in an unforeseen way. For myself, I would listen to an argument that said that we should stick to 1% on costs shown in those circumstances, but if 3% was breached we would go back to the status quo. That does not have a cost at all.
The noble Lord, Lord Forsyth, and I have been doing government uprating statements for 30 years together and I have never known a Government not get an uprating statement that they wanted if they had a majority. That is what I think would happen in these circumstances. However, the Secretary of State would be obliged to come back and say to both Houses that the circumstances were not what he had anticipated or what the Office of Budget Responsibility had calculated and that therefore there would be a chance for reconsideration. That is all I ask.
In fact, Clause 1(5) and Clause 2(4) of the Bill give the Treasury power to protect itself from the downside. These clauses say that if inflation falls below 1% it will not admit the full 1% uprating and will reserve the right to adjust it. Yet there is no limit to which the Treasury will allow inflation to increase before it comes back and argues its case in Parliament one way or
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We need more than that. We need some inflation-proofing and protection for recipients of benefits in the two years covered by the Bill if inflation races ahead. That is the burden of the argument. It is no more and no less than that. I do not think that it would be attacked on the grounds of financial privilege. It has no direct effect, as I see it, on deficit reduction. I am content that the Government get £3 billion in savings, but not content that they get £5 billion or £7 billion, because that is not what the Bill is designed to do. I argue in this amendment that there is no protection in particular for low-income families. I hope that my noble friend will give me some reassurance about what the Government will do in these eventualities. If he is not prepared to accept this amendment, I may well be tempted to test the opinion of the House. I beg to move.
Baroness Morgan of Drefelin: My Lords, I am not an economist. I declare an interest as chief executive of a cancer research charity. My concerns are similar to those voiced by the noble Lord, Lord Kirkwood. The Bill locks in the 1% and does not contain a very important review provision. I am sure that my amendment is so anodyne that the Minister will say either that it is unnecessary or that he will accept it.
For that reason, I will be brief. It is important once more to challenge the myth that disabled people will be protected from the measures in the Bill when that is so clearly not the case. Let us remember that, by 2015, in excess of 40,000 cancer patients will be claiming ESA. It is the main benefit claimed by cancer patients, as we have already heard. For those cancer patients in the support group, only a proportion, the support component, of what they receive, will be protected, while their core payment will rise by only 1%, as my noble friend Lord Low mentioned.
Overall, cancer patients in the support group will see their ESA payments rise by only 1.4%, rather than by inflation, and Macmillan Cancer Support has estimated that, by 2015, cancer patients will be £138 worse off each year than if they had received the 2.2% rise which could have been expected with the CPI level as was in September 2012. I cite the £138 figure, but I am conscious that we do not yet know the true effect of the Bill. That figure shows how far ESA will fall behind inflation if the consumer prices index were to remain at the September 2012 level of 2.2%. However, it has now risen to 2.7%. If, as we have heard, inflation were to rise to 3% over the next three years, the loss to cancer patients and others in the ESA support group would be even greater. The actual impact on cancer patients and others supported by those payments is just as uncertain as the level of inflation itself.
In its current form, the Bill leaves no flexibility to protect vulnerable groups such as cancer patients if there is a significant rise in inflation over the next three years. For that reason, I support the amendment moved by the noble Lord, Lord Kirkwood. I fully expect the Minister to say that he will accept my amendment or
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Lord King of Bridgwater: I should have asked my noble Lord friend Lord Kirkwood, this; he is an expert on uprating. The noble Baroness said that this is an anodyne amendment. I am not an expert on how uprating works, but does her amendment provide that if inflation is above 3%, the Bill does not apply and it will then be up to the Secretary of State to decide what increase he tries to get through both Houses of Parliament, which could in fact be 1%, if the economic situation is as it is? So it does not automatically provide that the current rate of inflation has to be included. Have I got that right?
Baroness Morgan of Drefelin: That is correct. As normal, the House would receive an annual uprating SI, there would be a debate in the normal way and, if the Government of the day wanted to propose a particular uprating, there would be the normal impact assessment. The noble Lord, Lord Kirkwood, may want to clarify his amendment, but my amendment states that if we have a significant increase in inflation, we need the experts to conduct a review to say what will be the impact on benefit recipients.
The Bill could see vulnerable cancer patients and other seriously ill patients losing out on almost £500 per year if inflation rises. That is a great deal of money for people who are not working and who are ill. I hope that the Minister will give some hope that those vulnerable people will not suffer and that he will support this helpful amendment.
I must congratulate my noble friend Lord Kirkwood on this very ingenious amendment. I suspect that he started from a position opposed to the Government's proposals, knowing his long and distinguished record in supporting people on low incomes. I am sure that he would have preferred that the status quo had a rival-
Lord Kirkwood of Kirkhope: Since the noble Lord asked, let me tell him. I am looking him straight in the eye. I have voted for the Government all through this afternoon against my better judgment, but I say this to him: if any further cuts are introduced by the coalition
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Lord Forsyth of Drumlean: The noble Lord and I both have our crosses to bear in the coalition. I am grateful for his confirmation that he does not support the principle. This is just a very clever device to try to get us back to where we started from without making a commitment to spend money. The amendment states that the provisions in the Bill which limit the benefit increases to 1% can be set aside if inflation reaches 3%. That is for very good reasons. The noble Lord argues the case about people on low incomes and the effects of inflation. The noble Baronesses, Lady Morgan and Lady Masham, in their amendment, have highlighted the desperate impact that inflation has on cancer patients who are not working.
If the noble Lord, Lord Foulkes, wishes to interrupt, I will be happy to give way, but otherwise I would be grateful if he did not make remarks from a sedentary position, which is distracting me from my argument-which of course, was his intention.
The best way to protect people is not to have inflation. One thing that sets inflation running uncontrollably is people's expectations of inflation. When the noble Lord makes a speech saying, "I think that inflation is going to be more than 3%", people hear that and think, in their wage negotiations, "Lord Kirkwood says that it will be more than 3%; the Government say that it will be two and a bit per cent". Expectations drive the inflation rate, and inflation is devastating for the poorest in our society and for people on fixed incomes.
Therefore, we need to follow a policy that will limit the possibility of large increases in inflation. That is where we have a problem. To do that, we must show that we have control of public expenditure and have plans in place that can be relied on.
If the amendment were accepted, anyone looking at the Government's plans for financial responsibility over the next two years would say, "They have marked down that social security and benefit payments will be this, but, of course, because of Lord Kirkwood's amendment we cannot rely on that because if inflation is above that figure, the Secretary of State will need to take a decision". They will note that he will be taking a decision in the run-up to an election and will therefore draw conclusions about what the pressures on the Secretary of State might be.
Lord Forsyth of Drumlean: Yes, got it in one. The one thing that we learnt in the 1970s was that indexation, like other palliatives, is absolutely disastrous, because
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Baroness Hollis of Heigham: If the noble Lord follows that argument through, is he therefore saying that, should inflation happen, that is just tough luck, and the poor cannot not have the possibility of any protection from the Secretary of State doing what he would now do, which is to consider all the options under the circumstances?
Lord Forsyth of Drumlean: I have the highest regard and respect for the noble Baroness, Lady Hollis. She knows more about social security and understands the issues better than anyone else. I wish that she was on the Front Bench. If she was, she would be putting forward alternative proposals that might be more attractive and meet some of the points that are being considered, but she is not on the Front Bench and there are no alternative proposals.
We have to contain public expenditure not to within our means, because we are spending more than our means; the noble Lord, Lord McKenzie, pointed out that the Government are already borrowing and spending £200 billion more than was planned. I am simply arguing that if we continue like this the pound will continue to sink. The cost of energy, which, as the noble Lord, Lord Kirkwood pointed out, is a major cost for families, will go up. He supports windmills and other energy forms of energy generation that are the most expensive known to the planet and which are put on people's bills without their knowledge as a tax and add to the pressure on these families. That is another example of where, if he is worried about poor households, he should abandon his attachment to windmills and other things that are raising energy costs and adding to inflation. The name of the game is to contain inflation by not having daft policies such as windmills and other energy policies. It is to act in a responsible way so that people will not decide that they do not wish to buy government debt, which is already a problem, and will not result in further pressure on the exchange rates.
I am sympathetic to the points that the noble Lord, Lord Kirkwood, has made and with which the noble Baronesses, Lady Morgan and Lady Masham, are concerned in respect of the people who are affected. The problem is that the remedy that they propose would make things much worse. It is not a good place to be. We would prefer not to have started from here, but it was Mr Gordon Brown who put us in this position, ably assisted by the noble Baroness, and we must sort this mess out. Clever as it is, this amendment is a smart attempt to get round the basic purpose of the Bill, which is fundamental to protecting people on low incomes.
Lord Bates: I support the noble Lord, Lord Forsyth, but I want to go one step further. He has dealt incredibly effectively with the measured arguments put forward by my noble friend Lord Kirkwood in Amendment 9, but it does not quite hit the interesting amendment in
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Front and foremost are two things. The first is the control of inflation and the second is the creation of employment. They will help the poor more than anything else. If we fail to tackle the debt, the cost of borrowing will rise, as my noble friend Lord Forsyth has said. If the cost of borrowing rises, inflation will rise on the back of it. Therefore it follows that tackling the deficit is the best thing that can be done to help the poor. In table 2 on page 6 of its forecast, the OBR estimates that inflation will be: 2.6% in 2013-14; 2.2% in 2014-15; 2% in 2015-16; and 2% in 2016-17 and thereafter. It is clearly assessing that the culmination of the effect of these and other measures being taken is to move us towards a situation in which inflation is on a steadily downward course. That is the OBR's assessment, which was used as the basis of the 2012 Autumn Budget Statement. As noble Lords have said, we will find out tomorrow where we stand vis-à-vis that.
