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Tuesday 24 January 2012
[Linda Riordan in the Chair]
Health Inequalities (North-East)
Chi Onwurah (Newcastle upon Tyne Central) (Lab): As a Member of Parliament, my priority must be the health and well-being of my constituents, and many MPs feel the same. Regional health inequalities are of profound concern and strike at the heart of our sense of fairness and equality: people are suffering unnecessarily in this country just because of the region in which they are born, and that undermines not only the idea that we are all in this together, but our very sense of national unity. At a time when the Scottish Government are seeking independence, does it help the case of those who believe in the Union, as I do, that a Brit born in Glasgow is likely to die 14 years earlier than one born in Chelsea?
As we shall see, health inequality is a complex subject, but the key question for the Minister is, do the Government recognise regional health inequalities in their health funding? I look forward to the Minister’s reply.
I was born in Wallsend and grew up in Newcastle. In Newcastle, we are more likely to die early from cancer, heart disease and stroke. We tend to die younger, are more obese as children and are more likely to die from the cold as pensioners. We suffer more from the diseases of our industrial legacy, such as asbestosis. Last year in Newcastle, there were 89 early deaths from heart disease and stroke—19 more than the national average. Disability-free life expectancy for women in Newcastle is 3.3 years shorter than the English average. For men, it is 4.9 years shorter. Not only do we live shorter lives, but more of those shorter lives are spent with a disability.
Such inequalities are not unique to Newcastle. Thanks to the public health observatories set up by the previous Labour Government, we have a comprehensive view of the inequalities in health across the country. Every year, 37,000 people in the north die earlier than their counterparts in the south. That is enough people to fill a modern football stadium. A report published in the British Medical Journal last year said that the excess toll of ill health and disability in the north is
“at the rate of one major city every decade”.
In Newcastle, one in 25 adults claim incapacity benefits for mental illness. That is four times the rate in the Secretary of State for Education’s constituency. Across the river in Gateshead, we have one of the highest levels of obesity in the country, and on the Wear, the 2010 chlamydia rate for 16 to 24-year-olds was almost three times the rate in Surrey.
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of the Tyne and Wear metro, which shows how life expectancy reduces by more than a decade as we ride from Ponteland north to Byker.
Although I see mainly north-east MPs here today, this is an issue for the whole country, for the Exchequer and for the Prime Minister, but given that the Prime Minister press-released yesterday’s visit to Leeds as a visit to the north-east, it is clear that his grasp of geography still leaves something to be desired.
Every year, health inequalities cost £31 billion to £33 billion in lost productivity, up to £32 billion in lost taxes and higher welfare payments and £5.5 billion in additional health care costs, so this is a problem for us all. It is important to emphasise that the poorer health in the north-east is not a function of the level of health care. The Newcastle Hospitals NHS Foundation Trust is in the top 10% of best-performing trusts in the UK. We have the Campus for Ageing and Vitality, the Centre for Life, the Great North Children’s Hospital, the Northern Institute for Cancer Research and the Northern Vascular Centre and Freeman Hospital’s Cardiothoracic Centre. They are world-class institutions.
“Social and economic factors are extremely reliable predictors of health”
If more resources are put into an area, its health improves, but if they are taken out, its health declines. The north-east has the lowest income per head in England, and in Newcastle, a quarter of the city’s neighbourhoods are in the 10% most deprived in the country. So the poorest are hit by a double whammy. Not only does poverty impact on their quality of life, but it reduces their life expectancy and makes them susceptible to a host of diseases.
It is also ironic that in the north-east we live with the health consequences of industries that were long ago allowed or even encouraged to die. Just last month, Cabinet papers showed how Margaret Thatcher’s Cabinet discussed the managed decline of the north. We are still dealing with that. Last year’s figures from the Health and Safety Executive show that rates of death from mesothelioma in the north-east are by far the highest in the country, and although we address the symptoms, we can do nothing for the causes. But in other areas we can and are tackling the causes.
The north-east has the highest number of mothers smoking during pregnancy—22%—so Fresh, a local charity, is working with local primary care trusts to make smoking history for children. Higher than average alcoholism in the north-east has resulted in excessive numbers of hospital stays for alcohol-related harm, so a campaign to reduce alcohol dependency is supported by local press, such as the Newcastle Journal and the Evening Chronicle. But I am worried that essential work to improve health in the north-east is threatened by measures that the Government are taking.
Under Labour, health funding doubled in real terms, waiting times reduced and death from heart disease and stroke went down by a massive 40%. The previous Government also worked hard to tackle poverty and its associated evils—poor housing, high fuel costs and low wages—but the inequalities remained. So although the health of people on low incomes improved significantly,
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the health of those on high incomes went up by the same amount or more. In some areas, health inequalities decreased. For example, the infant mortality health inequality for manual workers fell by almost a third to 12%. To understand why that is so, we must go back further than the previous Labour Government.
The Thatcher Government refused to acknowledge the relationship between poverty and ill health. The Department of Health was prohibited from using the phrase “health inequalities”. It had to talk about variations in health, and they were always couched in terms of its being people’s fault because they led such an unhealthy lifestyle.
Labour’s experience with infant mortality shows that targeted interventions can work. Infant mortality is really interesting, because it is a sensitive measure of immediate health, which is susceptible to direct interventions, such as the ones the Labour Government introduced, including improving the health of expectant mothers through the pregnancy health grant and of babies through Sure Start.
Guy Opperman (Hexham) (Con): I have listened carefully to the hon. Lady’s arguments, and I congratulate her on this debate. It is good to see so many hon. Members from the north-east in the Chamber. She talks about inequalities, and referred to Surrey’s excellent mortality rates and alcohol abuse recovery rates compared with the north-east and Scotland—people in Glasgow have the lowest life expectancy rates in the country. Does she support the proposal for an alcohol Act that would statutorily restrict alcohol availability?
Chi Onwurah: I thank the hon. Gentleman for his intervention. As I said, the causes of health inequalities are complex. Alcohol dependency certainly varies significantly throughout the country. We need, and we are seeing, targeted campaigns to address that. I hope that the Government will introduce concrete measures to address alcohol dependency, such as legislation and a minimum price if that is appropriate.
Labour prioritised addressing health inequalities. We could not overcome the legacy of inequality in 13 years, but we made real progress, as the figures for infant mortality show. However, that is set to change. There are three main ways in which the Government are undermining work to reduce health inequalities.
First, the Government have changed the funding formula, and reduced the component designed to address health inequalities. I have been in Parliament for 19 months, and I have raised this matter directly with Ministers four times, not counting written questions. I am hoping it will be fourth time lucky for receiving a direct answer. Will the Minister confirm that in 2010 the Secretary of State decided, against the advice of the Advisory Committee on Resource Allocation, to reduce the health inequalities component of the primary care trust target funding allocation from 15% to 10%? Two weeks ago, during an exchange on the Floor of the House, the Secretary of State cited a 2.8% rise in funding when I asked him
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about changes to the funding formula. Will the Minister address the change to the formula, rather than the overall increases that the Government claim?
During a speech on the Floor of the House in December 2010, I asked the Secretary of State to confirm that more will be invested in health services for every man, woman and child in Newcastle for every year of the comprehensive spending review as the Government claim that they are increasing NHS spending. He declined to do so, so will the Minister step into the breach?
Clearly, if funding is changed to reduce the amount associated with health inequalities, the north-east will lose out. The Minister will say that the Government have ring-fenced public health spending and handed it over to local authorities. She may refer to the public health outcomes framework, which was published yesterday, just in time for today’s debate, and is very interesting reading. It includes 66 measures, which will be monitored, but they cannot distract from the assault on public health that the Government’s wide-ranging cuts represent for local authorities. For example, cuts to fuel poverty reduction programmes such as Warm Front will leave pensioners in Newcastle colder and more vulnerable to illness. Cuts to area-based grants such as the Supporting People programme mean there will be less investment in support services for those with mental health issues.
The second way in which the Government are undermining work to address health inequalities is the top-down, unnecessary and destructive health care reforms. It is estimated that they will cost £3 billion, and we now know that in the north-east the NHS has been asked to put aside £143 million for those organisational changes. The Government claim that efficiencies will make up for that, but the service is already being asked to meet the 1.5% efficiency cuts challenge at a time of wholesale reorganisation. As the Select Committee on Health said today, it is incredibly difficult, if not impossible, to make such efficiency savings when everything is changing.
In the north-east, our strategic health authority and primary care trusts are being abolished. Funding will be in the hands of GP consortia. Newcastle already has a pathfinder consortium in place. Newcastle Bridges GP commissioning consortia covers most of the city, and has shown that it is keen to work with other stakeholders across the city to promote public health, but it is having to make it up as it goes along in the face of huge uncertainty and change in the public sector and in the third sector, with unprecedented local authority cuts, watched over by an eager private sector that is keen to take advantage of the profit-making opportunities that the Prime Minister and the Health Secretary have promised.
A recent letter to the Health Service Journal, signed by more than 40 directors of public health and more than 100 public health academics, argued that the Bill will increase health inequalities, not reduce them. If the Government will not pay attention to what the Opposition say, perhaps they will pay attention to what the profession says. Michael Marmot told the Health Committee that there is little evidence that the health premium will reduce inequalities. Indeed, he said that it is most likely to increase them. Seven former presidents of the Faculty of Public Health have said that the Bill will “exacerbate inequalities”.
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Ireland, where health is a devolved matter, but she is expressing concerns felt by many people throughout the United Kingdom, even where such matters are devolved. There are two reasons for that. The problems for her constituents, to which she referred, are as real in my area as they are in other areas of the United Kingdom. The Government’s reduction in the block grant for Northern Ireland means that our health will also be affected. The changes in health care here will be the marker for future changes for us. Does she believe that the service that the NHS is offering is not the standard that we in the United Kingdom expect and are accustomed to, and is not of the standard that is needed to address core health issues?
Chi Onwurah: I thank the hon. Gentleman for his intervention. I believe strongly that the national health service is one of the best, most efficient and most effective health services in the world. The evidence shows that, as I will explain. It is absolutely right to say that the concerns I am expressing on behalf of my constituents and the north-east are felt throughout the country, and with good reason. The proposed measures will have an impact on the health of all constituencies in the country. The profession believes that the changes will have a negative impact on health inequalities. The Health Committee’s recent report on public health warned that the Bill poses a “significant risk” of widening health inequalities, yet the Government are pressing ahead.
The third way in which the Health Secretary will widen regional health inequalities is through the wholesale marketisation of the national health service. Before the Minister pretends otherwise, let me quote her colleague, the Minister of State, Department of Health, the right hon. Member for Chelmsford (Mr Burns), who admitted last year that the Bill will turn the NHS into a “genuine market”.
We should recognise that despite having serious health inequalities, we suffer relatively little from inequalities of access. I am no expert on health services, but I am told by those who are that the stent insertion that Prince Philip recently underwent at Papworth hospital did not differ materially from the treatment that any of my constituents would have received at the Freeman hospital if they had suffered a similar condition. That is fantastic, but it is not the case in the United States of America where there are terrible health access issues due to its private health care system. In the short term, the Government’s reforms are diverting funds away from patient care, which will have an impact on waiting times. Those who can afford it will tend to seek private health care, but those on low incomes will be unable to do that. In the longer term, the Bill is about the privatisation of the NHS. Strong independent evidence indicates that the NHS is one of the most efficient and equitable health systems in the world. Why would we want to make it into a market? The Bill misses an important opportunity to focus on the real issues and the wider determinants of health in this country.
