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Mr. Tyrie: He has introduced the child care tax credit and the disabled person's tax credit.
Mr. Tyrie: He has introduced the employment credit, the children's tax credit and the baby tax credit.
Rob Marris:
Hear, hear.
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Mr. Tyrie: The Chancellor has abolished—and I do not know whether I will get more "Hear, hears"—the working families tax credit, the disabled person's tax credit, the children's tax credit and the baby tax credit. He has also abolished the employment tax credit and introduced the working tax credit. The results are predictable: low take-up, confusion and complexity. Those are the unintended consequences of a system in which fraud and error are rife and many people do not get the support to which they are entitled and which they deserve.
That brings me to my third and final point, which is about the Treasury as a spending Department. After all, most of what I have just described is a direct consequence of the Treasury's having started to meddle in this area. How on earth can it be that the Prime Minister has allowed a Chancellor to turn the Treasury into a spending Department? How on earth is it that the only gamekeeper that we have in Whitehall is now on the loose as a poacher? The answer comes in one word: Granita.
The truth is that just over a decade ago, in an Islington restaurant, the then Leader of the Opposition, now the Prime Minister, promised his shadow Chancellor that if they won the election he would have a free run of the fairness agenda—social justice, employment opportunities and skills. As a result, we have Treasury measures such as this, and the DWP, which is just about the only repository of wisdom in Whitehall about how to run a benefits system, lost half its remit. It is scarcely any wonder that there has been such chaos in the take-up of benefits. The Inland Revenue was never geared to run a benefits system; its job was to get the tax in. In the long run, neither the making nor the running of policy in this way is sustainable.
Mr. Liam Byrne (Birmingham, Hodge Hill) (Lab): I hate to puncture this entertaining narrative, but has not the effect of the changes introduced by the Chancellor been to end the growth of income inequality which so scarred the country under the last Conservative Administration?
Mr. Tyrie: That is a very broad question, but it is a fact that in the past seven years the number of those at the bottom end who are most in need—the so-called million who miss out on education and training—has increased from a little under a million to well over a million. The indicators point in several directions, and the picture is certainly unclear. What is more, that change took place at a time when the economy has been growing very strongly and unprecedented sums have been thrown at these problems. Never has so much money been spent, with so many good intentions, to so little effect.
As I said a moment ago, that is no way to run a Government. I have noticed that a number of new Labour's keenest, innermost, kitchen cabinet-type supporters have started to say the same. What does John Birt's proposal to extract the spending Departments from the Treasury and place them in the Cabinet Office really mean? It is about recreating something that was lost when the Treasury became a spending Department. It is about recreating a workable system of public expenditure control and review. That is what we desperately need in Whitehall now. Of course, it is also
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about trying to wrench back some control for the Prime Minister over the empire-building of his neighbour in No. 11.
If one wants to know the real origin of this child benefit proposal and the whole of the Treasury-driven skills agenda, one finds it in Granita. It is not all good and it is not all bad, but it lies there. The Granita deal has a lot to answer for, for the plain truth is that a great deal of Whitehall machinery has been wrenched apart and restructured to placate the ambitions of a thwarted Chancellor. This Bill is just one small part of that decision.
2.16 pm
Rob Marris (Wolverhampton, South-West) (Lab): I shall return in a while to the out-to-lunch remarks about Granita by the hon. Member for Chichester (Mr. Tyrie).
I want to put the Bill, which I very much welcome, into an historical context. Many of my generation, and those of others in the Chamber today, were scarred politically by our communities' experience of the 11-plus and the idea that, at age 11, one was either going to become a manual worker or an academic, A-level type with a higher certificate, as it used to be in England. We worked hard politically to overcome that bifurcation at age 11 with our support for comprehensive education and for encouraging young people into higher education. The pendulum has swung too far and what many of us, including me, overlooked, is that training is necessary for many manual jobs and that we should be looking for people divided off at age 11 into the non-academic stream to be able to get back, as adults, into the academic stream. That is what the Open university, one of the jewels in the crown of Harold Wilson's 1966 to 1970 Labour Government, was about. What has only just started to happen in the other direction is that, in the past three or four years, we have been looking at ways for those who were on the academic track to take a non-academic or less academic route to education and training.