Other elements need to be taken into account. We have the Low Pay Commission's report coming up shortly. The Low Pay Commission provides a report that influences the minimum wage. The report was submitted at the end of February. I do not know whether my noble friends on the Front Bench have had sight of that recommendation, but it, too, provides a lock. Despite in previous incarnations being against the minimum wage, the Government have said that they support the minimum wage and have always accepted the recommendations of the Low Pay Commission to increase income as a result. Taking that together with the changes to universal credit that are deemed to be providing additional benefits to people estimated at £168 a month for 3 million families and the likely increase in tax thresholds and their impact on the salaries and incomes of the poorest in our society, it seems fair and reasonable, as the noble Baronesses, Lady Morgan and Lady Masham, have suggested, periodically to undertake a review. Post-implementation reviews normally take place three to five years after implementation.
We are talking about some of the most vulnerable. I believe that the position affecting the poorest in our society will not be as great as some people anticipate and that the situation with the combination of policies that I have outlined will lead to an increase, but as we are not having the annual uprating review, some periodic review of how this is working against projections of inflation and of the impact on the poorest in society, would be sensible. I encourage my noble friends on the Front Bench to support it if possible. Should such a review take place, it should not need focus on the one narrow measure that has been the theme of this debate but should assess the wider impact on the poorest in society, taking into account the other measures-the pupil premium, NHS, the lid on fuel increases, the increase in personal allowances, the increase in the national minimum wage et cetera-which we are talking about. With that, I support the noble Baroness, but I am, afraid not, my noble friend Lord Kirkwood.
Lord McKenzie of Luton: My Lords, let me make it clear that we support each of these amendments. The request in the amendment in the name of the noble Baronesses, Lady Morgan of Drefelin and Lady Masham of Ilton, that there should be a review seems modest and straightforward. If the Government should seek to resist that, or a reasonable and clear alternative, I would be amazed.
The case is the same with the amendment of the noble Lord, Lord Kirkwood. As I understand the proposition, he is saying that should in any year the current expectations of inflation be in excess of 3%, which we currently expect to be the case, the 1% automatic uprating would not apply and there has to be an annual assessment, as happens at the moment. That assessment might lead to a 1% uprating, or to some other form of uprating, but there would not be the automatic application of 1%. Who knows what will happen to inflation? I do not predict that there will be a surge in inflation but, if were to be, is any level of real cut in the standard of living of poor people acceptable to the Government? Is that what they are saying? They would be if they rejected this amendment.
Lord McKenzie of Luton: We are talking about specific provisions in the Bill about the uprating of benefits. The noble Lord has worked quite hard to differentiate himself from the noble Lord, Lord Kirkwood, and his amendments. The suggestion that somehow having this provision in the Bill will fuel wage inflation across the land, fuel expectations up and down the country and bring the economy to a halt is, frankly, frivolous and a nonsense. The noble Lord knows that full well. He is an experienced parliamentarian and an able debater, but I do not believe that he did himself justice in the way he sought to pick away at the noble Lord's amendment.
Lord Forsyth of Drumlean: I was asking the noble Lord a straightforward question. He is enunciating the principle that if inflation were at 3% or more, it would be necessary to abandon a position that held the increase in benefits to 1%. I am simply saying that if that is the Opposition's view, is it also their view in respect of public sector pay? If inflation turned out to be much higher, would the same apply to people working in the public sector? If not, why not?
Lord McKenzie of Luton: My Lords, we are debating a different Bill. If the noble Lord wants to debate a proposition about public sector pay, let us have some propositions and we can consider that. The noble Lord knows full well that he is trying to lead the Opposition in a particular direction.
I come back to the point that the amendment of the noble Lord, Lord Kirkwood, is very straightforward. It just says that an automatic 1% uprating would not apply automatically if inflation reached a certain level. That seems entirely unobjectionable and I cannot see
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Lord Newby: My Lords, the first amendment in this group in the name of my noble friend Lord Kirkwood would mean that the Bill would apply only if inflation was below 3% for the purposes of uprating in that year.
I shall provide a reminder of what the official inflation forecasts currently show. While inflation is forecast to be above target-that is, 2% in the near term-it will fall back towards the target in the medium term. In the final year of the Bill, the current forecasts show that inflation for the purposes of uprating in that year will be 2.2%. That was the view of the Office for Budget Responsibility at the time of the Autumn Statement. The OBR produces independent and authoritative forecasts for the economy and public finances and we take decisions based on them.
However, the OBR is not alone in forecasting that inflation will fall back to target in the medium term. That is also the view of other major economic forecasters. I refer to the IMF, the OECD and the Bank of England. Indeed, the latest assessment of independent forecasters in February was that UK inflation would be 2.2% in the 12 months to quarter 1 of 2014 and in the 12 months to quarter 1 of 2015. That is an average assessment of people who make their living by doing this job.
The noble Lord, Lord Kirkwood, said that he thought there was a 50% chance of inflation being over 3% in the period covered by the Bill. I remind the House that that means a 50% chance that inflation will be over 3% by September 2014, because that is the last point at which the Bill has an effect in terms of benefit uprating. All I can say to my noble friend, for whom I have the greatest regard, is that his view is just not shared by any reputable international or national body that is making forecasts about inflation.
Lord Newby: I am coming on to that. In fact, I will deal with it now. It is relevant to the point that was made by my noble friend Lord Forsyth. The purpose of the Bill, as we have debated about 20 times since Second Reading, is to give some certainty to the Government's fiscal plans. The reason we are doing that is that a number of international bodies and rating agencies have said that this has a specific and significant impact on the way that they view the UK's prospects. Entrenching something in a Bill has the effect of giving a degree of certainty, which is immensely useful with regard to the markets.
As my noble friend Lord Forsyth has said, there seems to be a sense that the markets think that we in the UK are in a very good position and that a little tweak here and there in terms of borrowing will make no difference. That is not the way the markets work. It starts off with a little tweak and then the markets feel that something is going wrong. Once that feeling takes hold, the markets can move very quickly.
The effect of a 1% increase in inflation on someone with a £100,000 mortgage is £1,000. These are big differences and a 1% increase in the interest rate is by no means out of line with the interest rates being paid by a raft of European countries whose borrowing as a percentage of GDP is significantly less than ours. The risk in terms of interest rates is real and present. It is not some airy-fairy possibility that would come into play only if the Government were suddenly to go mad and spend huge amounts of money. It can happen with a relatively small change.
The Government remain committed to low and stable inflation. As we have said umpteen times, it is good for individuals and for business and is a prerequisite for economic prosperity. That is why the Government set the remit for the independent Monetary Policy Committee to target inflation. The Chancellor will set the remit at Budget tomorrow, as usual. I do not know what the remit will be but I know it will not be, to quote my noble friend Lord Kirkwood, to loosen the constraints so that inflation rips. I am confident that the Government's commitment to low inflation will remain.
My noble friend Lord Kirkwood and the noble Lord, Lord McKenzie, said, "What happens if, contrary to what the Government have said, inflation does rip? Suppose we have a circumstance that we don't believe is going to happen". If Governments legislated for every circumstance that they did not believe was going to happen, we would have Bills thousands of pages long. The Government can legislate and act only on the basis of a central assumption of what the future, in respect of the particular area of public policy they are dealing with, is going to be like, and that is what we have done here.
I turn to the issue that many people have faced and in many cases continue to face-real-terms reductions in pay. Inflation risk is something that everyone has to face in everyday life. We have been taking about public servants but let us just talk about them a bit more. Public servants have seen their pay frozen and then increased by 1%. When inflation rose to 5.2% in
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These are difficult but necessary decisions. We must remember the tough circumstances that many people in work have faced and continue to face across the country as we deal with the effects of the economic crisis. As I have said, we believe that this Bill is necessary to set out a clear and credible plan to make savings from welfare, help reduce the deficit and restore economic recovery. We are taking the tough decisions because it is necessary to give confidence to the markets. Adding to the Bill conditions such as those proposed by my noble friend Lord Kirkwood would diminish the confidence that we require.
I now turn to Amendment 12, in the name of the noble Baroness, Lady Morgan of Drefelin. This amendment would place a duty on the Secretary of State to instruct the Social Security Advisory Committee to commence a review of the level of uprating if inflation reaches 3.2% in any of the relevant periods as defined in the amendment. I hope that during this and previous debates both I and my noble friend Lady Stowell have been able to convey to the House that we understand and share noble Lords' concerns about measuring the impacts of the Bill and all our reforms on individuals. However, as the noble Baroness slightly suggested in her speech, we believe that the amendment is unnecessary.
Noble Lords will be aware that we already have comprehensive arrangements in place to report on the impacts of government policy. First, we have already published a full account of the impacts of this Bill based on the forecast set out by the OBR. Again, these forecasts are broadly shared by the other main economic forecasters. Noble Lords will be aware that we have also published the child poverty impacts of the Bill. The Government already have a suite of ongoing reporting mechanisms in place and report on the levels of poverty every year in the households below average income series. It is only by looking at poverty issues in the round that we can have a meaningful debate about poverty. Noble Lords will be aware that the Government are currently analysing responses to their consultation on new measures of child poverty, measures that will attempt to capture the wider reality of poverty in the UK today.