I shall therefore finish by asking the Minister these questions. The Government have signed the recent World Health Organisation declaration to deal with the social determinants of health inequalities, so what concrete actions will Ministers take? The previous Government accepted the Marmot review’s recommendations in full.
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When will the current Government do the same? What are the coalition’s proposals for introducing a national minimum unit price for alcohol? Will the Government confirm a commitment to undertake a consultation on plain and standardised packaging for tobacco products, and on what date that will take place?
Does the Minister share my concern about the Royal College of Midwives and Netmums survey showing that women from lower incomes were denied antenatal classes and the choice of a home birth? Will that not entrench health inequalities from before birth? The Minister looks somewhat surprised at that question, but differences in health access do exist in our country.
As Blane said, no law of nature decrees that the children of poor families should die at twice the rate of children born into rich families. In the north-east, there are more poor families. Will the Government commit to reversing their changes to the funding formula component designed to deal with health inequalities?
The national health service’s first Minister of Health, Nye Bevan, famously said that when a bedpan falls to the floor in Tredegar, it should echo in the Palace of Westminster. The Minister of State, Department of Health, the right hon. Member for Chelmsford, quoted that with some amusement and disdain and proclaimed that those days were long gone, so what does this Minister think should echo in Westminster? Does she accept responsibility for reducing health inequalities? Can she assure me that health inequalities between the north-east and the rest of the country will reduce over the term of the present Government?
Mrs Linda Riordan (in the Chair): Order. At least six Back Benchers wish to speak. I mean to call the first Front-Bench speaker at 10.40 am. That leaves about 45 minutes, so I ask hon. Members to bear that in mind.
Ian Swales (Redcar) (LD): It is a pleasure to speak under your chairmanship, Mrs Riordan. I congratulate the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) on securing the debate. I agree with her that the issue of health inequalities is of great importance to all MPs and particularly those of us who represent constituencies in the north-east. Having been born in Leeds, I was delighted to emigrate to the north-east in my early 20s.
First, I would like to refer to the July 2010 National Audit Office report, which was specifically about “Tackling inequalities in life expectancy in areas with the worst health and deprivation”, and to the subsequent hearing of the Public Accounts Committee and the report that it produced in November 2010. That report was in effect a catalogue of action by the previous Government and bears detailed reading. It said that the Department of Health had been
“exceptionally slow to tackle health inequalities…we find it unacceptable that it took it until 2006—nine years after it announced the importance of tackling health”—
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things such as educational under-achievement, the need for warm homes, and child poverty, which go across a broad range of Departments, not just the Department of Health?
Ian Swales: I absolutely agree with that and will go on to say more about it. The Department of Health has an important role in being the umbrella Department for monitoring action in this area, however. The report went on to say that the Department recognised its failings, admitting that it had been
“slow to put in place the key mechanisms to deliver the target it had used for other national priorities”
“slow to mobilise the NHS to take effective action.”
There certainly has not been a shortage of reports on this subject. The Department of Health issued 15 major publications on the issue, starting in 1998 and rising to a crescendo in 2010. In fact, 2007 was the only year in which the previous Government did not issue a publication.
Debbie Abrahams (Oldham East and Saddleworth) (Lab): I wonder whether the hon. Gentleman could catalogue the action that was taken after the publication in 1980 of the Black report, which first demonstrated a causal link between ill health and poverty. In addition, “The Health Divide” was published towards the end of the ’80s. As I recall, because I was working in this field, there was absolutely nothing.
In 2003, the Government identified 12 cross-Government headline indicators and 82 cross-Government commitments, but sadly overall it was effective action that was the problem. In 2005, the Government identified 70 spearhead local authority areas for special attention, and credit to them for that. One third of those areas were in the north-east. However, only in London did those spearhead areas see a narrowing of health inequalities.
I know that this issue is complex, but some things are basic. The NAO report showed that more deprived areas had fewer GPs. Some had significantly fewer. They were also paid less. I was shown barely believable figures showing that Redcar and Cleveland had only half the average GP resource of the most deprived 20%. Clearly, that is not a good position to be in.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab): How does the hon. Gentleman think that forcing through NHS reforms that are vehemently opposed by both the British Medical Association and the Royal College of General Practitioners will encourage GPs to go and work in deprived areas that have a shortage of GPs?
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As the hon. Member for Easington (Grahame M. Morris) said and as we all know, many factors are involved in health inequalities: smoking, alcohol, obesity, housing, income and others. Sadly, the area that I represent has the worst rate or one of the worst rates of obesity in the country, and one third of my constituency is in the poorest 10% of most deprived wards, so I am well aware of how these things operate in the local area.
In the public health area, we should, as the hon. Member for Newcastle upon Tyne Central said, celebrate a great success and learn from it. The Fresh organisation has had a great impact in terms of smoking reduction. The rate in the north-east went from 29% in 2005 to 22% in 2009. I also find this hard to believe, but apparently males in the north-east have the lowest rate of smoking in the country. It was probably the highest at one time, but apparently it is now the lowest. That shows that effective public health action and education can have a big impact. Models such as that, in which innovative third sector organisations focus on change, can assist with this important job, which is a lot about behavioural change.
As well as successes such as the one that I have described, I welcome the increased spending in the NHS by the previous Government. That has increased health outcomes for all, regardless of the fact that it failed to narrow health inequalities. My area has seen the setting up of excellent facilities such as the James Cook university hospital. As has been mentioned, there is also the data gathering, which is so important in learning how to deal with these problems.
There is still a lot to do. In my constituency, there is a 16-year gap between the life expectancies in the richest and poorest wards. I therefore welcome local health commissioning, which will lead to a more joined-up approach to local issues. An excellent pathfinder GP group is already up and running in Redcar; in fact, it was running as a social enterprise for five years before the recent reforms were introduced.
I welcome the public health agenda and the fact that the budget will go to local authorities. I also welcome the setting up of health and wellbeing boards, although we will have to watch how the money is spent to ensure that the maximum amount gets to the front line. Similarly, I welcome the proposed establishment of Public Health England, which will have the specific aim of reducing health inequalities.
Even more study is needed into, for example, the psychological aspects of why people choose lifestyle options they know to be harmful. Recent research clearly shows that many social problems, including the one we are discussing, stem from income inequality, not from absolute levels of income, and some interesting data are emerging. Sadly, income inequality also widened under the previous Government.
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I congratulate my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) on securing this important debate. She set out very well the challenges facing our constituents in addressing health inequalities, which still exist in the north-east, despite the progress made over the 13 years of the Labour Government. I have to say I found the hon. Member for Redcar (Ian Swales) somewhat confusing and confused about the nature of those inequalities—I suppose confusion is one result of trying to face both ways.
I want to make three broad points, and I will be interested in the Minister’s response to them. The first is about health spending in the north-east. The Government’s view is that NHS spending will continue to grow overall in the next few years, and figures from the House of Commons Library certainly confirm that planned spending is set to grow in cash terms. For 2010-11, the cash figure is £102 billion; by 2014-15—at the end of the spending round—it is set to be £114.4 billion. If we look at the issue in real terms, however, and we take 2010-11 as a base figure, the broad trend is essentially flat.
I do not, however, want to argue that point. Instead, I want to ask how that spending affects the north-east and institutions in my constituency. The Government will no doubt tell us that there is a 3% increase for PCTs this year. They will say that is evidence of their commitment to growing budgets; in fact, that is, effectively, what the Secretary of State said on this morning’s “Today” programme. However, the tariff that funds hospital treatment has been reduced. Next year, the budget of Northumbria Healthcare NHS Foundation Trust, which serves my constituency and those of a number of Members here, will be reduced by 1.9%. Hospitals have a key role to play in not only treating patients, but addressing health inequalities, and I want to place on record the excellent work done at my local hospital—North Tyneside general hospital—particularly in treating diabetes and stroke, where we have made huge advances in the past few years, although we are still running to catch up.
My first question to the Minister, therefore, is this: if PCT budgets are rising, why are hospital budgets, which are already under pressure, being cut? Where is the money going? Is it to pay for reorganisation? Will the Minister confirm the fear that PCTs are required to put the extra money into contingency funds to pay not only for reorganisation, but for other things that might arise? Will she confirm that if those things do not arise, that money will be clawed back by the Department of Health and ultimately, one fears, by the Treasury? That helps to explain the difference between the planned expenditure that the Government announced and the actual expenditure in the past 12 months.
The second issue I want to turn to is alcohol-related harm. The north-east has a reputation for heavy drinking, which in some ways reflects our heavy industrial past. The region does significantly worse than the English average on alcohol-related hospital admissions. In February 2009, Balance, the north-east alcohol office, was launched, based on the excellent work of Fresh, which works for a smoke-free north-east. For the first time, we had a strategy that covered the whole region on this issue. One of Balance’s concerns—I remain to be convinced on this issue—relates to the introduction of a minimum unit price for alcohol. There was no consensus in the previous Government on the issue. The Home Office, of which I was proud to be a member, was sceptical about
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minimum unit pricing, because it was most concerned about addressing alcohol-related crime and disorder. However, the Department of Health, which was more concerned about individuals’ health, was more positive.
Just before Christmas, the Prime Minister entered the debate in The Daily Telegraph, saying that he was in favour of minimum unit pricing and will overrule any Department or Minister who stands in his way. As my hon. Friend the Member for Newcastle upon Tyne Central asked, will the Minister confirm that the Government will introduce proposals for minimum unit pricing and, if so, when? Will she confirm that the Department of Health supports the policy? Is she personally committed to it? Is the Secretary of State a supporter of it?
Thirdly, I want to acknowledge the points that have been made about health inequalities being addressed only if we go beyond NHS professionals and make sure that individuals make the right choices about issues such as smoking, how much alcohol they consume and whether they eat healthily. The Government have a role to play—if they had not played a role, we would not have made the progress that has been made in recent years.
In my constituency, there is a clear link between health inequality and deprivation. Life expectancy in the borough of North Tyneside is 76.8 years for a man and 81 years for a woman, which is about 18 months lower than the English average. However, in parts of my constituency, such as Chirton ward, Valley ward, Collingwood ward, central Whitley Bay and central North Shields, life expectancy can be about 11.5 years less for a man and over nine years less for a woman than it is in the least deprived areas of our country.
As we have been told, the Marmot review recommended that the focus should be on the social causes of health inequality, and it highlighted the need for an effective integrated approach. In my constituency, however, health inequality is worst among those groups and those areas that are most likely to be hit by cuts elsewhere. My hon. Friend the Member for Strangford (Jim Shannon) mentioned Northern Ireland. I recall, as he will, that the Prime Minister—then the Leader of the Opposition—was interviewed by Jeremy Paxman days before the general election. They talked about the scale of public spending cuts, and the Prime Minister was asked to name the regions that would be hit worst. The first one off the tip of his tongue was the north-east and the second was Northern Ireland, so my hon. Friend and I, as well as my other hon. Friends, are here to raise these issues because our regions face the most cuts overall.
Let me give an example of what that means. North Tyneside council has to make £48 million of cuts over the next four years. Next year and in subsequent years, it proposes to charge bowling clubs more to use bowling greens. It also proposes to close more bowling greens in my constituency than in any other part of the borough. The outcome will be that fewer people will be involved in the sport. Many of them will be pensioners, and my constituency has one of the highest numbers of pensioners of any in the country. The proposal could have an adverse impact on their physical and mental health.
I am concerned about getting a joined-up, integrated approach—which just is not happening. The region has a better than average record of reducing child poverty and premature winter deaths, but what effect will the
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proposed benefit changes have, and what about increasing energy prices, which the Government appear powerless to do anything about? What about the impact of cutting Warm Front? That will affect not just the bills of people who are trying to keep warm, but their health.