Also part of the historical context is the fact that we have 2 million more people in work and the fact that in certain areas of the country there are huge skills shortages. Some of that is being addressed by imported labour, which in some cases will be temporary—for example, the use of Filipino nurses in the health services. However, the bulk of the problem should and will be solved by training home-grown labour.
The support that we as a society, the previous Government and this Government provided for those entering higher education was entirely worth while, but again the pendulum swung too far. Those who were continuing with training but were not in higher education were second-class citizens when it came to social and Government support for their endeavours. That is true of young people as well as mature students. I very much welcome the 14 to 19 strategy for increased curriculum flexibility that has come from the Tomlinson report. The Bill fits neatly with that as additional financial support for those who, for example, have had disrupted schooling and go on to do at 19 or 20 what some of their peers might have done at 17 or 18. It is very welcome and it is overdue.
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You will know, Madam Deputy Speaker, of the huge skills shortages in your area, which is the same as mine—the black country—and of what the Learning and Skills Council and Connexions have been doing. We are starting to change that, but it will take a long time. It is particularly relevant for an industrial area such as the west midlands. Not so much down in the southern part, where you are, Madam Deputy Speaker, but where I am in Wolverhampton, there is a history of people training on the job but not getting formal qualifications. Although that is important, we need to move as a society towards more formal qualifications as well as training on the job that leads to qualifications. The Bill dovetails nicely with that, and it will be of tremendous benefit to our region and sub-region.
The hon. Member for Chichester rightly mentioned the complexity of the Bill. He talked about the various ways in which young people could access not only training but financial support, whether child benefit or education maintenance allowance. He mentioned the "Bridging the Gap" report, which refers to slightly different figures from his but reaches exactly the same end point. It says:
"Money is paid through at least eight different agencies (with a ninth heavily involved) on behalf of two Government Departments."
That was also mentioned by the hon. Member for Banbury (Tony Baldry) when he talked about how young people would find out about this support, and it is what I found in my preparatory research for the debate. The aims of the Bill are twofold—to provide state support for trainees who are unwaged on training courses and for those who are, to put it in shorthand, at further education colleges and carrying on with courses until the age of 20 or so.
That is a simple and laudable goal; the complexity lies in the delivery mechanism. I caution the hon. Member for Chichester as regards talking about simplicity. Simplicity is one of those things, like cutting red tape, that is terribly attractive to Members all over the House, who hope that it will be attractive to those whose votes they seek to garner. As my hon. and learned Friend the Member for Redcar (Vera Baird)—a fellow member of the Work and Pensions Committee who will speak later—and I know, the Child Support Agency is a classic example. Parliament decided to simplify CS1, the first system that was brought in, and introduced CS2—a system based on 15 per cent. for the first child, 20 per cent. for the second child, and 25 per cent. for three or more children in terms of the non-resident parent's obligation to pay. That is a simple formula that is understandable to the man—it usually is a man—in the street, but the complexities of putting it into effect have bedevilled the Department for Work and Pensions and the Child Support Agency. What appeared to be simple on paper became terribly complex when one tried to put it into operation. The reason for that is simple—people lead complex lives. If we as a House try to simplify matters too much, it may well imperil support for children and for young people engaged in education and training who will be covered by the Bill potentially from the ages of 16 to 21.
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The Bill is a step forward because it will start to address the skewed choices that some young people have made through force of financial circumstance. Paragraph 28 of the regulatory impact assessment states:
"One possible positive effect is that training providers may find they are on a level playing field with FE colleges because young people's decisions are not being skewed by differentials in financial support between the two learning routes."
It is very important that young people have a more level playing field of choice.
The costs have been adverted to. Government spending is massive. One should never be cavalier with taxpayers' money, but the Bill is a very positive step. As set out in the regulatory impact assessment—there will of course be changed behaviour, as the hon. Member for Chichester said—the cost of the 80,000 unwaged training positions will be £105 million per year. In fact, one hopes that there will be some change in behaviour and that more young people who are not on the training contracts will engage in them, thereby helping to address skills shortages. Relative to Government spending, that cost seems small. If the number of positions were to double from 80,000 to 160,000, and the per capita costs were roughly the same, the figure would rise to £210 million, with tremendous social benefit in terms of those young people's self-respect and dignity. There will be positive benefits for society when those young people come through the pipeline having been trained.
The cost of paying for FE places—again that is shorthand, but they are the main focus—is £65 million a year up to the age of 20 and £75 million up to the age of 21, with some attendant costs that are not mentioned.
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