Later this year we shall see the first of what will become an annual report from the Social Mobility and Child Poverty Commission, which will report on the Government's progress towards reducing child poverty, in particular meeting the targets in the Act and implementing the most recent UK strategy. This commission, chaired by Alan Milburn, will report to Parliament and will enable detailed scrutiny of the Government's work to eradicate child poverty.
Finally, the Government regularly produce an analysis of the cumulative impact of changes on households across the income distribution. This information is published by the Treasury at every Budget and other major fiscal events. This analysis will use updated inflation projections. We believe that it is a better approach than that in the amendment as it looks at the cumulative impacts of all changes rather than artificially isolating just one policy. The publication of cumulative impacts is a coalition initiative and was not produced by the previous Administration.
The Government have taken unprecedented steps to increase transparency and enable effective scrutiny of policy-making by publishing detailed distributional analysis of the impacts of their reforms on households. Our published distributional analysis goes further than that of any previous Government. Having these mechanisms in place means that we are confident that the Government will be able to scrutinise the effects of this Bill and of our whole suite of welfare reforms. I therefore ask the noble Baroness to withdraw her amendment.
Lord Kirkwood of Kirkhope: I think it is me, in fact, but let that pass. I am grateful to my noble friend. He and I had a good private discussion about this. I understand the Government's position and he understands my position as well. I plead not guilty to his charge of being clever. All I am trying to do here is to get an insurance policy to protect people who are on benefits who may well need it. I hope I am wrong. He knows more about inflation than I do, but there is a real risk that in the demeanour of the coalition Government's policy, which I would support, to try to attract higher levels of growth, it may be a price worth paying-not to let inflation rip, as my noble friend said, but to allow it to rise reasonably in expectation that growth would follow as a result of that. The shift in the policy changes that.
When the Bill was drafted we were in a different position. We are now-we will see tomorrow whether that is correct or not-in a position of the proposals of the noble Lord, Lord Heseltine, for growth, much of which I support. I must say to the noble Lord, Lord Forsyth, that I pay attention to what he says as Britain is a poorer place. These are huge sums of money and we need to work out collectively how we make provision for social protection in future. However, I say to my noble friend-I am looking him straight in the eye-that I cannot accept that this is a safe position to leave the House in. I want the protection-
Lord King of Bridgwater: Is not the key point here that the Government have to be able to convey credibility to those around the world who may lend us money? The noble Lord, Lord McKenzie, has made the point very well. We have to borrow a lot of money or there will be nothing like the present level of benefits if we find, as the Minister has made clear, that we are out on the market trying to borrow from countries and lenders who say, "I thought they had a clear plan. Now they're qualifying it, they may not follow through". I make this simple point. The noble Lord quite rightly talks
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This is very simple. This is a one way bet for the Chancellor. If the Government end up with a windfall of £1 billion or £2 billion over and above the saving that I am supporting here, that is completely unconscionable. I am moving this amendment only to try to get an element of inflation protection for benefit claimants. I am grateful to everybody who has taken part in the debate, even the noble Lord, Lord Forsyth. I am sorry to do this to my noble friend, but I want to test the opinion of the House.
Baroness Young of Hornsey: My Lords, I am pleased to open this second debate on ethics and sustainability in fashion, especially as there is a full-page account of a round-table discussion on the subject in today's Guardian. I am particularly grateful to colleagues on the All-Party Parliamentary Group on Ethics and Sustainability in Fashion for their hard work and to the Centre for Sustainable Fashion for providing a secretariat alongside MADE-BY. Special thanks go to Dilys Williams, the head of the CSF, for bringing me up to date on key developments.
Fashion is about so much more than the clothes we wear. It may be an expression of our professional and personal identities, an expression of where and how we see ourselves in relation to our peer group, our cultures, our families and communities, and an expression of our creativity and our sense of fun. However consciously or otherwise we do it, as we dress, so we make a statement, even if the statement is, "I don't care or think about what I wear".
In spite of its importance in so many people's lives, the perception persists that fashion is frivolous and inherently ephemeral. However, better than most, the Minister will be aware of the size of the UK fashion industry and of its contribution to the economy. The estimated amount spent on clothing in the UK in 2011 was £43.9 billion. Despite the high level of garment manufacture carried out overseas, the estimated value of UK-manufactured clothing and textiles in the UK was £8.1 billion in 2011, and the overall estimated export value of UK clothing and textiles was £7.3 billion.
If we take the volume of clothing sales and look at the global nature of the supply chain, and then start to unpack what that means in terms of the relationship between the environment and consumption, a worrying picture emerges. The Waste and Resources Action Programme, known as WRAP, reported in Valuing Our Clothes that we have stashed away in our wardrobes some £30 billion-worth of clothes, unused for at least
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We have to work much harder and be more creative and inventive about how we tackle these problems. Not enough of us make connections between "fast fashion" and climate change, environmental degradation, labour issues in developing countries and resource scarcity. This is not to suggest that nothing is being done. On the contrary, parts of the fashion sector supply chain and increasingly aware consumers, campaigners and legislators have embraced a range of measures, instruments and strategies to mitigate the damage caused by our current practices and processes.
Last month, I was in Copenhagen, where I gave a presentation to Danish MPs on the APPG on Ethics and Sustainability in Fashion, which I chair. Jonas Eder-Hansen, the director of NICE, the Nordic countries' umbrella group promoting sustainable fashion, and Michael Schragger of the Sustainable Fashion Academy work with Ministers and MPs from Sweden and Denmark, as well as representatives from the industry, to develop and deliver sustainable business models and other strategies to take us forward.
Here in the UK, the work of Defra and WRAP in promoting the Sustainable Clothing Action Plan, known as SCAP, is seen as a model of good practice and held in high esteem internationally. Indeed, WRAP and Defra were presented with the Global Leadership Award in Sustainable Apparel by the Swedish Sustainable Fashion Academy in Stockholm last month. At the event, I found a strong appetite for collaborating internationally with politicians and the sector. All of us are aware that in our contemporary, globalised world, pollution and unsavoury labour practices are no respecters of national boundaries.
Industrial dyes are a case in point. For a start, fabrics are dipped or washed in dyes that are made using copious amounts of precious water. In spite of regulations intended to ensure that the excess, dye-laden water is treated before being disposed of, it is cheaper to dump the dye effluent than to clean and reuse it. The Wall Street Journal's report on an instance of severe pollution in China where a river literally ran red makes chilling reading. Of course, by not treating water, costs are kept low, as demanded by large retailers wanting to sell cheap clothes to their customers in the USA and Europe.
Consumers need to make the links between their desire for cheap clothing and the loss of livelihoods through depleted, polluted fishing stocks and ever diminishing food and water resources. Add to that the fact that more than 400 people have died in fires in Bangladesh and Pakistan in the past six months, with at least one of the factories involved producing garments for a British retailer, and we have to acknowledge that our current mode of "enjoying" fast, cheap fashion makes no sense whatever.
Fashion today is both global and local, and even much of the produce of many of our high-profile "heritage" British brands, such as Burberry, Aquascutum and Crombie, is often all or mostly made outside the
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One equivalent to the horsemeat issue, if I may put it that way, in clothing terms is cotton. There are many people who would not wish to wear garments made from cotton harvested by children forced to work in the cotton fields of Uzbekistan instead of attending school-I should declare an interest here as a patron of Anti-Slavery International, which has worked ceaselessly to try to persuade Governments and the EU to work harder to stop this practice-but it is impossible to know the source of your shirt, skirt or trousers. Yet some of our largest fashion retailers will not undertake to demand that the companies in their supply chain stop using cotton gathered by state-sponsored forced labour.
Businesses and consumers alike can be powerful agents of change, and it is clear that education and awareness-raising have a crucial role to play. However, there is also a need for leadership from government in hosting platforms for initiatives, supporting change-makers and investigating the risks of not thinking through the consequences for environmental sustainability. This leadership role should also be concerned with working in partnership to educate consumers and skill up young people on manufacturing and other skills, as well as investing in sustainable fashion SMEs and other projects focused on a sustainable future still infused with excitement, individuality and style.
We have all the incentives we need to act and to act quickly, and we have the individuals and organisations with the talent, so what more can government and politicians do to enhance the effectiveness and reach of these people? Clear, vocal leadership is important, and government Ministers and their officials can fulfil a useful role in supporting initiatives across the spectrum of departments with a stake in finding solutions to the problems we have created. The Sustainable Clothing Action Plan is a good example of government leadership, with an NGO and industry working together to find solutions to complex problems.
I cannot mention all the different departments that could have some sort of purchase on this issue. Some time ago, DfID, for example, introduced the Responsible and Accountable Garment Sector Challenge Fund. Fashion, of course, lies within the DCMS's remit. It is also within the BIS agenda because of the manufacturing element and also because of the potential of the Green Investment Bank. In fact, in November last year, Business Secretary Vince Cable promised government support to breathe new life into UK textile manufacturing as a study revealed that the cost gap with Asia is narrowing. Can the Minister tell the House how far such plans have gone and the extent to which sustainability
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Will the Minister undertake to set up a meeting with me and other Members of both Houses on the APPG to discuss how we can best help to support the development of this part of the fashion sector? We need to get a commitment to develop practical, effective strategies across the different departments for realising the potential of rethinking how we "do" fashion. Because of its experience with the Sustainable Clothing Action Plan, Defra is perfectly placed to broker and animate the necessary discussions.