Do the Minister and the Government believe that central Government still have a role to play in reducing health inequality? Will the Minister confirm that she is raising the issue of health inequality across Government, wherever Departments want to take action? I tell her this: in our region alarm bells are ringing about the effects on health and a range of other matters. Or has her Department, as the report of the Select Committee on Health suggests today, put its focus and energy on a costly NHS reform Bill, which no one asked for and for which there is decreasing support?
Guy Opperman (Hexham) (Con): My grandmother was an NHS matron, and I worked with health care professionals for nearly 20 years in my former profession as a barrister. I also spent far too much time as a patient, attempting to become an expert on all health matters. I probably hold the House record at the moment for the most time spent in hospital in the past year. I certainly spent a lot of time in hospital in my other former profession of jockey. I think that I have broken 19 different bones at various times. I was actually quite a good jockey, but I did not always stay on board in a 20-year career. If people ride over fences at 35 mph, they occasionally hit the deck.
I congratulate the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) on obtaining the debate and welcome the chance to speak on behalf of the citizens of Northumberland whom I represent. I should make a declaration that, before I first came to the House, I worked as a barrister in health care matters. I also worked for the Free Representation Unit, providing assistance as a lawyer in health care cases. I am proud that two successive Labour Governments gave me awards under the national pro bono scheme for lawyers. I do not expect that to happen again in a hurry, but it is still a great source of pride about the work that we did on behalf of patients.
As I was ill last spring and summer, I could not speak in the health debates about the children’s heart unit, but I am most pleased to support the Freeman hospital in its campaign to keep its amazing unit open. The hospital is outstanding. It is not in my constituency, but everyone in the north-east recognises that it is a flagship. We all very much support the work that it has done and continues to do. I was proud to see that my constituents Graham and Andrea Wylie, who have raised a phenomenal amount of money and supported the hospital very well, were able to bring their daughter Kiera home last week.
The debate is about inequality in health care, and all hon. Members present would acknowledge that disparities exist within the region. I accept that in Northumberland the quality of the health care and the results and optimum findings will be better than in some of the more urban parts of the region. There are also disparities by comparison with other parts of the UK. The point that I was trying to make in intervening on the hon.
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Lady was that clearly, when compared with Surrey or other places down south, there is a genuine difference. We all recognise that. The statistics are overwhelming. The point can also be made that in Scotland, in parts of Glasgow that I have been to, where life expectancy is barely 59 or 60 for some people, the situation is considerably worse.
I spoke in the debate on alcohol pricing before Christmas and expressed my support for an alcohol Act similar to the one that exists in Scotland. It seems to me that that is supported—to this extent I disagree somewhat with the hon. Lady—by a vast number of health care professionals and clinicians. I hope that the Minister will support that today. I welcome the fact that the Prime Minister seems to have swung behind the idea of an alcohol Act. We should all applaud the work done by Balance and Smoke Free North East. When I was a barrister, I used to see the effects of crime and the links to alcohol. Hon. Members who go out on the beat with the police in any of our constituencies will be aware that the rate of alcohol-related admissions is the highest in the country; 46% of all violent crime is alcohol-related; and about 50% of domestic abuse is alcohol-related. I strongly support the campaign of my hon. Friend the Member for Totnes (Dr Wollaston) to change the law.
To touch briefly on hospitals, I am lucky enough to have Hexham hospital in my constituency. I accept it was built by the former Prime Minister, Mr Tony Blair—[Hon. Members: “Personally!”] Not personally; he was not there with the bricks and mortar, but he certainly signed off on the upgrade to the original hospital. It is an outstanding hospital, with a tremendous cancer support group, which I went to listen and talk to in the summer. The quality of care and its integration into the health care trust’s programme is outstanding. However, I am pleased that finally, after successive Governments—I am going back in history 20, 30 or possibly even 40 years —the small hospital in the west of Northumberland called Haltwhistle is being rebuilt. It is impossible to go there without being asked when the hospital will be rebuilt, and I think that successive MPs have had to deal with that repeatedly.
I want to talk about inequality in relation to provision throughout the region. I represent the far west of Northumberland and the people of Bellingham, Kielder and the far west are very conscious of the fact that there is no hospital or ambulance provision all that close to them. There are outstanding paramedics and other people and a system that works very well, but there are rural inequalities, and I wholeheartedly support the campaigning by the Friends of Bellingham Surgery and by those who are trying to introduce a more integrated system to take care of the inequalities suffered by those who are far away from hospital. It is not easy to explain why the hospital at Hexham, which was built as a particular type of hospital, is unable to deal with certain things on an ongoing basis, including significant accident and emergency. It is necessary to drive past that hospital to Wansbeck, the Royal Victoria infirmary or other hospitals.
I am living proof that people should not necessarily go to the nearest hospital, but should go where the specialists are. I wholeheartedly support—I hope that the House does, too—specialist hospitals where people go for the best possible treatment. When I was taken ill
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on 26 April and collapsed in Central Lobby, I was taken initially to St Thomas’, which is a very good hospital; there is no dispute about that. I was subsequently taken to the National Hospital for Neurology and Neurosurgery, a specialist hospital for the treatment of meningiomas and brain tumours. I have broken umpteen bones, and I would want to go to the hospital that is best able to deal with the problem and that does so regularly.
I will finish on two matters on which I want to give support. First, I strongly urge local authorities to work together with the health care trusts during the coming changes, because across the region there are examples of local authorities’ failure to do that. I urge them to integrate the provision of services, particularly care, on a continuing basis. Finally, in the north-east, we are proud to be the champions of certain screening programmes. I raised the matter of bowel cancer screening in an Adjournment debate on 23 November. Two hospitals in the north-east, in South of Tyne and Wear and Tees, piloted bowel cancer screening by Flexi-Scope. It is likely that the pathfinders for the future will be there, too. I applaud and recommend to anyone the quality of continuing health care screening that successive Governments have introduced.
Mr Iain Wright (Hartlepool) (Lab): It is a pleasure to serve under your chairmanship, Mrs Riordan. I apologise for turning up late to this debate. I was chairing another meeting, which I was obviously doing badly because we overran our time.
I congratulate my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) on securing this debate, which is on one of the most important issues facing the north-east. The health inequalities in my own constituency are certainly unacceptable. For many years, the health of the people in Hartlepool has generally been worse than the national average. Although progress has been made, health levels remain too low and are not improving fast enough for many of my constituents.
Life expectancy in Hartlepool is lower than in the rest of the country. A boy born in Hartlepool today would expect to live until he was 75.9 years old, which is two years shorter than the national average. A girl born in Hartlepool would expect to live until she was 81 years old, which is longer than her counterparts in Middlesbrough, Gateshead, South Tyneside or Sunderland. None the less, her life expectancy is still more than a year shorter than the national average for girls and women.
Those figures have improved dramatically over the past 15 years, which reflects increased health funding, more investment in primary care, a greater emphasis on prevention and rising living standards. However, there are several worrying elements within the data. First, generally rising life expectancy rates mask huge inequalities within Hartlepool that simply should not be tolerated in a civilised society. A constituent of mine living in Stranton, Dyke House or Owton Manor would expect to die up to 11 years earlier than a similar constituent living in the area close to Ward Jackson park.
Secondly, the mortality rate for women of all ages has fallen across all parts of the country, with the exception of those in my constituency. Data show the contrasting fortunes of different local areas. In the decade after
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1998, the mortality rate for women in Kensington and Chelsea fell by more than 40%, but it barely moved in Hartlepool. I suggest to the Minister, who has some experience of Hartlepool, that women in my constituency consider the health of their children and family over and above their own. What can she do to address that cultural issue, so that the caring nature of Hartlepool’s womenfolk is retained, but not at the expense of their health?
Thirdly, much behaviour in Hartlepool leads to poor health outcomes. For example, estimated healthy eating, smoking rates and obesity are significantly worse than the England average. Although deaths from heart disease and strokes in Hartlepool have fallen, they remain well above the national average, while death rates from cancer remain some of the worst in the country. Hip fractures for people in Hartlepool aged 65 and above are off the scale by comparison with other areas in England. Why? It is mostly because of our place in history and the manner in which we have been affected by de-industrialisation.
Given our legacy as a place of heavy manufacturing, we have a disproportionate amount of people suffering from industrial diseases and injuries. I particularly want to highlight the number of chest-related diseases. The number of people suffering from asbestos-related diseases such as pleural plaques and mesothelioma is heartbreaking. The present Government’s delay in setting up any response to deal with those cases is prolonging the suffering for many constituents and their families. I urge the Minister to speak to her counterparts at the Department for Work and Pensions and the Ministry of Justice to ensure that the employers’ liability insurance bureau is established as quickly as possible.
I mentioned the de-industrialisation of the past 30 years. The loss of the shipyards, the docks and many of the steelworks and our engineering firms has hit Hartlepool’s prosperity hard. As my hon. Friend said, there is a very clear correlation between income, employment and health. Given the bad and deteriorating economic situation in my constituency and the wider north-east, the Minister needs to be mindful of the implications on health of the Government’s economic policy.
As unemployment in the north-east and in Hartlepool is high and rising, and there is a direct link between being unemployed and being unwell, the significant health inequalities that my constituents experience will only get worse. Only this week, the Centre for Cities highlighted a growing divide between northern cities and their southern counterparts in prosperity, innovation and resilience to an economic downturn in 2012 and beyond. That is bound to have a worsening effect on health inequalities, whether physical health or mental well-being.
The Minister will recognise the direct link between economic policy and health inequalities. How will she combat the health fall-out from the failures of the Chancellor’s economic policy and the neglect of the north-east? The problem will be made worse by the
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Chancellor’s announcement in the autumn statement to regionalise public sector pay. That will have enormous repercussions on the NHS in the north-east. Although highly professional, the NHS in the region is already struggling to recruit and retain appropriate staff tasked with addressing health inequalities in our region. Health services are already under strain not merely because of budgetary pressures, but because of difficulties in recruitment.
My hon. Friend the Member for Tynemouth (Mr Campbell) mentioned difficulties in attracting and recruiting GPs. My area has one of the lowest GP per capita rates anywhere in the country, and that does not help to reduce health inequalities. Does the Minister not think that that problem and therefore health inequalities will get worse under the Chancellor’s proposals for regionalised pay, and how will she counteract it with regards to recruitment and retention in the NHS?
Let me refer to the ongoing saga of the University hospital of Hartlepool. The Minister will be aware of the closure of accident and emergency last year, which no one in Hartlepool wanted. It has been announced recently that some services will migrate back, which is very welcome, but the whole health economy in my area and, by implication, the health inequalities in the region remain uncertain because of the lack of a clear decision about the new hospital and its funding arrangements.
Will the Minister today provide some clarity about what will happen with regards to the future provision of a hospital in Hartlepool? I do not want to take away the welcome news of a new hospital for the constituents in Hexham, but what about my constituents in Hartlepool? Will she reconsider the proposals put forward by Lord Darzi five or six years ago? In short, can we have clarity with regard to the ongoing provision of a hospital in Hartlepool?
We in the north-east and in Hartlepool have suffered for far too long with disease, ill health and early death, much of which is linked to deprivation and poverty. Government policy threatens to make that worse, so I hope that the Minister can provide us with some reassurances this morning.
Grahame M. Morris (Easington) (Lab): It is a pleasure to serve under your chairmanship for the first time, Mrs Riordan. I congratulate my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) on securing this debate. The number of Opposition Members who are present today is a testament to the issue’s importance. I wish we had a little longer to speak, because I will have to truncate my remarks.
