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I do not for a moment want to gloss over the problems that he described or pretend that they do not exist. I know that there are significant problems exactly along the lines that he described. However, I should point out, first, that the system has achieved a great deal and, secondly, that we are on the case. I hope that
he will detect over the coming weeks that we are putting right the problems that he drew to our attention.
The tax credit system has had a big impact in reducing child poverty. Take-up has been high from the startmuch higher than for predecessor income-related benefits. The system has also had a big impact in helping to make work pay. Together with the national minimum wage, it can guarantee a minimum level of income for people moving into employment, thereby helping to ensure that work pays over welfare. For example, a lone parent with two children moving into full-time work on the national minimum wage will have an income gain from working that is 40 per cent. greater in real terms than would have been the case in 1997. That contributes to stability in the economy and has helped to increase the number of people in work by 2.3 million to the historically high levels of employment that are such a positive feature of the UK economy today.
As I said, it is certainly not my intention to gloss over the serious difficulties that the hon. Gentleman highlighted. The system is complex and has to be because of the complexity of peoples lives. Every year, 3 million people change jobs, and 200,000 men and women move into new or better jobs and raise their family income by more than £10,000. We need a system that reflects that and that can support people as they move between jobs and change their circumstances, and that is what we have designed the system to do.
Overpayments, which the hon. Gentleman mentioned, are a consequence of a responsive system. Under an annual system, given that a familys final entitlement cannot be known until the end of the year, we have to be able to make end-of-year adjustments. We can avoid that only with an entirely inflexible fixed system that would not offer the flexible support that is such a valuable feature of the present system.
Mr. Weir: I understand what the Minister is saying, and I do not dispute much of it, but does he not accept that if the system is to be responsive, it is vital that notified changes are correctly put in the computer and that the computer is able to deal with them? From the cases that I have come across, it appears that that is not happening. Either the information is wrongly inputtedperhaps it is not inputtedor the computer does not react to it. In some cases, it does not seem to be able to take on board the changes that are given to it. That is a serious drawback to the system.
Mr. Timms: I completely agree with the hon. Gentleman. The system should not fail to work because of that, and we have made some important improvements to tackle the problems. This is the first time that I have had the opportunity to look in detail at it, but the incidence of problems is limited, as far as I can see. There are 10 too many problems in his constituency, but that is 10 out of 7,100. It is not the normal experience of people who send in information about a change of circumstances that the system fails to register it. I agree that no one should have that experience and that too many do at present, but they
are a small proportion of the total and I hope that it will get smaller over the coming months.
We have made changes. From last month, the disregard for income increases between one tax year and the next has risen from £2,500 to £25,000. Almost all families with rising incomes will not have their tax credit entitlement reduced in the first year in which the increase occurs. We believe that that will lead to a big fall in the number of overpayments. Other changes will be introduced in the coming months.
The aim is to provide more certainty for tax credit recipientsthe hon. Gentlemans constituentsparticularly for families who see a rise in income, and to keep the benefits of the systems flexibility to respond to falls in income and changes in circumstances. We estimate that overpayments will be reduced by around one third. Families will have a clear responsibility to report changes promptly and will be helped to keep their records up to date. Her Majestys Revenue and Customs will take a more proactive approach.
There have been significant further improvements in our administration systems. With effect from last month, a new award notice is being issued to give claimants a clearer summary of their award, explaining how it was calculated and what they will be paid. I hope that that will help people in the circumstances described by the hon. Gentleman. The guidance notes that accompany claim forms have been replaced with a clearer, shorter version. The tax credit section of the Revenue and Customs website has been redesigned to make it easier to access information.
Since the beginning of the year, there has been a publicity campaign reminding people to notify us promptly of changes in their circumstances. The helpline, which dealt with 22 million calls in 2004-05, has been improved. Call-back arrangements providing more targeted, fuller support in the most complex cases are now in place, and I hope that the hon. Gentlemans constituents will see improvements as a result. Major software releases were successfully implemented in November last year and again last month and are delivering real improvements in operational performance. Again, I hope that that will directly address the concerns that the hon. Gentleman expressed. New procedures to suspend recovery of a disputed overpayment were also introduced last November and we published a revised and clearer version of HMRCs code of practice on overpayments. I hope that that will also help.
I know that hon. Members on both sides of the House have appreciated the willingness of my right hon. Friend the Paymaster Generalwho is out of the country on ministerial business todayto meet hon. Members about the problems that we have had, to assist in resolving them and to make changes to put them right.
Today, tax credits are helping millions of families throughout Scotland and the UK. We are determined to improve the system further, to remedy the defects that have affected a minority of tax credit recipients in the way outlined by the hon. Gentleman today. We want to give families more certainty about their tax credit awards, but we want to hang on to the crucial ability that characterises the current system of being able to respond to changing circumstances.
I am grateful to the hon. Gentleman for setting out on behalf of his constituents their wholly proper concerns and for helping us to ensure that the system provides the help that it was designed to provide. I hope that over the next few weeks or months he will notice the significant improvements that are being made to the administration of the system and that the incidence of the problems that he described will become significantly less frequent than in the past few months.
Finally, I note that we received a helpful and interesting brief from the National Council for One Parent Families to coincide with the debate. It made a number of points rightly emphasising that there is more to be done to ensure that the system delivers what we want it to. It started by welcoming the fact that the Government have listened to concerns about the operation of the tax credit system and that we are introducing changes that should improve income stability for claimants and reduce hardship. That is our aim and I hope that we will be successful.