To end on a positive note, technological innovation is crucial. I look forward to the day when waterless production techniques, air-purifying textiles, as being developed by Professor Helen Storey and Professor Kate Storey, and closed-loop technologies, in which the garment is manufactured, sold and eventually reformed so it can go back into the manufacturing process, will be the norm. Then we will know we are getting somewhere. However, we should also acknowledge that there is no single magic potion that can cure our environmental excesses. We need multiple strategies and to work collaboratively and internationally to effect sustainable change.
At the British Fashion Council's Esthetica Showcase at London Fashion Week last month, a young designer showed the collection with which she won a competition for fashion designers. The material she had to work with was the discarded clothing and waste materials of Veolia, whose employees collect our rubbish and sweep our roads. It just goes to show that with support, creativity, vision, skill and invention, even the fluorescent strips from a refuse collector's jacket can be turned into a garment of true beauty.
Lord Young of Norwood Green: My Lords, with that fresh in my mind I will endeavour to proceed without hesitation, repetition or deviation, as they say. If every Member in the Chamber could examine the labels in their clothing, it would reveal the global nature of high-street supply chains. I am not suggesting we do it as it might cause embarrassment for some. However, I checked my jacket-not that I pretend to be anything to do with fashion-and I noticed that it came from Morocco.
I want to focus on the ethical aspect of this debate. I declare an interest as the vice-chair of the Ethical Trading Initiative, a groundbreaking alliance of companies, trade unions and NGOs. The company members include a large number of high street fashion retailers, supermarkets and department stores, with a combined turnover of £166 billion. The trade unions represent 160 million workers around the world and a wide range of NGOs, large and small, is involved.
Every member is committed to the implementation of the ETI base code, which is founded on the ILO conventions. In brief, they state: employment is to be freely chosen, with no forced, bonded or involuntary prison labour; there should be freedom of association with the right to collective bargaining; working conditions should be safe and hygienic; child labour should not be used; living wages should be paid; working hours should not be excessive; there should be no discrimination; regular employment should be provided; and no harsh or inhumane treatment should be allowed. As you can see from the list, all the companies that are members of the Ethical Trading Initiative are on a journey in trying to ensure that workers throughout their supply chain benefit from these conditions.
If noble Lords think about some of the stories in the news, only too often unfortunately, such as workers being exploited and denied basic rights, and incidences of child labour, which have been uncovered in many of the supply chains of our high street companies, it shows how difficult it is to ensure that workers get a fair deal. These are workers whose lives are put at risk, as we saw recently in clothing factories in Bangladesh, where fire exits were locked. It shows what a long way we have to go. All of us in the Ethical Trading Initiative have embarked on a huge task in trying to open the minds of companies and consumers to the fact that clothes do not just arrive through a UK-based manufacturing process.
Many ETI brands and retailers which sell garments to UK consumers are engaged in activities that attempt to integrate respect for human rights and labour rights throughout their global supply chains. Working with sourcing states and civil society, UK retailers are at forefront of focusing on the UN guiding principles on human rights. On that point, I know that the UK Government support the UN business and human rights agenda and that we are awaiting a document on the human rights and democracy programme from the Foreign and Commonwealth Office, which is co-ordinating the policies of 12 government departments. I wish it luck in this. Can the Minister tell us when the document is likely to be published?
Baroness Parminter: My Lords, on entering this House in 2010 I wore fur-free "non-ermine ermine". However, I am not just passionate about cruelty-free fashion, so I thank the noble Baroness, Lady Young, for securing this debate and for chairing with such pizzazz the All-Party Parliamentary Group on Ethics and Sustainability in Fashion, of which I am proud to be an officer.
Sustainability, green, eco, organic and ethical are increasingly a part of the fashion conversation. That is to be welcomed although I am not sure everyone has the same view of sustainable fashion. Is it a timeless, classic handbag I can pass on to my daughter-the opposite of the cheap, disposal fashion epitomised by Primark? Is it a dress made from locally sourced materials, with limited transport and a light carbon footprint, or is it a Fairtrade cotton t-shirt produced in a factory where the needs of employees are taken into account?
I like that definition; it does not go so far as to pin it down but allows the creativity of individuals to flourish as they interpret what it could mean for their business. As the impacts of climate change hit harder, with resource constraints and more severe weather, we need the clothing industry to develop the necessary resilience to satisfy the colossal appetite for clothing sustainably. The commitments from the Business Secretary in support of the UK textile manufacturing industry are very welcome but more needs to be done to future-proof the industry and to support sustainable and ethical fashion.
Sadly, 20 years after the first child labour and labour standards scandals in our high street fashion chains, we still face the same problems. Clearly, current audit approaches are failing. They rely too much on cheap, bribable inspectors. It is analogous with food supply chain issues, reflecting huge pressures to reduce costs combined with an "unlikely to be found out so don't worry" mentality. Some companies are trying hard to address these issues. One is BBC Worldwide, which refuses to rely on third-party certification and makes its own unannounced checks of its suppliers, has credible and enforced sanctions and promotes its speak-up line to managers and workers in supplying factories.
However, spot checks alone will not address all issues. The fires in a number of Bangladesh factories just before Christmas highlight a problem of ethical culture. During the audits the fire doors were open but when the fires happened they were locked. We need companies such as the GoodCorporation, which argues powerfully to encourage debate about ethics and culture in factories, to move away from blame, to push managers and to take more responsibility for standards.
We also need more opportunities to showcase best practice, such as the Estethica at London Fashion Week and the RSPCA's Good Business Awards, which have supported the development of animal-friendly clothing policies. Can the Minister say what plans the Government have to address this and to help give companies advice and support as they develop the standards to take on the ethical and sustainability issues, and to provide more platforms to share best practice?
We need also to focus on clothing, from creation right through to disposal. With around £140 million-worth of used clothing going to landfill each year, we urgently need to address the issue of reuse, exchange and disposal of clothes. I was therefore very pleased to see that the Government's consultation on waste prevention, launched last week, identifies clothing as one of the priority areas for action. We have come a long way with compassionate fashion, largely thanks to powerful campaigning by organisations such as PETA. Opinion polls show that 95% of Britons would never wear real fur and top designers including Vivienne Westwood, Ralph Lauren and Stella McCartney leave fur out of their designs. Even on the high street, icons such as Topshop, H&M and New Look are fur and exotic-free.
Green is not the new black; it is not just another trend to come in and go out with the seasons. I applaud the work of the all-party group with partners in industry and government to develop a new space for fashion which respects the need for social and ecological balance and can help create more British jobs.
Lord Patten: My Lords, the more alert of your Lordships may notice that I seem to be the only member of the Tory party Back-Bench fashionista tendency rising this evening. I do that for a number of reasons. One is that I admire what the British fashion industry produces. The noble Baroness referred to that in her introductory speech, and I will not repeat it. I also admire very much the creativity of the British fashion industry. About a month ago, I was very glad to be at my first ever London Fashion Week show, the Matthew Williamson show. I sat in rapt attention on the edge of the seat: indeed, the seats seem to have been designed to ensure that you sat in rapt attention during the whole show watching the models sashay past. It is no wonder to me that the British fashion industry is growing and is contributing so much. Certainly, it is one of the top 20 productive sectors in this country, which has to be a very good thing. The imagination of the British fashion industry is also good. We can see a Matthew Williamson or a Stella McCartney dress being paired with something from Primark or Topshop. That has gone all over the globe, which is much to the credit of those involved.
However, I agree that the ethical issues must be addressed, and I have four points that I wish to make. My first point is the only one which I believe is unique to the fashion industry; namely, that the fashion industry has done a bit, but not enough, to discourage the image of the thin, verging on anorexic, and therefore ill, model in its shows and photographs and the casting agencies which cast these models. Occasionally, there is a bit of breast-beating about it, but I do not think that there is a continuing programme to discourage 13 and 14 year-old girls and boys who want to be models one day. Its message should be to eat responsibly, just as the drink industry should tell people to drink responsibly. I urge the noble Baroness, with her influence in the fashion industry, to press this hard.
My second point is that I do not think there is anything peculiar or unique to the fashion industry in the need to manage the supply chain properly and responsibly. It is not just in fashion that we see these problems; it is in the use of children in other parts of the world in manufacturing carpets and toys, as well as in the use of young people who are not very well paid in putting chips into hand-held telephones. A responsible corporation monitors the supply chain and makes sure that it treats those who work in it properly. Much more needs to be done by good corporations in this area.
Thirdly, a very good tool is to hand in the condign punishments available under the UK's Bribery Act and bribery legislation. UK companies which permit their supply chains to bribe and act in a corrupt way are those which do not treat their workforces very well. We should ensure that the Bribery Act provisions
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Fourthly and lastly, ethical and good companies are very appealing to customers, investors and the young of all sorts who go into the shops to buy those goods. Good corporations have the very highest ethical standards. The Prime Minister's presently absentee guru, Steve Hilton-I believe that he is now in the west of the United States-used to run Good Business. It was founded on the highest ethical standards. I look forward to welcoming Steve Hilton back when he comes to re-guru for the Prime Minister next year.
Baroness Prosser: My Lords, I, too, thank the noble Baroness, Lady Young of Hornsey, for securing this debate. As has been mentioned, the all-party group has a very wide agenda. Included under the heading of ethics is, of course, the treatment of people engaged in the production, transportation and sale of textiles and clothing. Shortage of time requires me to concentrate my remarks on just one of those areas, and I will focus on those engaged in production.