I served on the Committee that considered the Health and Social Care Bill, and I am a member of the Health Committee. As someone who has worked in the health service for more than a dozen years, I can say that the subject is very close to my heart. I am grateful to a number of organisations for their work, including the Association of North-East Councils, the National Education Association, the Campaign for Warm Homes, Durham county council, the North East Public Health Observatory and Health Works, which won a national award last week for its innovative and pioneering work
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in tackling health inequalities at the very heart of my constituency, and I thank that organisation for the information that it provided to Members for this debate.
The NHS reforms contained in the Health and Social Care Bill are only one aspect—a very important aspect—of how Government policies will increase health inequalities. We must make it clear that there is no consensus on this matter. There is clear blue water between the views of the Opposition, who think that resources should be applied to the areas of greatest need to address real and fundamental problems, and the attitude of Government Members. Across every Department, coalition policies will exacerbate socio-economic inequalities and, ultimately, health inequalities, as indicated by Professor Sir Michael Marmot in his report. I wanted to mention some figures in my region, but I do not have enough time.
Chronic obstructive pulmonary disease, or COPD, is particularly prevalent in the north-east. It is often associated with heavy industry, coal mining and the like. Last year, my own primary care trust received a national award for its innovative approach to tackling this public health issue within our community. COPD costs the NHS an estimated £491 million every year.
I want to focus on two significant issues in the limited time that I have: first, inequalities in access to health service, which is a key factor that influences health outcomes; and secondly, the broader problem of health inequalities produced by deep-seated differences of social class.
As we have heard, in 1979 the Government’s chief scientific adviser, Sir Douglas Black, produced a report on the extent of health inequalities in the UK, and he acknowledged that the NHS could do much more to address those inequalities, alongside other improvements across the Government. As I mentioned earlier, those improvements include ones to child benefit, maternity allowances and pre-school education, as well as an expansion in child care and better housing. All those changes would address health inequalities.
Those findings by Sir Douglas Black were subsequently reinforced by further research and reports by Professor Peter Townsend and Sir Derek Wanless and more recently by Professor Sir Michael Marmot, all of whom I have had the pleasure to meet in one forum or another before and after I was elected to serve in the House.
There is a stark danger—a clear and present danger—of a downturn in the progress that has been made in addressing health inequalities because of decisions being made by the Government, both in the Department of Health and elsewhere, and severe cuts to services for the most vulnerable. That makes it all the more important that the NHS focuses on tackling health inequalities. Let us make no mistake: under Labour, good progress was made to address health inequalities, but a great deal more needs to be done.
I have served on the Health and Social Care Bill Committee for a year now, as well as on the Select Committee on Health, and I would argue that that Bill changes the fundamental aspects of our NHS. The NHS has been fragmented, with privately led commissioning, the reintroduction of a postcode lottery,
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an unco-ordinated health system and greater competition. That fragmentation risks entrenching the inequality of access to health services and health outcomes. Fragmentation is the antithesis of a co-ordinated approach. We need more co-ordination, more integration and a more focused approach.
Stephen Thornton, chief executive of the Health Foundation, talked about health inequalities when he was one of the expert witnesses who gave evidence to the Health and Social Care Bill Committee. He said:
“a duty needs to be placed on the national commissioning board and the consortia”—
“to embed shared decision making in all care and treatment”.––[Official Report, Health and Social Care Public Bill Committee, 8 February 2011; c. 19.]
The cuts that are falling across every Department are clearly hitting the poorest hardest. The Association of North East Councils has shown that the north-east will be worst affected by those cuts between now and 2013. Child poverty is rising in my constituency. Currently, one child in three in my constituency is living in poverty, but in the Eden Hill ward in Peterlee 48% of children are in poverty, and in Deneside in Seaham, which is next to where I live, the figure is 40%. Those figures should concern not only the local MP but the national Government.
Recently, the TUC produced figures after the unemployment figures were released that show that, on average, 7.5 jobseekers are chasing every vacancy, but in the constituency of my hon. Friend the Member for Hartlepool (Mr Wright) the figure is as high as 24 jobseekers chasing every vacancy. Youth unemployment is rocketing, and the coalition Government seem to have no intention of reducing health inequalities.
Ian Lavery (Wansbeck) (Lab): I will make a very brief intervention. My hon. Friend has just mentioned statistics about child poverty, unemployment and jobseeker’s allowance applications, and earlier in the debate other colleagues talked about the inequalities in the north-east regarding the situation within the NHS. Those statistics and that situation are wholly unacceptable. The Prime Minister said before the election that he would attack the north-east first and then Northern Ireland second. That is happening. With the Welfare Reform Bill, there will be a continued attack on the north-east. Does my hon. Friend agree that that does not bode well for the future of the people in the north-east and that things can only get worse?
Grahame M. Morris: I am grateful to my hon. Friend for that intervention, and I agree with him. I was shocked to attend a meeting in my constituency last Friday about the contingency plans that are being put in place for emergency feeding centres after 2013. Those centres are the soup kitchens that we have not seen since the 1930s or the miners’ strike in 1984.
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Government than they had been when we took office in 1997. My plea to the Minister is this: raise the standards and be a champion for public health and not an apologist.
I congratulate my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) on securing this debate. Also, I want to welcome to Westminster Hall the two Tanzanian women MPs who are shadowing me today. Whether they like it or not, they are finding out a great deal about health inequalities in the north-east of England.
I will be very quick; I am becoming good at truncating my speeches now. We have heard some excellent speeches that have been based on well researched statistics. I do not intend to use any statistics today. I will be unashamedly emotional and, like the hon. Member for Hexham (Guy Opperman), I will start by talking about my own family, because I want to talk about the practicalities of health inequalities.
I attended a memorial service in the village of Esh Winning last summer, which was to remember the men—they were men—who had died in the three pits of the Deerness valley. There was a huge list of men who had died; there were 75 names on it. Those three pits had never had a major disaster, but over 100 years 75 men were killed in them, including my grandfather, Andrew Corrigan, who I think was 27 when he died, and his brother, Peter, who was 25 when he died. They were on my father’s side of the family. On my mother’s side of the family, however, Alix Wright, who was 25, and his brother, Jack, who was 22, died in the trenches of world war one within two months of each other.
I will not pretend that wartime deaths were unique to the north-east, but they came on top of all the health inequalities that existed in the north-east. If people survived the trenches and the pits, they were very likely to succumb to consumption, problems in childbirth or the diseases of poverty. That continued right through the two world wars, and through the ’50s, the ’60s, the ’70s and ’80s. We created tens of thousands of ships, we hewed coal and we made iron ore into steel. That industrialisation left us with a massive legacy in the north-east—a history of early deaths from cancers, emphysema, stroke and heart disease.
The Labour Government did something about that situation. For the very first time, they focused on the social causes of health inequalities and put together a planned and integrated system to level the playing field. What concerns me is that, although the current Government are saying that they are committed to tackling health inequalities, what we are seeing is a complete difference between the drivers that they have put in place to deliver their stated objectives and what actually happens. There is a real skew between what they say and what they do.
I sat through the debate yesterday in the main Chamber on food prices. I do not want to be rude but I must say that it was almost as though the Secretary of State for Environment, Food and Rural Affairs was handing out
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bouquets at a village fete. We are faced with people telling us that there have been massive increases in charitable food banks and in middle class poverty; a return of diseases such as rickets among children; and children being admitted to hospitals during school holidays with malnutrition, which shocked me. However, the Secretary of State said to us that she welcomed the increase in food banks as a sign of the success of the big society. I see that as being a massive skew between what the Government are saying and what they are actually delivering.
I will finish by saying that in the north-east we have things that we are rightly proud of. We have a proud history; we fired the industrial revolution. As I have already said, we built tens of thousands of ships and we provided the powerhouse for this country for many years. And we have things that we can still rely on: our community and kinship; our social cohesion; our stability; and our wonderful surroundings, of which we are rightly proud. But we are saying to the Government, “You have a duty to ensure that we live long enough to be able to enjoy these things.”
I congratulate my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) on securing this debate. Its importance to the north-east is exemplified by colleagues’ high level of attendance this morning, but it is also important because the lifestyle issues and the social and, if I might say so, class determinants behind health inequalities lie at the heart of bringing down levels of acute diseases such as cancer and heart attacks. Until we tackle the range of public health issues that underlie health inequalities in the north-east, we have no hope of building a healthier Britain overall, or of containing the cost of the national health service.
My colleagues have comprehensively dealt with the data on health equalities in the north-east, and I do not plan to repeat most of them. I want to talk specifically about smoking and alcohol, which are big issues in the region, and to pose some questions to the Minister. I was very pleased to visit Newcastle last year, at the invitation of the then, and current, leader of the city council, Councillor Nick Forbes. I chaired a round table on tobacco and alcohol, and heard about the work of Fresh under the leadership of Alisa Rutter, and saw a presentation by Balance North East. On the same day, I visited Newcastle Royal Victoria infirmary and discussed the devastating impact of the excessive alcohol consumption in the local community with a top north-east liver specialist and consultant gastroenterologist, Dr Chris Record. He kindly gave me a chart of alcohol units, and I have it up in my office because I need reminding that the average glass of wine nowadays contains 2.5 units. How many people know that?
There is no question but that we did not achieve all we wanted to on health inequalities under the previous Labour Government, but we did make progress, and I hope that the Minister will acknowledge that. Drilling down into the overall figures shows that we made
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progress in specific areas, and the Minister acknowledged during a speech to a fitness industry conference in London that the previous Government were indeed firmly committed to reducing health inequalities. As colleagues have said, and as the North East Public Health Observatory tells us, the health of people in the north-east generally is worse than that of people in England as a whole, and that is largely to do with the social determinants I referred to earlier, and also the region’s industrial legacy.
I now want to talk specifically about tobacco. Work in this area is an example of good practice and partnership, but it is the sort of public health work that is potentially threatened by some of the changes the Government are bringing forward. Smoking remains the major cause of premature death and disease in the north-east, killing more than 5,000 people a year. It costs the region £174 million, the NHS £104 million—£35 million through passive smoking—and businesses £34 million in absence days alone. The average age at which people start smoking in the north-east is 15. The region has historically had the highest smoking rate in England, but, as we have heard, the rate has come right down due to the activity of Fresh.
Fresh has won all sorts of awards, including the gold medal in the inaugural chief medical officer’s public health awards, and it delivers work across eight key strands, but it is concerned about the changes in public health that are coming forward. It is currently funded on an annual subscription basis by all 12 north-east PCTs, and the PCTs are worried about what will happen when they finally fold. I understand that discussions are under way to secure the continued commissioning of the Fresh programme by local authorities. Is the Minister aware of those discussions? Can she update the House on what progress has been made to secure funding for this important and successful initiative, which is leading the nation?
Fresh is also concerned about the loss of the regional tier of tobacco control programmes in England as a whole, and the advent of the localism agenda might make it more difficult for local authorities to co-ordinate, and to attack some of the public health issues. How will the Government ensure that all local authorities prioritise tobacco issues? How does the Minister plan to ensure that there is no fragmentation or duplication of resources and efforts when the PCTs go? How will she ensure that localities work together to achieve economies of scale and have a population-level impact, as we have seen happen so successfully with Fresh? Can the Minister tell the House today when the new tobacco marketing strategy will be published? Will the Government ensure that there is a clear focus on tobacco?