Let me start with raw materials, in particular, cotton. One of the most disturbing and difficult examples is that of cotton picking in Uzbekistan, which has already been flagged up by the noble Baroness, Lady Young. Uzbek cotton accounts for 10% of the world's harvest, ranking third in the world. It is, of course, a very important product for the country, making up 20% of its GDP and approximately 40% of its hard currency export earnings. The legacy of Uzbek's history with the old USSR, with its continued command economy, does not provide a happy situation either for the farmers or the cotton pickers.
A production quota system is forced upon farmers and that, together with the government-set price, means that farmers cannot cover their expenses. Lack of profit leaves no money for investment in machinery, which leads to a continuing heavy reliance on cheap labour. Incidences of minimal payment or no pay at all means that many adults go elsewhere to find work, often to neighbouring countries. The Uzbek Government then step in with a system of forced labour, mostly, but not entirely, made up of children. Some schools in the cotton-growing areas are forced to close between September and November for the picking season so that children, some as young as 10 years old, can be sent to the fields to pick cotton for seven days a week. Children in rural areas are required to carry out weeding of the cotton fields during May and June. The children who pick the cotton have a quota to reach which varies, depending on the local circumstances, between 60 pounds and 110 pounds of raw cotton per day.
This is by any other name slave labour and it is not confined to children. The Government of Uzbekistan also forcibly mobilise teachers, public servants and employees of private businesses to harvest the annual crop manually. Failure to comply can mean the loss of employment and/or pension rights. The Cotton Campaign has a list of demands for Governments and companies, and, of course, cotton traders, calling on them to use
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I hope that the Minister will be able to reassure the House that the UK Government will use their best endeavours at the ILO annual conference to bring this issue to the attention of the global community. Uzbekistan cotton is, of course, not the only area of concern to those campaigning for better rights for workers in the textile and clothing supply chain. Labour Behind the Label, an NGO which campaigns for better terms and conditions for those employed in making our textiles and clothing, calls for improvements in wages and in health and safety. It has joined forces with Asia Floor Wage in calling for a living wage across the region and has now widened its embrace to include work with activists in the USA, North America and Europe, but western companies must be more vigilant of the supply chain and take personal responsibility for checking the veracity of locally made claims that all is well.
Lord Stone of Blackheath: My Lords, perhaps because of our society's destructive obsession with speed and short-termism, fashion is often neither ethical nor sustainable. In many fields we fail to consider the long-term effects of what we do: in politics, it is the next term's votes; in the media, it is weekly ratings; in business, it is tomorrow's share prices; and in fashion, consumers want today's new look. At Marks & Spencer, I was taught by the late Lord Seiff about good human relations in industry. We were not only concerned with the long-term satisfaction of our customers and of our shareholders who were often with us for life, we were also frugal with our use of resources. We used minimal packaging; we did not have fancy window displays; we used low-energy lighting; and even our relationship with our suppliers was that of a long-term partnership. We mainly bought our goods in the UK, but even when we moved some production abroad, we ensured that there was fair pay and good conditions in the factories that made our clothing. Home production is an issue to which I will return.
The consumer, too, has a role in this. How does he or she decide what to buy? A brilliant mind in this field, as was mentioned, is the designer, artist and academic, Professor Helen Storey at the Centre for Sustainable Fashion at the London College of Fashion. She is involved in a project that seeks to explore and understand more deeply the relationship between us and our desire to acquire. At the heart of the question posed by this debate lies our understanding of human actions in relation to material consumption habits. Here in the western world we are consuming and wasting at a rate that threatens our own health and that of the planet. The fashion industry exemplifies the complexity and extreme nature of human society's obsessive cycle of creation and destruction, but it is also a great place to find solutions. Fashion sits at a point that crosses economics, aesthetics, psychology, creativity and our individual notions of who we are. This research will produce some really interesting results.
At this point I must declare an interest. I have three wonderful children. I tried to stop each of them following me into the shmatter business. Daniel and Jessica work respectively in charities and healing, but I failed with my youngest child, Susie Stone, who has a couture fashion business. She says that sustainable fashion requires us to buy less but wear it more and to spend more on good, bespoke, UK-made clothing, which in the long term will cost you less, suit you more and make you feel better about yourself.
On a grander, wider scale, the noble Lord, Lord Alliance, is working on a project to bring textiles back to Britain. He and his team have involved Manchester University, local businesses and regional and central government. This should be supported by regional investment and government grants. Tens of thousands of jobs could be created, so the investment would be cost effective. Within it, ethics and sustainability should be built into contracts to make them synonymous with "Made in Britain".
A friend who has a new factory in the UK tells me that some awful UK factories bring in people at night to work the machines. They are paid by the illegal "cabbage" system. They have no right-to-work documentation to prove they are legitimate workers. We need this stopped so that ethical trading companies with audited compliance are not put at a disadvantage. As well as criticising other countries, we need to enforce ethical trading here in the UK.
Finally, I am afraid we have uneducated consumers in this field. They do not know what is involved in making clothes well from start to finish in terms of skills nor what the costs of a retailer are in terms of staffing, distribution and running stores. The public have never been exposed to this understanding. Many companies in the retail industry tick the boxes in terms of ethical and sustainable initiatives but do not have them high on their agenda because their one-year operating plans are dominated by recession survival and the complexities of multichannel retailing. As we found this week with controlling the press and media, we cannot wait for retailers and manufacturers to put in place voluntary, sustainable and ethical reporting practices. We need to create laws and ensure compliance with them.
After the unchecked industrialism of the 20th century and in order to advance sustainable and ethical fashion, there is a need for reinvestment in the textile industry in this country, for transparency and information from brands so that people can make informed longer-term purchasing choices and for legislation and compliance monitoring from Her Majesty's Government.
Lord Razzall: My Lords, it is not possible to overestimate the importance of fashion design in this country. From Stella McCartney to Vivienne Westwood, we are clearly world market leaders. It is also important that we should highlight the importance of ethical fashion, which was brilliantly highlighted in this House by the noble Baroness, Lady Young of Hornsey, and outside it by Livia Firth, who is better known in this field than her famous actor husband.
We all remember the horrors of Primark, which were referred to earlier. It was accused of exploiting third-world employees to produce dresses that it was cheaper to wear once, throw away and replace with another than to dry clean. However, the big companies have begun to catch on. I commend to the noble Lord, Lord Young, and others-I do not know why I picked on him-the Gucci ecologically 100% traceable bag. It is not black but a burgundy brownish red because this is the best vegetable-sourced colour. The leather is sourced from cows reared without causing deforestation and the handle is made from bamboo that grows like a weed. Gucci may sell furs, but this bag is a start.
It is not only major companies that have caught on. The United Kingdom has Brora, which sources ethically produced fibre from the Mongolian goat and turns it into cashmere in Scotland. It also has People Tree, which started in 2001 and is recognised as a pioneer in fair trade and environmentally sustainable fashion. It both provides desirable fashion and works to improve the lives and environment of workers and farmers in developing countries. UK manufacturers do not just provide jobs. Barbour not only makes all its waxed coats in United Kingdom but is a major donor to charity. It has given away £8 million in recent years, including a recent grant of £1 million to Newcastle University for medical research.
What can the Government do? That is the Question put by the noble Baroness. I am not a great believer in government intervention, but if we accept that demand for high-end value manufactured goods made here rather than in China is good for the United Kingdom, the Government could, first, encourage universities to concentrate courses on manufacture rather than just design; secondly, following the reference to Vince Cable, contemplate the creation of manufacturing hubs, or "catapults" to use the jargon, to encourage manufacturing; and, thirdly, in their export drives, promote manufacturers and suppliers of ethically produced clothing that is made here. They could also, as the noble Lord, Lord Stone, indicated, give a lot of money to the initiative of my noble friend Lord Alliance.
Lord Giddens: My Lords, fashion is a huge global industry, as other noble Lords said, with a large carbon footprint. It has left behind it a trail of eco-destruction. Now, fortunately, efforts are being made to counter the existing structures of the industry. As usual it is the Scandinavians and not us who are in the lead, as they always are on environmental issues. I commend to noble Lords the work of the Nordic Fashion Association, which was briefly touched on in other speeches. It has a very wide range of projects and amazing coverage in the Scandinavian press. One of the main emphases of the NFA is eco-design: integrating sustainability into garments at the design stage.
Among high-profile figures in the UK, I commend in particular Vivienne Westwood for her work on climate change. A couple of years ago I went to speak at a literary festival in Hanover. I gave my speech on climate change. It was followed by the Handel opera "Semele", performed in the same long, elegant gallery
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Sustainability is becoming important in the fashion industry around the world. There are many initiatives in North America. The annual Eco Fashion Week debate has been going for six years and attracts 2,000 people from the industry. Even more important is China, where the picture is very mixed. In some respects this echoes what my noble friend said about another part of the world close by. The turnover of the garment industry in China is about $60 billion a year. Most of the money is earned from exports, mainly to the West. There are massive contradictions here. On the one hand, children work all hours to produce cheap garments for the western market. The film "China Blue" is a very good exposition of this. On the other hand, sustainable fashion is now talked of as widely in Hong Kong and Shanghai as it is in London. I admire the designs of Ma Ke, who makes beautiful, traditional clothing.
There are two questions that I would like to ask the Minister arising from this. First, all this is worthwhile but it seems to be nibbling at the edges of the global garment trade and it could degenerate into eco-chic concentrated at the high end of the industry. Is it possible to generalise it to the industry as a whole? Secondly, how do we get the big corporations more involved? As far as I can see, there are many corporations involved, but mainly their corporate responsibility department, which is usually a minor part of the business. We surely need companies to be much more integrated in the whole design process to transform it, and I would welcome the Minister's comments on that.
Baroness McIntosh of Hudnall: My Lords, I join everyone else in thanking the noble Baroness, Lady Young, for securing the debate-it is indeed very timely, in view of the article in the Guardian today-and for her excellent and comprehensive overview of the issues. I am glad that the debate is to be answered by the noble Lord, Lord De Mauley, for many reasons, not least, and I hope he will not mind my saying this, because we could all agree that he is unarguably one of the most stylish Members of your Lordships' House.
I had not intended to speak-I should be singing-but I wanted to make a couple of short points. However, they have all been made by other speakers and so I will quickly pick up on a couple of matters that other people have spoken to and expand them a little. My noble friend Lord Stone spoke about buying less and wearing it more. That is absolutely at the heart of how we change human behaviour in this area. It will be difficult because in the developed world we have become addicted to over-consumption, and fashion is no exception. I am a complete serial offender in this respect. I have that wardrobe full of misguided purchases, to which the noble Baroness, Lady Young, referred, which were
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We buy too much of everything because we can and because the market is geared towards high volume and low costs, as we have heard from many other speakers. We have largely forgotten how to value, restore, maintain and sustain the clothes that we wear. We are shamefully and shamelessly profligate.
This is a difficult issue for Governments of all complexions because the prevailing economic orthodoxy says that consumption equals growth, and growth is the only game in town. I can see that we have got problems but we should surely be wondering whether that model is itself sustainable. I rather doubt that it is.
Fashion, of course, is very much about novelty and therefore inevitably about consumption. However, at its best it is also about beauty, craft, skill and durability, and it is often about small businesses doing one thing really well. Does the Minister agree that one of things the Government can do is to put as much support as they can behind small businesses in fashion, as well as trying to persuade the large businesses to change their practices, which I do not deny is extremely important?
We must not forget that sustainable fashion is, of course, about sustainability, but it is mainly about fashion. If we do not get the fashion part right-that is, if the fashion that comes as sustainable is not as good as, if not better than, other fashion choices we could make-then it will never get off the ground. That is why we need small businesses that have creativity built into them.
My final point goes to the heart of how we can keep those small businesses coming: our education system. The system that we have at present, as we have already heard, has allowed some very talented people to come through and has allowed the fashion industry in this country to be world beating in many respects. If we do not keep the education system balanced so that the creative education necessary to allow those talents to emerge is properly sustained and valued, we shall find in a few years' time that we are not the world beaters that we once were. I would extend that into the higher education sector where, as I should probably have said at the start, I have a personal interest in the excellent work of the Centre for Sustainable Fashion, which has been mentioned many times today, because my son works for it. What he has learnt through being part of that team has engaged my interest and I hope that there will be more units like the Centre for Sustainable Fashion in future, and that they will themselves be sustained.
Baroness Jones of Whitchurch: My Lords, I add my thanks to the noble Baroness, Lady Young, for initiating the debate and echo the thanks for her enthusiastic leadership and for the fashion inspiration that she has given to the All-Party Parliamentary Group on Ethics and Sustainability in Fashion, of which I am also a member. I declare an interest as a board member of WRAP, which, among other things, as we have heard, manages the Sustainable Clothing Action Plan on behalf of the English, Scottish and Welsh Governments.
This is undoubtedly a complex area in which it is difficult to be an active and responsible consumer. In the short time that I have available, I will highlight a couple of ways in which government can make a difference at a UK level.
First, it remains surprising that the Government pay so little attention to the fashion sector, as it is a major player in our economy. As the recent WRAP report, Valuing our clothes, identifies, clothing accounts for around 5% of the UK's annual retail expenditure, with consumers spending £44 billion a year on buying clothes, or around £1,700 per household.
Many UK clothing producers, particularly small businesses, as my noble friend Lady McIntosh identified, are putting ethical and sustainable fashion at the heart of their business models. They are making a point of celebrating quality manufacturing, greater longevity, respected craft skills and locally sourced materials. However, to expand further they need greater investment in production skills, improved training and a higher status, which would encourage the next generation to believe that the sector has a future. Will the Minister update the House on the steps being taken by BIS and other departments to build up our UK textile capacity and attract the brightest and best young people into UK sustainable textile production and design for the future?
Secondly, a wholesale shift towards sustainable and ethical fashion means that all the major production and retail businesses in the sector have to commit to change. I am very proud of the work being done by WRAP in the Sustainable Clothing Action Plan to sign up a list of companies prepared to work towards ambitious targets on sustainability by 2020. Already, major retailers such as John Lewis, Primark and Marks & Spencer are involved. Together they are addressing a range of environmental challenges such as the overuse of scarce water in production, the fact that a third of discarded clothing goes straight to landfill and the short lifespan of most clothing with resulting demands, as we have heard, for endless new purchases to fill the wardrobe.
The Sustainable Clothing Action Plan is providing businesses with practical tools to deliver change, such as how to accurately measure the environmental footprint of the clothes they produce, how to design clothes with a longer active life, how to give consumers consistent information so that they can see the benefit of changing their behaviour and how sustainable business models can bring financial benefits as well. For example, it has worked out the financial advantages of retailers providing repair services for their own garments, extending clothing hire services, offering a buy-back and resale section within their stores and providing clothing exchange events among consumers.
I echo the congratulations of the noble Baroness, Lady Young, to WRAP and Defra on being awarded the Global Leadership Award in Sustainable Apparel in Sweden in January. Will the Minister confirm that this work continues to be a priority for Defra and that WRAP's work will continue to be funded? Will he reassure the House that, contrary to rumours, environmental sustainability will remain a key priority in Defra's current review of its priorities?
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley): My Lords, I thank the noble Baroness, Lady Young, for initiating this debate on the promotion of ethical and sustainable fashion. I have enjoyed the contributions of all noble Lords and I will try to respond in a moment to relevant comments raised during the debate.
Although I make no claim to be a fashion expert, I should declare a vicarious interest by virtue of having a wife who runs a small but, she tells me, successful business retailing fashion accessories. Her range includes, I am relieved to say, sustainable products, notably some in the shape of handbags made from recycled offcuts of leather. She tells me that they are highly desirable. Of course, I am very interested in the range of economic, ethical and environmental issues associated with the fashion industry, which have been so well covered this evening.
As several noble Lords have said, fashion is a vital part not only of our national but of the global economy. In 2009, the United Kingdom fashion industry was estimated to contribute more than £20 billion to our economy and to support more than 800,000 jobs, so this is indeed an industry worth talking about. About 90% of the clothing consumed in the UK is imported. Our consumption has positive economic effects in developing countries, but there are also a wide range of environmental and ethical implications to take into account. We need to consider the water, fertiliser and pesticides used when fibres are grown and the emissions generated when synthetic fibres are made. There are issues associated with access to markets and trade terms for producer farmers. There are concerns about labour conditions in clothing factories, sweatshop conditions and child labour.
As the noble Baroness, Lady Jones of Whitchurch, said, there are significant water as well as greenhouse gas impacts associated with washing and drying clothes and waste at end of life. As the noble Lord, Lord Young, said, we landfill around a third of a million tonnes of clothing every year. There are complex global supply chains. Although the issues are different, the recent and ongoing horsemeat saga has shown that we need to be able to trust all our supply chains, including, of course, the fashion ones. I will return to this in a moment.
We want to ensure that the fashion sector continues to grow. Several noble Lords, the noble Baroness, Lady McIntosh, in particular, spoke about small businesses, and I agree with her. I will return to that point in a moment. Last October, the Government hosted the UK fashion and textile manufacturing showcase. This was part of the Government's Make it in Great Britain initiative, designed to dispel the myth that the UK does not make anything any more. UK Trade & Investment is promoting UK products and services to customers abroad and encouraging foreign investment in the UK through its GREAT campaign. I hope the noble Baroness, Lady McIntosh, will be pleased to hear that Creative Skillset, the sector skills council for the creative industries, recently launched its first higher level apprenticeship in fashion and
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As for environmental improvements, my department, with WRAP, co-ordinated the Sustainable Clothing Action Plan, which several noble Lords referred to. This is a collaborative effort with businesses and third sector organisations to reduce the environmental impacts of the UK clothing supply chain. The organisations involved include high-street names such as Nike, Sainsbury's, M&S, John Lewis and Primark, as well as clothing reuse and recycling organisations such as Oxfam and the Salvation Army.
This is a world-leading initiative, which has been recognised internationally. As the noble Baroness, Lady Young, said, Defra and WRAP have just received the 2013 global leadership award in sustainable apparel from the Sustainable Fashion Academy in Stockholm. I am proud about that and pleased that the noble Baroness was able to be there.
Government action to improve ethical standards in the fashion sector includes the creation of the Responsible and Accountable Garments Sector-RAGS-Challenge Fund. This fund helps projects that improve the conditions of vulnerable garment production workers. It is aimed at workers in low-income countries in Asia that supply the UK market.
DfID has also provided support to the Ethical Trading Initiative, an alliance that brings together businesses, trade unions and voluntary organisations and has developed a base code to define the minimum standards that member companies should reach. The nine provisions of the base code include that child labour shall not be used.