Alcohol is another major cause of health inequalities in the north-east. We know that generally the affluent tend to consume the most, but for a variety of reasons the health effects of disproportionate alcohol consumption are felt most keenly among the poorest, and in areas such as the north-east. We also know that although in a recession levels of drinking tend to level off, among young people they go up, and we are seeing evidence that levels of self-harm are going up among young people. Alcohol is therefore a worrying issue, not just because of the physical health issues, but in relation to mental health and public order. The north-east continues to have the highest rate of alcohol-related hospital
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admissions, and in the past nine years alcohol-related liver disease has increased, sadly, by 400% among 30 to 34-year-olds, which is the highest rate in the country. I want, therefore, to know from the Minister about the Government’s alcohol strategy. Is she content that the constituents of my hon. Friend can buy two litres of cider for £1.34? That is less than the cost of an equivalent quantity of a soft drink.
On my recent visit to the region, I found that availability was a genuine concern, with alcohol available 24/7 and many off-licences centred in the more deprived areas. I see that in Hackney; we have more off-licences and bookies than shops where we can buy fresh food.
Last September, the leader of Newcastle city council, Nick Forbes, amended a motion calling for the introduction of a minimum price for alcohol. He made the motion more comprehensive, calling for a wider range of measures to address the availability of alcohol. They included more powers for the council to refuse or withdraw licensing applications, following a report last year that linked under-age drinking to areas with a high density of licensed premises. Nick Forbes said:
“Figures show that alcohol is being sold for pocket money prices in Newcastle. Cider is available for 16p a unit…Most pubs back the idea of a minimum price for alcohol, as it would only affect the loss-leading deals offered by some supermarkets and wouldn’t have any impact on the price of a pint. It’s a controversial step, but there’s evidence that more and more people are ‘pre-loading’—downing cheap spirits at home before going out on the town. Minimum pricing would reduce this, and thereby reduce the overall figures for anti-social behaviour and hospital admissions”.
What decisions are being made at a national level to support local leaders such as Nick Forbes, who are committed to reducing health inequalities overall, and are taking strong action on issues such as alcohol?
The figures show that NHS North East has been told to set aside £143,350,133 to pay for the Government’s plans over the next two years. The NHS operating framework published in November requires health trusts to set aside 2% of their budget to pay for the Health Secretary’s changes in the Health and Social Care Bill. County Durham PCT has to set aside the greatest amount, followed by Sunderland and Northumberland. It is wrong to force local health trusts to set aside money to pay for bureaucracy and redundancies, when patients in the north-east, and constituents up and down the country, are waiting longer for treatment.
The Minister will know that the Heath Committee, chaired by not just a Tory Member of Parliament but a distinguished former Health Minister, the right hon. Member for Charnwood (Mr Dorrell), has raised a number of concerns about public health. It is concerned about whether the so-called responsibility deals can help alcohol and obesity problems, and about whether the health premium will just involve money going to people in regions where they are managing to tackle the problems, perhaps because they do not have the underlying social and class issues of other regions, at the expense of
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regions with genuine problems. The Health Committee also raised concerns about the closure of public health observatories in regions including the north-east.
What we are debating is not just a matter for the north-east. The underlying social issues apply to the health service all over the country. Even the north-east, with all the challenges posed by its industrial past, has examples of excellence and of path-breaking partnership work. We want an assurance from the Minister that the proposed changes—the confusion, chaos and cuts—will not hold back that work, and that she will not confine herself to discussing Labour’s record in general terms but will address the issues that affect the day-to-day lives, life expectancy and life chances of millions of people throughout the country, including in the north-east.
The Parliamentary Under-Secretary of State for Health (Anne Milton): It is a pleasure to serve under your chairmanship, Mrs Riordan. I congratulate the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) on securing this debate on a matter of considerable importance, and not only for the UK. Non-communicable diseases are a problem around the world, and inequalities also exist in Tanzania. I welcome Tanzanian MPs’ interest, as I do my new daughter-in-law, Maureen Rachel Mwasha, who married my son in Dar es Salaam at Christmas.
However, I will return to inequalities, if you will forgive me, Mrs Riordan. It cannot be right that people in one part of the country are likely to live about 11 years longer than people elsewhere, or that the likelihood of developing heart disease or cancer is determined to a significant degree by postcode. I stress that some of the detail of inequality is missed, and that it is necessary to consider large, significant but often hidden populations of inequality in otherwise affluent areas.
As the hon. Lady mentioned, inequalities in the north-east are particularly poignant and generally worse than in England as a whole, but although I recognise that spending on health increased under the past Government, so did health inequalities. As the hon. Member for Hartlepool (Mr Wright) stated, links between education, employment and health are well recognised, but we inherited a dreadful budget deficit, a terrible economic climate and worsening health inequalities.
Health in the north-east has historically been poor due to a legacy of heavy industries such as coal mining and shipbuilding, lifestyle choices and a complex web of factors. Levels of deprivation are high and life expectancy for both men and women is lower than the national average. Members might be interested to know that the Hartlepool shadow health and wellbeing board is already having a detailed debate about tackling the issues mentioned by the hon. Gentleman, including child immunisation. The proposed health reforms are enabling the people of Hartlepool to address the issues through local solutions instead of a top-down approach.
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Even within local health authorities, wide and unacceptable health inequalities remain. Life expectancy can vary by as much as 18 years within a relatively small geographical area. On the plus side, although previously falling rates of early death from cancer have started to level off, death rates from all causes among males have fallen faster than the national average in recent years.
Anne Milton: I have only six minutes, and I have numerous questions to answer. The north-east has made commendable efforts to tackle its problems, acknowledging some of the things that happened under the last Government. At the core of Better Health, Fairer Health is a drive to tackle inequalities through multi-agency partnerships.
The north-east has its own tobacco control office, the first of its kind in the UK; Fresh began life in 2005. I am sure that the local authorities will recognise the work that has been done. It will be down to them to decide how the money is spent in local areas to improve their stubborn smoking rates. In the north-east, Fresh has managed to reduce the number of smokers by 137,000, and local NHS stop smoking services continue to provide support to the highest number of people in England. We in Government have introduced a tobacco control plan, and I assure the hon. Member for Newcastle upon Tyne Central that we will be consulting on plain packaging and continuing progress, as detailed in the plan, which I am sure she has seen.
However, the major part of poor health in the area will be remedied only by widespread changes in behaviour. It is this Government’s policy to encourage people to change how they live—[ Interruption. ] Hon. Members might gain slightly more from this debate if they listened to the answers rather than shouting at me from across the Chamber. We cannot frog-march people out of the off-licence, compel them to stop smoking or force them to practise safe sex. Our challenge is to make the case that freedom without responsibility is not sustainable, so for the first time, allowing for the progress of the Health and Social Care Bill through the House, the Secretary of State will have a specific responsibility to tackle health inequalities, whatever their cause, and will be backed up by similar duties— [ Interruption. ]
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For the first time, the Secretary of State will have a specific responsibility, backed up by similar duties on the NHS commissioning board and clinical commissioning groups, which will create a focus on reducing those inequalities.
Balance, the north-east alcohol office, was set up in 2009. Its remit is to change the culture of drinking to reduce alcohol consumption. The hon. Member who raised the issue might do well to remember that one of the problems with alcohol involves the discrepancy in price between supermarket alcohol and alcohol sold in pubs, and that the Licensing Act 2003, introduced by the previous Government, played a significant part in the availability of cheap alcohol.
We are doubling the number of family-nurse partnerships and increasing the number of health visitors by 4,200, and we have said that we will increase NHS funding, but critically, we will improve people’s life chances by ring-fencing public health money for the first time, so public health budgets will not be raided to fund services. We are introducing the first public health outcomes framework.
The hon. Lady mentioned older people. This year, a £30 million budget is being distributed to local authorities so that they can take action locally in ways that will reduce the number of local resident deaths from cold weather. I remind hon. Members that the previous Government’s policy was to cut funding in the NHS. We are ring-fencing the public health budget and increasing duties on the Secretary of State.
The proposed mandate for the NHS commissioning board and the suite of outcomes frameworks for the NHS and public health will enable organisations to be held to account for the first time on health inequalities. The Health Secretary will also have new responsibilities to address health inequalities as part of the NHS reforms.
The hon. Member for Tynemouth (Mr Campbell) is confused about funding. I point out to him that the Department does not distribute funds to local hospital trusts. He mentioned alcohol in particular. It would be simplistic to suggest that the rise in alcohol harm and alcohol misuse is due to price alone. The issue is complex, and we will be introducing an alcohol strategy in the near future.
Tackling inequalities and supporting the principles of the Marmot review are a priority. Inequalities are deeply embedded in society and highly resistant to change. What echoes with this Government is the fact that public health funding will finally get the priority that this country deserves and that was missed by the previous Government.
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Richard Harrington (Watford) (Con): It is a pleasure to serve under your chairmanship, Mrs Riordan, and I am pleased to see so many hon. Members present, particularly the Minister for Further Education, Skills and Lifelong Learning and the shadow Minister, the hon. Member for Chesterfield (Toby Perkins).
This debate came about as a result of a conversation between me and my hon. Friend the Member for Wyre Forest (Mark Garnier), who is sitting next to me, about people in this country setting up their own businesses. We reached the conclusion that not enough people do so. Everybody knows the benefits of people setting up their own businesses, but there is a certain culture against self-employment and business in this country, notwithstanding everything that this and the previous Government have tried to do. Politicians brand the terms “entrepreneur,” “small and medium-sized enterprises” and similar without really understanding what they are about. My hon. Friend and I have, therefore, decided to focus the debate on how Governments can change attitudes.
Like so many people of my generation, I was the first member of my family ever to go to university. Few people at that time had the idea of setting up their own business, and I do not think that much has changed. I have two sons, one in his late teens and the other in his early 20s, and from what I have observed of my family life, as well as that of my sons’ friends and during my constituency duty of visiting schools—some very good, others not so good—and further education colleges, there is very little idea, culture or yearning among people, from the most academically gifted to the least so, to set up their own business. However, I commend people such as my hon. Friend the Member for Newton Abbot (Anne Marie Morris), whom I am pleased to see and who is co-chair of the all-party group on micro-businesses. Others have also tried very hard in the main Chamber, as well as elsewhere in the Palace of Westminster and throughout the country, to help the cause of small business. The Government themselves have also made a lot of effort, and I do not feel that it would be right for me to criticise them.
This debate will be divided into two halves. I will deal with social, cultural and educational barriers, and what I think the Government might do about them. My hon. Friend the Member for Wyre Forest will then deal with taxation, regulation and other more direct governmental aspects. It is also nice to see so many other hon. Members present who want to take part.
On the face of it, self-employment seems to be going well. Recent figures show that 300,000 people have become self-employed in the past year, which means that they are registered with Her Majesty’s Revenue and Customs as being self-employed, but I do not think that that necessarily means that they have set up their own business. Some of them will, legitimately, have taken on part-time functions that classify as self-employment. I do not want to get into a political debate about whether that is self-employment or not, or whether the recession is to blame, because I want to focus on a culture that will give ambitious young people the desire to set up their own business.
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The education system is the most important opinion-former for young people, and many aspects of it are encouraging. Like many other hon. Members, I have Young Enterprise groups in my constituency. We have Hertfordshire Young Enterprise in Watford, and I have seen many teams of young people setting up little businesses at school. They are largely supported by voluntary contributions from local businesses and they get mentors. In fact, only last Saturday, there was a display of the best teams at the Harlequin centre in Watford, which is well known to some Members present and to those more illustrious alumnae of the better Watford girls school—without naming names—whom I am also pleased to see present. It is interesting to see that these teams set up real businesses, producing bracelets, handbooks and all sorts of things. Some of the products make them a bit of money, and it is good to see local businesspeople helping them. This, however, is only useful if it gives those young people a desire to say that, when they graduate—assuming that they want to go to university; I am not saying that that is necessarily the most important thing—they want to set up a business, but I do not find that to be the case.