The Government, of course, need to look to their own procurement, too. The government buying standard for textiles was published in December 2010. It limits the levels of hazardous chemicals and encourages the consideration of durability, the use of recycled fibres, ethical standards and end of life disposal. We are now starting a review of this standard and plan to strengthen it and cover additional issues such as demand management, recyling and repair, and we will work with the Government Procurement Service to embed the new standard in the framework contracts for use across government. We are working hard to ensure that the climate is right for growth in the UK fashion industry, and at the same time are encouraging businesses to move UK consumption on to a more ethical and sustainable footing.
I will now address questions the noble Lords have asked. The noble Lord, Lord Young, referred to the number of government departments involved. Ethical and sustainable fashion is a complicated topic, and there are roles here for more than one government department. DCMS leads on the UK fashion industry, BIS on UK business, Defra on environmental policy aspects, and DfID on poverty reduction aspects. We work together to ensure that appropriate links are made without duplicating or generating unnecessary bureaucracy. There are cross linkages between the initiatives. For example, Fairtrade, the ethical trading initiative, and DfID are all members of the sustainable clothing action plan steering group. Many of the
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The noble Baronesses, Lady Young and Lady Prosser, raised the issue of child labour in Uzbekistan in particular, I think. In negotiations about eligibility for the EU's generalised system of preferences, we understand that there are legitimate concerns about the use of forced labour during the cotton harvest season in Uzbekistan. There remains much to do, but we welcome this year's progress; enforcing a ban outlawing the use of children aged under 15 in this year's cotton harvest is a step in the right direction. We continue to monitor the situation and encourage further efforts towards full implementation of Uzbekistan's obligation under the ILO conventions.
My noble friend Lord Patten asked about child labour, and other noble Lords have also referred to this matter. The Government are committed to ensuring that children are not engaged in work that is harmful or detrimental to them. We know that this is an ethical issue-perhaps the issue on which, as the noble Lord, Lord Young of Norwood Green, said, UK businesses already take action. I also agree with my noble friend Lord Razzall, who has congratulated several businesses that he has named. We help by supporting organisations that enable companies to demonstrate their commitment. I have referred already to several initiatives. Let me add to the Ethical Trading Initiative and Fairtrade the UN Global Compact, which is a call to companies everywhere to align their operations and strategies with 10 universally accepted principles, including abolishing child labour.
We are working towards long-lasting changes that tackle the poverty we identify as being at the root of the problem of child labour. The noble Lord, Lord Young of Norwood Green, referred to the launch of the UK business and human rights strategy. The Foreign and Commonwealth Office has led a successful process across government to agree the UK's first strategy on business and human rights. Arrangements are being finalised for the launch in the near future. The UK has played a leading role in supporting the UN guiding principles on business and human rights.
My noble friend Lady Parminter asked about government advice to UK business on ethical issues relating to specific countries. I have already mentioned the strategy on business and human rights. This includes clear signposting to advice provided by different government departments responding to business feedback during extensive consultations when business requested clearer guidance on how to approach the Government for advice. The Government also provide guidance to businesses on how to carry out corporate social responsibility reporting on environmental and ethical issues. I think it is fair to say that UK companies lead the world on corporate and social responsibility reporting.
My noble friend also asked about audit and checks on the supply chains. Textile supply chains can be complicated, with many intermediaries, and UK businesses
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The noble Lord, Lord Stone, spoke about the role of consumers. I agree with him. Further action that consumers can take include buying pre-owned clothing, choosing fair trade products, washing at lower temperatures and recycling textiles. He also asked whether the Government would introduce compulsory reporting on corporate social responsibility for all UK companies, particularly in this area. UK companies, as I have said already, lead the world in choosing to report on their contribution to social, ethical and environmental sustainability. We support mechanisms that help them to improve their reporting and are keeping a watching brief on current trends towards more mandatory reporting in some countries.
My noble friend Lord Razzall raised the issue of encouraging universities to support ethical fashion. London is seen as a global centre of fashion, with our universities attracting students from around the world. In 2011, almost 18,000 students were registered on fashion and textile courses, and there were 190 apprenticeship starts in the fashion and textile framework.
I will write to noble Lords if I have not answered all their questions. To finish, there is no simple answer to the many economic, environmental and ethical issues associated with the global fashion industry. However, I hope noble Lords will agree that we are taking action and are making progress.
Any mandatory 1% up-rating stipulated in section 1(1) shall not apply to statutory maternity pay."
Baroness Sherlock: My Lords, I rise to move Amendment 6, which is in my name and that of my noble friend Lord McKenzie as well as the names of other noble Lords. We rehearsed this issue in Committee but I return to it on Report because, with apologies,
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The Government estimate that some 232,000 families will claim statutory maternity pay, or SMP, in 2012-13, rising to 235,000 in 2013-14. Using the Government's own inflation forecasts, the Children's Society calculated that if a woman were on maternity leave now with her first child, and had her second child in 2015, she would find that she received about £184 less in real terms during her second period of maternity leave than her first. If her earnings were below the flat-rate level of SMP, that figure rises to £217. Just when a family needs money most, support is being cut.
This is by no means the first assault on the living standards of mothers of young children. In Committee, I recited the litany of cuts to support for parents of new children. I will spare the House the entire list but will just reprise one or two. We have seen the abolition of the health and pregnancy grant, the abolition of the Sure Start maternity grant for all but the first child, the abolition of the baby element of child tax credit and the cancellation of the planned toddler element, the abolition of the government contribution to child trust funds, cuts to the percentage of childcare help and much more. Since then, the Children's Society has analysed in detail the impact of those changes. The results are shocking. They have calculated that a working couple about to have a second child in 2015 could find themselves over £7,000 worse off than they would have been over the following two years, simply as a result of changes since 2010. That is the context for this amendment and, indeed, for this Bill.
My second concern is that the Minister failed entirely in Committee to address the question that I raised as to the rationale for including SMP in this Bill. Noble Lords may recall that the Prime Minister's official spokesperson responded to critics by telling the Telegraph that it was a "personal choice" for parents to decide whether to return to work or to stay at home after having a child. Of course it is, just like deciding where to go on holiday, where to shop, or where to buy your children's clothes is a personal choice-if you have enough money, that is. If not, then it is George at Asda for you, rather than Giorgio Armani Junior. Money is what makes people have choices, not simply the fact of having a baby.
However, that was not the reason that the Chancellor gave when he announced this Bill back in the autumn. He claimed that the legislation was necessary to ensure that the welfare state was fair to working people, and not to those who lie in bed with their blinds down when their neighbours go to work. In Committee, I asked the Minister to explain how SMP fits with his argument. Let us recall that SMP is a contributory benefit, paid only to women who have given up work to give birth or to care for a new baby, after having been in continuous employment for the requisite period and earning enough to require their employers to pay national insurance contributions on their behalf. However, answer came there none. I therefore ask the Minister one last time: how does including SMP in this Bill fit with the Chancellor's narrative, and why should pregnant
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Lord Bach: My Lords, I very much support what my noble friend has said in moving the amendment. The House seems very quiet this evening, following the shenanigans of this afternoon when it looked very much to some of us as thought there was an organised group on the other side-many of whose members are no longer present, of course, it being after dinner time-who found a huge interest in this Bill in order to keep the Report stage going. Be that as it may, those times are obviously passed.
If I read correctly, the Minister-to whom I attach no blame at all for what has been going on, of course-said in reply to my noble friend in Committee that the cost in the last of the three years of allowing this amendment would be around £50 million. Let me tell her one way, at least, that that £50 million could be found five times over. The communities department has £250 million to spend, and has done for some time, in order to make rubbish collections weekly rather than fortnightly. No doubt that is a priority for some, and no doubt it has a validity of its own. However, compared to the wrong which is being done by this Bill-and by others too-and in particular the wrong addressed by my noble friend in her amendment, could the Government not get some proper sense of priority as to what does and does not matter, even at this late stage? That is £50 million, compared with £250 million that is sorted away. This was not mentioned, of course, by the noble Lords who were this afternoon defending the Government's position with such vigour, because it is an inconvenient truth that in Government there is spend which could be much better spent on protecting those who are going to be hammered by this legislation. I ask the noble Baroness to answer my question: what is wrong with spending part of that £250 million, and agreeing to my noble friend's amendment?
Lord Bates: My Lords, I was not intending to speak on this amendment, but I rise at the prodding of the noble Lord, Lord Bach, who seemed to suggest that some kind of operation was going on in the conduct of our discussion. If there was any operation, the strangest thing about it was that there was not a single speech from the Back Benches of Her Majesty's Opposition. It is amazing. We are talking here about what we recognise as being critical issues. On each amendment, there were probably three speeches from the Back Benches here, but not one single speech from the Back Bench of the Official Opposition. If the noble Lord wants to come back on that, I shall be more than happy to give way.
Baroness Hollis of Heigham: I overheard one of the government Whips encouraging those who sit on the Privy Council Bench to speak and speak and to string out it out to delay the votes. I heard that myself. Those Members made their own decisions and I do not in any sense criticise the quality of their speeches. I also saw briefing being passed from the Minister and so on. Perhaps the noble Lord could not see from
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Lord Bates: That is a wonderful way of expressing it. The noble Baroness has been complimentary to me; let me reciprocate by stating a fact. She knows more about this subject than anybody else in this Chamber and everybody would immediately acknowledge that. Our previous discussions in Committee and at Second Reading were enhanced immeasurably by her thought-provoking contributions. Now, what is more unusual: that a few Members on Her Majesty's Government's side should rise to speak in support of the amendments or that the noble Baroness did not make one speech during their consideration?