I recently visited Watford grammar school for boys, which is one of the better schools in the country— 30 boys are going to Oxford or Cambridge this year. After I finish my talk to the sixth form, I always ask them what they want to do after university—most of them go to university, but I would ask a similar question at a school where not so many pupils do so. When I ask how many want to be lawyers, accountants or involved in advertising or the media, many hands go up, but when I ask who wants to set up their own business, very few want to do so, including those who have taken part in the education system’s successful schemes.
Toby Perkins (Chesterfield) (Lab): The hon. Gentleman is making an important case for the role that education can play. Another part of getting young people excited about running their own business is the experience of those who do so at the moment. Today’s Financial Times includes an article on an Aviva report that involved interviewing 500 owners of SMEs for its research. A quarter of them said that they were considering returning to work as an employee, because of how difficult it is at the moment to run a small business. When people who actually run their own business find it that difficult, will it not be more difficult to persuade young people to do so?
Richard Harrington: The shadow Minister makes a valid point. I read that article in the Financial Times online—if I cannot sleep at 3 o’clock in the morning, I find that that is the best way to get back to sleep. It focused on the general problems of the economy and how much more difficult it is for people who are self-employed and have their own business. Some of those people look towards employment as an answer, and I do not disagree with anything that was said. I am sure that some people want to go back to the comparative security of employment, but I do not think that that changes my main argument. People becoming self-employed and setting up their own businesses is one of the most important things for this country to expand the economy.
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immigrants who are self-employed. My hon. Friend’s premise is to get young people engaged in self-employment. Does he agree that part of the challenge is getting started, which is always very difficult, particularly for young people who feel insecure about doing so? Does he also agree with the concept of a youth investment fund to provide Government funding or incentives that give people a cushion and confidence to develop their own ideas to become self-employed?
Richard Harrington: I appreciate that comment, because I intend to address the youth investment fund, which is important. Indeed, Sir Richard Branson has expressed an interest in this debate. He is elsewhere in the House at the moment and will join us later. The fund is important, but it is just one aspect and I hope to come back to it shortly.
On the education system, it frightens me that 60,000 people a year do GCSE business studies—this was true of my own sons—and are forced to learn accounting ratios, liquidity ratios and the difference between US generally accepted accounting principles and British accounting standards, but there is nothing whatsoever that will give any of them any desire or incentive to relate to business as they see it, which is buying a product and selling it at a profit, or providing a service for which people will pay. That is a real gap in the system, which, at the moment, is filled by Young Enterprise and various other very good schemes. However, that does not change the deep cultural point that people in this country do not perceive business as something to do that is either socially or economically worth while.
Mrs Helen Grant (Maidstone and The Weald) (Con): On igniting the flame of desire for a young person to start a business, does my hon. Friend agree that it would help if we had better, bolder, more ambitious career advice encompassing enterprise for our kids and young people at school and university?
We have to tell young people that setting up a business and employing people is socially acceptable and good for the country, and that they will make a lot of money. If they want fast cars, big houses and all that stuff, providing they pay their taxes, well done to them. It is very easy in politics to take examples of capitalism not working, of people being paid large amounts of money without doing much work for it and of people avoiding tax. We all have our views on those things and I think that everyone would agree that many of those issues need correcting. However, my fear is that such matters help to fuel the view among young people that business is not a very cool thing to be in, which is not right.
A socially responsible young person should be told, “Yes, you can do the kind of occupation that is directly socially responsible. You can be a teacher; you can be a nurse; you can qualify as a doctor and help to cure cancer; you can be a social worker. Those are all very good. But if you decide that you want to go into business and employ people, providing you pay your taxes, that is as much use to the country, if not more,
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because you are helping many people in their way of life. You are helping to fund the teachers, the doctors and the social workers and it is a very, very creditable thing to do.” Society should say to such a young person, “Well done to you. You have done something that is very worth while. Do not believe the stuff about Gordon Gekko and greed is bad. Actually, greed is quite good. Providing you pay your taxes and employ people, you are really contributing a lot to society.”
One of the big problems in this country is leaping over that barrier to make people think. Let us consider the notion of wanting things. People will only go into business to make money. I did it to make money. I did it because I did not have any money, and I did not like not having it. There is nothing wrong with that. People have to understand that going into business is a good thing to do. When I got my business to the level of employing 600 people, it was a constant nightmare. I was often worried. I did not sleep at night for thinking, “Have I done the right thing?” My wife once told me at 4 o’clock in the morning—she did not help matters; she never says things at 4 o’clock in the morning that help matters—that I was directly responsible for the lives of nearly 2,000 people. That is quite a burden of responsibility. People might think, “He’s filthy rich,” or, “He makes loads of money.” However, whatever people think and say about those in business, they do not believe that they are performing a socially responsible function.
I want the Government and all of us who are in the opinion-forming business—that is what politics is, irrespective of what party hon. Members belong to—to realise that something has to be done to change that attitude, because it is in the national interest.
Julian Smith (Skipton and Ripon) (Con): Does my hon. Friend agree that teachers have a major role to play? What does he think teachers need to be doing and saying to young people on the subject of enterprise?
Richard Harrington: I thank my hon. Friend for that comment. The problem is that teachers by definition have chosen teaching as a career, so it is very hard for them to communicate on that. I do not want to take much more of this Chamber’s time, but I will come on to a proposal that I think answers my hon. Friend’s question.
I am not being critical of what the Government are doing. Yesterday, the Prime Minister and other Ministers made an announcement about this year being the year of the business and said that a minibus will go around different institutions, helping to give people the idea to set up businesses. All that is very good, but the cream of young people who are thinking, “I’m going to go to Goldman Sachs,” or, “I’m going to become a top man or woman at the Bar,” or, “I’m going to be a partner at Deloitte,” need to think, “Actually, the status of my setting up my own business and employing people will launch me to a higher level in society. I will be applauded and not thought of as a person who tries to avoid taxes and should hide the fact they have bought a decent car.”
The last vestige of the class system in this country is contained in the attitude that business is a bit grubby, something to be looked down and not something that proper chaps do. Until we change that attitude, we will
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not have enough people setting up businesses, employing people and providing the growth that we need in the future.
George Freeman: I congratulate my hon. Friend and my hon. Friend the Member for Wyre Forest (Mark Garnier) on raising this important debate. I also congratulate Virgin on the support and work that it is doing in this field. Like many hon. Members here, I am sure that he agrees—he has touched on this—that part of what we must do is to help those youngsters who do not have the experience of entrepreneurship and self-employment through their family, so that they can experience it through schools. Many of us in our constituencies can help and, indeed, are helping with schemes. In my constituency, we have set up a programme called the Norfolk Way enterprise bursary and we are linking school leavers with local businesses, which can be very empowering. Lastly, does my hon. Friend agree that it is very striking that some of our best entrepreneurs, for example, Richard Branson and Bill Gates, are not graduates? They started their businesses pre-university, which sends a very powerful message to youngsters who are feeling disillusioned and disengaged by the mainstream curriculum. Some of our most deprived communities could benefit hugely from such initiatives.
Richard Harrington: My hon. Friend makes very valid points. I hope that I speak for all hon. Members involved in this debate when I point out that Richard Branson and Bill Gates are examples of people whom we would regard as being very successful and would look up to. Both Richard Branson and Bill Gates were rejects from the mainstream academic system. Obviously, when I say “rejects”, I do not mean that they were not up to it, but that they were, through whatever personality they had or whatever came about, not part of it. My hon. Friend’s helpful intervention supports my argument, rather than the other way round.
In my constituency of Watford, there are some excellent initiatives. For example, Wenta, which is run by Chris Pichon and Sharon Gaffney, has many schemes to help schools give young children the opportunity to become entrepreneurs and to create an incubator for people who are without a job to help them set up their own business. Lots of good efforts are happening, but the fundamental point is to ask people to think culturally, socially and educationally. There is still a feeling against the acceptability of business in this country that is not present in Germany or the United States. As I have said, such an attitude is a result of hundreds of years of looking down on business.
David Morris (Morecambe and Lunesdale) (Con): I agree with everything my hon. Friend has said. Back in the 1980s, the manpower allowances service scheme was brought in by Margaret Thatcher’s Government. That scheme took people who were on the unemployment register and gave them twice the amount of unemployment benefit, so that they could go self-employed. Indeed, I was one of those people, and I built up a business that employed more than 100 people and experienced the same sleepless nights as my hon. Friend.
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Richard Harrington: I absolutely agree. Indeed, I was also one of those people. My hon. Friend is talking about a business start-up scheme whereby if someone was unemployed, they got £100 a week. If they did well, they paid tax on it. That scheme helped a lot of people to start their business. I think that my hon. Friend the Member for Wyre Forest will discuss many of the schemes that the Government are doing.
I have a final proposal for the Minister. There should be an institution at university level—whether it is called a university technical college, a special university college or whether it is part of an existing university, such as the university of Hertfordshire, which does a lot of work in the field of business studies and management training—that exists entirely to train and help people to set up businesses. The course should be run predominantly by people who are successful in business and who are prepared to give up their time to do that, rather than by people who have taken business studies. At least half the course should involve practical work on how to set up a business. Sir Richard Branson’s scheme for the youth investment fund could help to fund it, as perhaps could the Government if local business people were to become involved. Students may include mature students as well as those from sixth forms going into the normal higher education system, and when they graduate they should have set up a business that either works and is doing well, or does not work. If it does not work, it should not mean that they do not graduate, because many people in business try things that do not work.
George Hollingbery: I have set up several businesses, some of which were not successful, but one of which was, and I am very aware of the shadow Minister’s reasonable point that 25% of people are seeking to go back into employment because of the difficulty in starting a business. Does my hon. Friend agree that we must be careful not to sugar-coat setting up a business? It is a difficult career, full of challenges, and if we teach it in schools and universities, we must be realistic. People must understand that failure is part of the education process, and that although it may lead to success, the road on the way will be bumpy.
Richard Harrington: That is an exceptionally good point, and I am sorry that my hon. Friend, like me, in later life has had to do the job that we are doing now instead of being in business. However, I know that he, like me, benefited greatly from his time in business. His serious point was well made. The alternative of salaried employment for a company is not secure either, and many people lose their jobs. My generation may be the last one that believed that the professions provided a job for life. There is a risk element now.
I return to my university college, which I hope the Minister will immediately decide should be located in Watford, because that is the obvious place for it. Watford is a good example for small businesses. It used to depend on two heavy industries—printing and lorries—but
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it now has more than 1,600 small businesses, and the employment background is small business, so Watford would be a suitable place for the college. It would be an ideal location because of being well known internationally as a centre for commerce, culture, intellect and so on.
My serious point is that the Government, with all the excellent measures that they are taking, should consider introducing a degree on setting up a business—obviously, that is not what it would be called—helped by local business people who would agree to take part for perhaps two or three days a week. Students could set up real businesses that would go on to provide real employment for people. That is where academia should meet the practicality of setting up a business.
Mrs Grant: Does my hon. Friend agree that banks need to be more reasonable in their behaviour and attitude to businesses and potential business clients, and that if they were, that would encourage business and future enterprise? At the moment, banks are so overly cautious that they are impeding business.
Toby Perkins: I want to explore the hon. Gentleman’s idea. He has rightly identified that many successful entrepreneurs with great business careers were not academically inclined, and perhaps those who have that motivation and spark do not sit well with long periods of study. How does he square that argument with his idea that people should undertake three or four years of study to set up a small business, when many of the best small business people have been instinctively brilliant rather than studiously and academically brilliant?
Richard Harrington: I have to accept the logic of that point. Not everyone who wants to go into business would go to the sort of college that I am proposing. Many people would start businesses as happens now. Many people who have been in employment may decide when they become a bit older that that is for them. There are different routes to the same objective. However, I believe that an all-star college with teaching by people such as Sir Richard Branson and senior politicians and business people—people who have been in business—would show that the Government are serious, and that the status of such a course is as good as those at Oxford, Cambridge and so on. It is wrong for people of my age to use the expressions of younger people, but that would show that it is cool to set up a business, and just as good as anything else. In addition to the many other things that the Government do, they could help with that, and it would not cost too much money.
Mark Garnier (Wyre Forest) (Con):
I thank my hon. Friend the Member for Watford (Richard Harrington) for his helpful and useful comments. As he said, I will speak about the slightly more tangible and gritty problems
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facing businesses. Before getting into the meat of my speech, I am struck by how many MPs are in the Chamber and the fact that I cannot see one who has not been in business. It is remarkable that the Chamber is so full, although I am sorry not to see more support for the shadow Minister with responsibility for small businesses. It is incredible to see so many politicians here, all of whom have extensive business experience.
As my hon. Friend said, I want to speak specifically about taxation, regulation, access to finance and cash-flow management. For the purposes of clarity, we are interested today in self-employed people and those who employ fewer than five members of staff—small businesses and micro-businesses. It would be wrong to start my speech without highlighting some of the initiatives that the Government are already taking.
On finance for businesses, the Government are introducing measures to increase the availability of equity finance through venture capital trusts and improvements to the enterprise initiative scheme. They are making regional growth fund allocations for business opportunities and addressing tax initiatives, such as rolling over capital gains into new venture funding. The national loan guarantee scheme is seeking to push debt finance further down the line, and the emergence of community finance organisations, which my hon. Friend the Member for Mid Norfolk (George Freeman) highlighted, is providing locally based informal financing opportunities.
On helping businesses with advice, my hon. Friend the Minister has recently announced three new websites. The Business Link website has an information section offering help on a range of business-related issues, including how to start up a new business. The “mentors me” website offers an opportunity not just for new businesses to find business mentors, but for business people to provide mentoring services. My hon. Friend the Member for Meon Valley (George Hollingbery) made the very good point that setting up a business is tough and that having the benefit of the experience of business people who have learned from their mistakes and can impart their wisdom to new businesses is incredibly important. Websites such as “mentors me” are a way of disseminating that information.
Finally, the improved Business Link website has a wide range of information on how to finance and grow a new or expanding business. However, were I to stand here praising the Government’s glorious achievements, many though they are, as I am sure all hon. Members agree, the Minister would have nothing to say, so I shall turn to some of the problems facing businesses. I hope that he will address some of them and explain how the Government can help and thereby reinforce the process of developing part of the economy that has so much potential for growth and is so liberating for a huge number of people.
I shall start with taxation. No one wants to pay tax, but if we all want to enjoy the wealth of services that the Government provide and to sort out the problems that we inherited, we accept that we must make a contribution to tax. But as we know, it is widely reported that the UK tax system is the most complex in the world. Whether that is true is a moot point, but irrespective of where we are in the ranking of complexity, the fact that we have tax complexity at all is completely at odds with any sort of entrepreneurial spirit that we may want to foster.
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The last thing a bright, young and enthusiastic business creator wants is to have that entrepreneurial spirit crushed by the dead hand of taxation regulation.
There are various simple answers. On national insurance, for example, the Chancellor has not only put in place a policy to help small businesses by giving employers a national insurance holiday for the first 10 employees, he is investigating doing away with that pointless and superfluous tax. That is definitely a noble direction, but things such as the accounting period for national insurance and PAYE and the fact that two forms must be filled in doubles the bureaucracy facing small businesses. Something as simple as dealing with that would be a quick fix.
We are familiar with the Federation of Small Businesses, which is an incredibly rich source of information on issues facing many small businesses. However, for micro-businesses and the self-employed, there is little specific data. The FSB definition of a small and medium-sized business is one with up to £25 million turnover and 250 employees. I do not know about other hon. Members, but certainly in Wyre Forest anybody bigger than that is quite a large employer locally, and there are few of them.
Glyn Davies (Montgomeryshire) (Con): I agree from a standpoint of running a micro-business myself: I have been a farmer and my wife has been a restaurateur. Regulation, and the fear of it, is particularly damaging to a micro-business, because the individual running it simply has to have the capacity to deal with all these things. In a larger business, often other people can deal with such matters, but it is typical of the small and micro-businesses that we meet for one person to do so. That is incredibly difficult. Fear of regulation and not being able to deal with health and safety issues are probably more of a deterrent than anything else.
Mark Garnier: I will come to the regulatory burden in a minute. My hon. Friend is right. I have seen a turkey farm that has had to comply with huge industrial reporting requirements for toxic chemicals, because turkeys produce ammonia, but it also has to prove that it is not producing a great range of other chemicals. These are the unintended consequences of over-bureaucratic regulation.
The FSB provides a great deal of helpful data on business attitudes. Sticking with the taxation issue, 60% of FSB members—two thirds of businesses—complained that the UK tax system is not only too complex, but has a negative impact on their ability to take on more staff and expand.
Guto Bebb (Aberconwy) (Con): The VAT threshold creates problems for micro-businesses. The fact that that kicks in at £73,000 is a cliff edge for many small businesses, because if they hit that level, they end up being penalised to the tune of £10,000, so they make a decision not to grow. Having a tax cliff edge of that nature is a barrier to growth for many micro-businesses in my constituency.
I agree. Our complex tax code is full of all sorts of unintended consequences exactly like the one that my hon. Friend mentioned. It is ridiculous having a tax that means businesses going above £73,000 will have to start charging their customers. That is a
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disincentive to growth in terms of going out and gathering business. If people stay below that threshold, it is a disincentive to employ more people.
Toby Perkins: The hon. Gentleman is talking about the difficulty with taxation faced by small firms. Will he support Opposition Members calling for a national insurance holiday for any micro-business with less than 10 employees that takes on a new member of staff?
Mark Garnier: I am sorry; the hon. Gentleman is talking about extending it to micro-businesses. Yes, all this has to be put into the mix of things that we need to look at. It is important to consider any way that we can help more micro-businesses.
On a wider social point—sticking with tax complexity—it is worth noting that a complex tax system allows a huge range of opportunities for tax avoidance and tax evasion, which makes it extraordinarily complex for Her Majesty’s Revenue and Customs to collect tax and ensure that we avoid the tax gap, which is estimated at anything between £40 billion and more than £100 billion a year. The rest of us have to pay for that tax gap and lack of revenue through increased taxes.
Half of small businesses spend at least two hours every week complying with their tax responsibilities alone and for 10% of businesses, particularly small micro-businesses, that can take up to six hours per week—six hours when those businesses should be capturing new customers, developing new products and investing in their future.
Two thirds of businesses feel that they need professional help to complete their tax returns, which costs them on average an extra £3,000 a year. One third of them find that national insurance in its various forms is difficult to understand. Half of businesses find allowances difficult to get to grips with. Frankly, it is all far too complicated and too expensive in man hours and financial resource to administer.
Regulation is the second area of extreme unrest for micro-businesses. According to the World Economic Forum’s global competitiveness report, the UK is ranked 89th out of 139 for the burden that regulation places on businesses. Aside from the obvious problem of possibly deterring inward investment, the overburden of regulation, especially in the realm of employment law, is cited by businesses as a reason not to expand.
In a business survey in 2008—that was some time ago, but it gives a good idea of trends—a third of businesses thinking about expanding cited fear of regulation as a significant headwind to be faced in expansion and therefore a key factor in their decision. The same survey revealed that half of businesses planning to downsize or close rated regulatory burden as important in their decision to do so. The 2008 survey was undertaken in
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difficult trading conditions, but regulatory burden should not be a significant factor when businesses are struggling to stay alive in a difficult environment.
Possibly more worrying is the fact that in the 2009 business survey 34% of businesses that were no longer employers cited complying with legislation as a reason for no longer employing staff. This is madness.
Karen Lumley (Redditch) (Con): In my constituency, I have been working closely with small businesses. Does my hon. Friend agree that they feel isolated, with a perceived lack of business support around them?
Mark Garnier: Yes. Being a small business man is quite an isolating experience, as many hon. Members will know. People are out there on the front line, struggling to get more business in. They can join network groups and all the rest of it, but they feel like they are in a foxhole, with letters in brown envelopes coming at them from HMRC and all sorts of regulators. That is not necessarily a particularly enthralling experience. My hon. Friend is right.
In addition to accountants and tax specialists to handle tax compliance, a plethora of organisations offer advice on human resources, fire and emergency, health and safety and other things. All that is welcome and they provide an excellent service, but the fact that they are needed and that a sub-class of business advice has been created shows the amount of regulation that we have to face.
The Government have made some progress on access to finance and cash flow. I do not want to be an apologist for the banking crisis. I have to declare an interest here. I was an investment banker and one or two other hon. Members here were, too. It is important to understand that banks have an aversion to risk. Part of the problem faced by the banks is that the Basel III and the Vickers’ recommendations, and so on, are trying to deal with the problem of not wanting the banks to fail. On one hand the banks are being asked to tighten their balance sheet, and on the other they are, rightly, being asked to lend more money. For the banks, those are opposing requests. We need to take great consideration of that as we go through the process of implementing the recommendations of the Independent Commission on Banking, because we cannot ask the banks to take on more risk and expect them not to go bust. That is a contradiction.
Sheryll Murray (South East Cornwall) (Con): Is my hon. Friend aware that in my constituency—with particular reference to the fishing industry—someone receiving training who then wants to start a business needs to purchase a fishing vessel? The banks will not just accept that fishing vessel, although it is a valuable asset, as collateral for a loan. They ask for additional collateral, such as a charge on a property, which a lot of young people do not have. That is stopping industries that support our coastal communities from expanding. Does my hon. Friend think that there is an answer to that?
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loans have not so much been business finance loans as mortgages, where a bank has taken a secure guarantee, such as a property, thereby effectively giving a mortgage used to finance a business and the cash flow out of the business is used to service that debt. The feeling that I get out there is that banks have slightly morphed away from being business financers to being mortgage companies dressed up as business financers.
Secondly, my hon. Friend mentions marine finance. We have one of the finest marine businesses in the world. We produce the most fabulously made yachts—we are world class. I hope you will forgive me for getting in a plug for one of my constituents, Mrs Riordan, but Sealine in the middle of landlocked Kidderminster builds very good ocean-going yachts, and if you ever get a chance to take one out, you should. However, this country does not have a significant marine financing industry, and that is a real problem for all the marine industry, whether we are talking about luxury yachts or working fishing boats. I am working with constituents and various marine industry representative bodies to see whether we can address that point, because we must look at it specifically.
In addition to problems with equity and debt, part of the problem businesses face lies with cash flow. All too often, small businesses suffer as a result of delayed payments. To return to the FSB, three quarters of its members have received late payments in the past 12 months, while nearly half claim that a third of invoices are paid late. That is costly in terms of the time spent chasing invoices. In addition, a fifth of the claims for money owing to those businesses are for more than £20,000. Many businesses go bust not because they do not have enough capital or customers, but because of their cash flow. The problem is that, although a business is perfectly viable, it can easily go bust because of a late payment.
Christopher Pincher (Tamworth) (Con): Further to that point, is the problem not that businesses have difficulties with their cash flow, but that banks do not offer decent overdraft facilities to tide companies over in such difficult times? We need to ensure that, when banks lend money, they do not simply do so through loans tied to interest rates and specific rules. They should be much more flexible about offering overdrafts, so that businesses can get through difficult times.