Baroness Hollis of Heigham: I am grateful to the noble Lord for letting me come back on this. Today, we started with a key debate on whether it was right to tie future Secretaries of State's decisions on the rate of uprating of benefits. My noble friend Lord McKenzie moved the relevant amendment and we had an extensive discussion. We then had a hugely important debate on children, a hugely important debate on disabled people and then an important debate led by the noble Lord, Lord Kirkwood. The noble Lord, Lord Bates, will know as well as I do that, as we had only effectively half a day-because people are not here after dinner-to discuss four key issues, either we had to postpone key debates to a period of time when no one would be here, including his Privy Council colleagues, to listen and take part, or we acted in a way that was self-disciplined in order that the arguments at least in their basic form could be heard, so that those who wished to-and there were not very many on his side-could come in and listen to those points being made to see whether they affected their vote. We were trying to act responsibly. Had we had two days on Report, we could have paced it differently and I for one would have been delighted to have spoken at least three times on each amendment and made a dozen speeches.
Lord Bates: I take the noble Baroness's point and shall not pursue it further. I had not intended to make that point, but it is important. Perhaps I may say one other thing. Since I have trodden on a few toes, let me tread on truly sacred ground.
Lord Bates: I am going to deal with it. I want to come back to the point that I was going to make previously, because I think it is relevant. For the first
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The OBR report relating to the Bill that we are debating shows some quite encouraging signs. For the first quarter of 2014, we have a forecast of increases in the order of 4.5% per year, growing to 4.6% during the period of this Bill. Surely increases of that nature, when linked to the statutory maternity pay of which we are talking, must have some effect. In the same way, I inquired of the noble Baroness, Lady Sherlock, who introduced this amendment, whether the stark numbers that she presented to us contained any element that reflected the suppression of wages that we have seen over the past five years. This has been seen particularly in the private sector, although it has been in the public sector as well, where wage increases are subject to a 1% cap. That is the point that I ask the noble Baroness to clarify when she responds.
Baroness Howe of Idlicote: My Lords, it is good to get back to the subject of the Bill. I support the amendment of the noble Baroness, Lady Sherlock. Although everyone is inevitably suffering under this economic disaster, it is surely completely counterproductive for the Government not to make specific arrangements for those who produce and support children. This is a particularly important generation of children. We will all need to depend upon them and will need to help them develop to their full potential if we are to have a brighter and more economically successful future. Not to do so will also specifically disadvantage-I would argue even discriminate against-women.
Whatever hopes there are for both parents to share childcare in future, to include statutory maternity pay at present would clearly disadvantage women, on whom the main responsibility remains for their children's upbringing. It will also particularly disadvantage single parents, the vast majority of whom are women. While 30% of all households with children are affected, 95% of lone parents-that is 2 million-are affected by the Bill. The Government have already estimated that the Bill will push a further 200,000 children into poverty, so what effect will this economic deprivation have on this vitally important next generation of children and their well-being?
First, there is their health: the 2010 Marmot review highlighted how poor health is strongly linked to low socioeconomic status. Children in the lowest-income households, for example, are three times as likely to suffer mental health problems as their more affluent peers. At the age of 33 they are at increased risk of severe long-term and life-limiting illness.
Next is their education. The link between economic disadvantage and educational underachievement is widely recognised by academics, as well as by parliamentarians. Children's cognitive development, related to parental social status, is evident as early as 22 months. The earliest high-achievers from deprived backgrounds are overtaken at five years, with this gap widening by the time children reach 10. DfE figures also show that only 26.6% of secondary school pupils eligible for free school meals achieved five or more A* to C GCSEs, compared with 54.2% for all the rest.
In employment, inevitably, the educational and health inequalities drive a similar divide. Young people who are NEET are more likely to have grown up in socially disadvantaged households, for example, from single-parent households and those where parents also have low educational qualifications.
Finally, there are family relationships and children's subjective well-being. Living on a low income is stressful and difficult and can, and often does, adversely affect family life and intra-familial relationships, as well as children's assessment of and satisfaction with their lives. Poverty can make strong parent-child relationships more difficult, and research shows that children growing up in poverty are more likely to suffer from low self-esteem and to be socially isolated.
Having listened to the excellent speech of the noble Baroness, Lady Sherlock, and a range of other subjects also brought into the conversation, I hope that the Government will find a way to accept this very reasonable amendment.
Baroness Stowell of Beeston: My Lords, I must say to noble Lords on the Benches opposite that we have had a number of debates about the economic context in which we are making these changes, and I have been disappointed that more noble Lords have not found themselves moved to contribute to them so far. I am glad that there have been more contributions to this debate.
Baroness Hollis of Heigham: My Lords, I thought that we had discussed this already. Can the noble Baroness help me by describing how we could have made our contributions? As she knows, four or five of us have regularly taken part in social security debates-including my noble friends Lady Lister and Lady Donaghy, and me, among others. If we had made our contributions, does she think that we would have got to the important debates on disability and the 3% trigger amendment before dinner? If not, does she think that it would have been fair to disabled people to exclude them from the possibility of Parliament reconsidering a foolish decision?
Baroness Stowell of Beeston: In my short time in this House, we tend to sit until about 10 pm and have debates on amendments at all times that we are sitting. I did not realise that we were expected to have debates before a certain time at night.
Let us focus on statutory maternity pay. I remind the House that the UK has a strong and effective maternity and parental regime. The UK is significantly more generous than the requirements of the EU pregnant
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It is also worth reflecting on the fact that in the past decade, the length of time for which statutory maternity pay was payable more than doubled. Under the previous Government, it was doubled. It is important to be aware of the baseline that we are starting from.
Yes, the decisions that we have to take on statutory maternity pay will mean a slightly smaller increase for people over the next few years, but that is in the context of a strong and effective maternity architecture in our country which will remain firmly in place. Indeed, the Government are committed to make this architecture even stronger. Noble Lords will soon be debating provisions in the Children and Families Bill which allow working parents to choose which parent takes parental leave and parental pay to care for their child in the early years.
It is also important to understand these changes in the context of other government reforms that support women, families and children and help make positive changes to their lives. I said this in Committee, but it is important, so I will repeat it. For example, a woman working full time at the national minimum wage for six months of the tax year who then receives statutory maternity pay for the next six months will still be better off overall as a result of changes to the income tax personal allowance.
We have debated universal credit many times before, and it is acknowledged that its purpose is to make it worth while for people to move back into work. Once universal credit is introduced, some 800,000 out-of-work lone parents would benefit significantly if they started to work just 10 hours per week. In nearly all such cases, these parents would see at least £40 more in their pocket per week than they would have done under the current system. Also as part of universal credit, £200 million extra is being spent to support families with childcare costs. For the first time, this support will be made available for families who work fewer than 16 hours per week. That means 100,000 more working families will be helped with their childcare costs.
Looking ahead, as my noble friend Lord Newby mentioned in one of the earlier debates today, we have set out changes that will increase eligibility of support to five times as many families as currently is the case through a new tax-free childcare scheme. As part of these changes, we have also announced today a further £200 million additional support in universal credit that will provide working families with the equivalent of 85% of their childcare costs where the lone parent or both parents pay income tax.
When referring to various different payments to families, the noble Baroness, Lady Sherlock, said that she could go on; so could I. There are other things that
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This amendment would reduce savings from the Bill by around £50 million in 2015-16. As I have said, we have taken none of the decisions in this Bill lightly, but we have to recognise that if the savings do not come from the measures set out in the Bill, that could clearly put additional pressures on to public services. The noble Lord, Lord McKenzie, mentioned alternatives that he would like to propose. They are not ones that I would point to because these amendments are part of a Bill that is about reducing by a smaller amount the increase that we pay in benefits.
To answer the noble Baroness's question about why we are including statutory maternity pay, we have sought to address the very significant welfare bill, which I am afraid is unsustainable, but doing so in way to protect the most vulnerable. We discussed and debated that at length earlier today. Regrettable as it is to have to make any reductions or cap any of the increases in the way that we have, the infrastructure and architecture there for women and families are strong. They provide sound support that will make a real change to people's lives. While I recognise that these are difficult decisions, I hope that I have provided enough assurance to the House to show that the Government take their obligations to parents seriously and that we will continue to provide a supportive environment for new mothers in the years to come. I hope therefore that the noble Baroness can withdraw her amendment.
Baroness Sherlock: My Lords, I am grateful to all noble Lords who have spoken in this debate, especially to my noble friend Lord Bach for his strong support, and to my noble friend Lady Hollis for her interventions. I am also grateful to the noble Baroness, Lady Howe, for a thoughtful and persuasive speech that highlighted the impact of these cuts on the next generation. I thank her for that.
In response to the noble Lord, Lord Bates, I would say three things. First, we have debated this a lot. We sat through the previous stages, and we have all contributed in long form to the Committee stage and reflected a great deal on this. I hope that we now know what each other think. Certain noble Lords contributed to every amendment but they did not make five speeches; they
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I say to the noble Lord that it is worth noting that the poorest mothers get the flat rate of SMP and are therefore unaffected by any impact on wage growth, so that point would not affect them. On the question of wage suppression, the consequence of that-in fact, of the whole Bill-is a double whammy for those who are finding that their wages are frozen or have been kept down, because these benefits and tax credits are the very things that will normally help to compensate the individuals as well as acting as stabilisers more broadly.
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