Mark Garnier: My hon. Friend is right. Various factoring, invoice and financing arrangements can be put in place for businesses. They are designed, in theory, to help businesses through their cash-flow problems, such as paying for stock to put on their shelves and sell on. A number of the banks in my constituency are certainly much more cautious about asset filing and invoice filing than they were. That is a serious problem, but it can be dealt with, despite some of the bigger problems that the banks face in meeting the Basel III requirements. My hon. Friend makes an incredibly important point.
I want to look at what the Government can do to help. I ask my hon. Friend the Minister to take note, and I am sure he will have some helpful comments at the end of the debate. First, we already have the Office of Tax Simplification, and it is incredibly important that we get the Government to take on its recommendations. We must make absolutely certain that any tax changes
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are properly thought through in terms of simplicity and that they have a good economic and social justification. If we are going to write taxes, we should do so with an eye to international competitiveness. They should make it easier for our businesses to trade and for us to attract businesses to come and invest in our country.
I talked a bit earlier about merging income tax and national insurance contributions, but I should stress again that it would be incredibly helpful if the collection of national insurance and PAYE could be merged, so that people have a simple form to fill in, rather than two complex forms.
The one-in, one-out system of regulation is welcome, and it should start to force some helpful changes. However, the system needs to be rigorously enforced, and the Government’s commitment to it must remain strong.
Lorely Burt (Solihull) (LD): The hon. Gentleman makes a really important point. Does he agree that, as well as introducing regulations in a rigorous way when they are absolutely necessary, we should measure whether they do their job, with a post-examination within a specific period, so that we can sunset those that we do not need and get rid of them?
Mark Garnier: Yes, absolutely. I agree with the hon. Lady. She is absolutely right on UK regulation, but we should also do that on European regulation. We simply cannot have endless regulation coming through, and we really need to see whether it is worth having.
Julian Smith: Does my hon. Friend agree that, with very small businesses and start-ups, the Government might need to be more radical than they are being at the moment? On issues such as flexible working and the right to request training, there may be an argument for exempting very small businesses and new businesses from legislation. We should seriously think about more radical measures, such as making it easier for small businesses to get rid of staff. That is politically difficult, but I would like to encourage the Government to think carefully about those proposals from Adrian Beecroft.
Mark Garnier: My hon. Friend could have been reading my speech, because my very next point was exactly that. It is vital that we help businesses. Ronald Reagan introduced a law under which businesses with fewer than five employees were exempt from a lot of business regulation, and he increased the number of jobs by 30 million as a direct result.
On a practical point that is deliverable, rather than necessarily doing something wholesale, it is vital that we have a system under which we exempt micro-businesses with fewer than, say, five employees from new legislation. We should also give such businesses a holiday when new measures are introduced. If we introduce new regulation—to follow on from the comments of the hon. Member for Solihull (Lorely Burt)—we need to see how it beds down with those organisations that can afford to implement it. If it works and it is sensible, we can translate it through to smaller businesses when we know how to implement it. We should not load it on to small business right at the beginning and expect them to tackle it and to be the crash-test dummies, when they do not really have the resources to deal with such regulations.
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Another problem with regulation is that its introduction is like Chinese water torture, with one drip after another throughout the year. It is quite difficult for many businesses to tackle that drip-feeding of regulation. If we are to bring in regulation, we should bring it once a year. That would make it a lot easier for businesses to focus and comply.
Finally, there is no doubt that the Government have plenty of opportunities to help businesses on cash-flow issues. They have quite a lot of money, although, admittedly, not as much as they used to, and they have a useful cash flow. When they take on contractors, particularly SME contractors, they could achieve a number of things by having a process whereby invoices were paid within 10 days. First, that would set an incredibly good example to the business community and show that early payment is important. Secondly, the Government could push such early-term payments from the contractors to the sub-contractors. Such a process would also give them the ability to persuade their sub-contractors and contractors to sign up to an agreement to help businesses by adopting better payment terms. Those are just a few suggestions, and I am sure that hon. Members will have many others.
I am heartened to see the Minister in his place. He has been in the private sector and has worked hard in business in the past. It is incredibly heartening to see so many business people here, including the Minister. I have every confidence that he will have some helpful comments when he winds up. Much more importantly, when he goes back to his civil servants, he will have a zeal and an enthusiasm for helping small businesses that can come only from somebody who has first-hand experience of the business world.
Mrs Linda Riordan (in the Chair): Order. I intend to call the Front Benchers at 12.10. A number of hon. Members are trying to catch my eye. I would like to call as many Members as possible. I therefore urge Members to make short speeches.
Sarah Newton (Truro and Falmouth) (Con): I will speak for two minutes, and I will probably speak very quickly so that more colleagues can get in. I congratulate those who secured the debate on the excellent way in which they opened it.
I would like to talk about enabling self-employment from the point of view of groups of people who find it difficult to engage with the workplace. These are not necessarily people who would go on to set up a business of their own. One such group is people living with disabilities that make it difficult for them to leave home. Another is women who would like to balance employment with caring responsibilities for children, an elderly relative or perhaps somebody with disabilities. I am really talking about people being self-employed as home workers.
I would like to share with Members the story of a really successful organisation I have been working with over the past 12 months. It enables call centres to be in-sourced back to this country by creating a network of call centre operators based in their own homes. The Government are investing a great deal of money in superfast broadband, and we are definitely benefiting from that in Cornwall. The networks I am talking about
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would be a good way of utilising that investment to encourage people who are probably not in a workplace now to get training and to become self-employed as call centre operators from their homes.
In America, such an initiative was set up a couple of years ago. It was specifically targeted at getting people off welfare and into work. Globally, the company to which I am referring and which invested in the technology employs more than 22,000 people. It set up in the UK just 12 months ago. It employs 1,500 people and is taking on 2,000 this year. Companies such as Littlewoods and many well known holiday organisations are involved.
With a concerted effort, all of us as Members of Parliament can promote what I have described. I would also like my hon. Friend the Minister to consider something that President Obama is considering this week. I am talking about giving tax incentives to the very big employers, the very big national companies, such as BT, that are outsourcing their call centres throughout the world to repatriate those jobs to the UK—to in-source them back to the UK. Barack Obama is considering giving financial incentives to companies through the taxation system—a financial incentive for every job that they bring back to America. I would like the Minister to examine what is being done in America to see whether we can do the same to repatriate what would be tens of thousands of jobs to these shores and enable people who are finding it difficult to fit into the workplace—such as people with disabilities and people with caring responsibilities—to be self-employed.
Nick de Bois (Enfield North) (Con): I shall be brief. I intended to make two points, but I will now make only one, in the interest of enabling other hon. Members to speak. I want to talk about the role of education and of finance and how help can be provided to people. I fully confess to being heavily influenced by a constituent of mine, who has been working under the scheme led by Virgin Media. In the past year, she has taken steps to establish a competitive business. In fact, while she was at college, she was so entrepreneurial that she decided to use some of her student loan to help to fund the website that is driving her business. The entrepreneurial spirit is to be admired. I have no idea whether she was allowed to do that, so I will not name her, but it shows that with some lateral thinking, perhaps some of the young talent that exists can be put to good use.
I myself did not go to university. I went to a technical college in Cambridge, which I am told is now a university. The business studies course that I did was a sandwich course. It struck me that the only choice that I had during that sandwich course was to go to a placement that was put to me by the college, very helpful though it was at the time. Why cannot we set up an arrangement whereby we allow a sandwich year, even in a course of reduced time length, to become an opportunity for someone, under mentoring and guidance and with the ability to use student finance at their disposal, to take their first steps towards running a business?
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the same terms as those of the student loans scheme. I suspect that it would not be able to extend its remit to do that and we may have to look elsewhere for other sources of financing. However, if we are genuinely saying, “Let’s educate and let’s motivate,” and we have students who are showing character and willingness by seeking out the courses, there could be a useful match with an existing system in order to help them. At the end of the day, the payback to them as individuals will be substantial—the payback to the economy will be vital.
The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): I have given that some consideration and I am grateful to my hon. Friend. I think we will do it. I think it is a very good idea and I will ask my civil servants to work something up.
Anne Marie Morris (Newton Abbot) (Con): I will be brief, given the number of hon. Members who want to speak. The UK Commission for Employment and Skills, which reported last August, said that we are at an all-time high; we have 4.1 million people in self-employment at the moment. That report was particularly interesting because it examined what drives the increase in self-employment, and it does not depend on the economy, as we might have thought. It is principally driven by looser regulation, access to finance and Government policy that specifically drives unemployed people into self-employment. The 1980s was a particularly fine example of that.
Let me deal with each of the three elements. With regard to Government policy, the new enterprise allowance has been a great step forwards; I endorse it entirely. The Government now need to consider whether, having extended it from young people to the whole working population, they should take away the requirement for a person to have been on jobseeker’s allowance for six months as a precursor to being eligible to receive it. Many people see unemployment as a bit of a stigma. They may want to come into employment after having brought up children or for many other reasons.
Equally, the Work programme is excellent. I am working with the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), who is responsible for employment, to consider the extent to which the Work programme is enabling and encouraging individuals to become self-employed rather than going into employment.
I come now to the two other issues raised by the commission’s report. On regulation, the Government have clearly taken a very good first step by exempting micro-businesses from regulation for three years. However, I urge them to exert all their energies on getting the European Union to exempt micro-entities—that is a
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new definition for the very smallest businesses—from new regulation. I gather that that is being discussed, but I urge the Government to push it forward as a priority.
The Government’s red tape challenge has been extraordinarily useful and powerful. It has explored 12 different areas of red tape—12 sectors—and five more are to come. The Government have said that they will report on that three months after the closure of the consultation. I look forward to those results. I urge the Government to examine in particular those regulations that disproportionately disbenefit the self-employed and the very smallest businesses. The EU has recognised the need to simplify regulation for the very smallest businesses. I ask the Government to work hard at insisting that the EU has its own red tape challenge. It has examined simplification, but it has not considered root-and-branch removal, which is crucial.
Finance is the third issue. Points have been made clearly and well about the challenge faced by the self-employed and the small business in trying to access finance. Tributes have been paid to Business Link. A new portal, Business in You, sets out a number of schemes that are available. There are 851 of them. My advice to Government would be that it is a great idea, but some guidance is needed because it is quite difficult for a self-employed individual to work out which of those is particularly beneficial.
The real challenge is ensuring that a very small business can find information about the opportunities available. It is the case that 28% of micro-businesses are not online, so we need to make the information available in libraries and to encourage the chambers of commerce and the local enterprise partnerships to play a role in disseminating that information. Without that, we will not secure the change that we need.
There was mention of the Government schemes to support access to debt, equity and guarantees. Most of those schemes are aimed at the whole remit of the SME community, which takes us up to 250 employees. The banks, who are usually the people delivering the schemes, will go for the easy wins because they are in business to make money, and the easy wins are the bigger businesses with good business plans and a good track record. The Government need to ring-fence—perhaps they will do this with their credit-easing proposals—a pot specifically for the self-employed, recognising that they are looking for smaller pots of money and do not have well developed business plans.
Perhaps the best initiative has been the growth of the community development finance initiative. The Fredericks Foundation should be recognised for the work that it has done to provide loans to those businesses that cannot find money anywhere also. I also pay tribute to the Government for considering making credit unions able to lend to small businesses, rather than just making loans to individual people. In addition, the Virgin Media pioneers proposal to enable those wanting to set up a business to be given financing at the same rate as applies to a student loan is definitely to be welcomed.