Mrs. Louise Ellman (Liverpool, Riverside) (Lab/Co-op): I am pleased to have been able to secure this important debate. I am aware that there is a great deal of interest in this topic, and I wish to associate myself with the comments of my hon. Friend the Member for Warrington, North (Helen Jones).
I want to draw attention to the problems that are being experienced in adult education in Liverpool and in other large urban areas as the unintended consequence of changes to Government funding for further and adult education. In particular, I want to focus on a highly valued course at risk, Second chance to learn, in the hope that the courses future can be secured.
There are three key players in this matter: the Government, the Greater Merseyside learning and skills council and Liverpool community college. Government provide major funding and set national priorities, the Greater Merseyside LSC allocates funding based on those priorities, and the college itself makes decisions on specific courses, although that is strongly constrained by the priorities already set and the funding allocated.
The Government, through the Department for Education and Skills, have given priority to securing employable skills and expanding participation among 16 to 18-year-olds. They prioritise level 2 and level 3 qualifications to be funded partly by transferring money from level 1 and courses inauspiciously designated other. That is where the problem lies. The transfer of funds threatens the adult skills for life provision and second chance learning, where Liverpool community college has been judged as outstanding by Ofsteds adult learning inspectorate in its 2005 inspection.
Greater Merseyside LSCs initial allocation to Liverpool community college reduced its adult further education budget by £2.7 million8 per cent. That was in order to transfer money to fund higher priority courses. Following representations, the allocation has been increased by £1.2 million, and I understand that further negotiations are still under way.
The Governments national priority of improving employability is to be commended, and is highly relevant in Liverpool where, despite the citys growing economic success and a 43 per cent. reduction in unemployment since 1997, high unemployment persists. For example, in the Riverside constituency the unemployment rate is 12 per cent. and male unemployment runs at 18.1 per cent. If we look more closely at local areas, we see that those figures increase. For example, in the Granby ward, the unemployment rate is 26 per cent.
It is essential that people are equipped with the skills to take up growing opportunities provided by successful regeneration. The unanticipated consequence of this national policy is, however, to reduce funding for people who either need support to enable them to step on the skills ladder or require education that boosts their confidence as individuals and as active citizens. The courses at risk include those that address that objective.
The courses may well become the gateway to further qualifications, but they are valid in their own right.
The courses are highly relevant to Liverpool, where long-term deprivation persists: 46 per cent. of Liverpools special output areas are in the highest 5 per cent. in England, and 23 per cent. of Liverpools SOAs are in the 1 per cent. of most deprived areas in the country. According to the Basic Skills Agency, 27.3 per cent. of Liverpool people between the ages of 16 and 60 have poor literacy skills; the corresponding rate for England is 24 per cent. In addition, 32.3 per cent. of Liverpool people in this age group have poor numeracy skills, compared with a figure of 24 per cent. for England. The constituency of Liverpool, Riverside alone has 10,900 people on incapacity benefitthe highest number for any constituency in the country. For many families with that long-term problem, formal education has not been seen as a high priority and there is a high level of alienation. That is why provision characterised unflatteringly as other is so needed.
Liverpool community college remains the arbiter on the provision of specific courses, although, as I said, its decisions are heavily constrained by funding decisions taken elsewhere. It is an exceptional college, whose skills for life agenda and approach to social inclusion and widening participation were judged by Ofsted to be outstanding. The Ofsted inspection also found that there is consistently good teaching, strong strategic leadership and strong financial management at the college. That is praise indeed.
I am concerned that a range of the colleges courses is at risk because the national funding priority does not take full account of Liverpools needs; similar problems are also found in respect of other urban areas. I wish to draw attention to the future of the long-standing course, Second chance to learn, which is now in jeopardy. That stand-alone course is provided at the colleges new city centre, Duke street premises, and attended by 180 students. It has run for 30 years, originally through the Workers Educational Association and the Liverpool university Institute of Extension Studies. During that time, 3,000 students have participated.
Although there are exceptions, most students are aged over 50, have limited formal educational qualificationsmany have noneand do not progress to higher education. They do not fit employment-oriented priorities. Yet the course is highly valued. Recently, I met students who attend the course. They described their experience as life transforming and explained how it had given them new confidence, encouraging them to be active citizens fully engaged in the regeneration of local communities. They recounted how they had influenced younger members of their families, who otherwise would not have been so influenced, to become interested in education. That demonstrates how second chance learning has helped individual development and community cohesion.
The college, under the pressure of its funding constraints, now proposes to disband that stand-alone course in the city centre. It plans to provide the individual subject options in the course through local drop-in study centres or DISCs. Those would become part of foundation programmes that address basic
skills needs and work towards level 2 entitlement. The proposal has been met with consternation. It means the end of the stand-alone Second chance to learn course, which will no longer remain an entity in its own right and no longer be held in the city centre.
Students have told me how coming to a stand-alone course has made them feel part of something important and given them a feeling of belonging. They have explained how meeting in the city centre is stimulating and enables them to join students from other parts of the city whom they would not otherwise have met. They talk about how misconceptions have been broken down and how prejudice has been addressed. They talk avidly and enthusiastically about how going to a course in the city centre brings them into contact with younger students. They find that to be part of an important learning process for themselves as individuals. One student who had no formal qualifications told me:
I have a thirst for knowledge. A light has been switched on; now it is to be switched off.
The course should stay city centre-based so that students like me, who have never wandered out of my own neighbourhood, can meet other students from across the city.
The students on the course are predominantly older people with few formal qualifications, who had a gross lack of self-confidence but found a new sense of well-being and optimism by attending the course. The local newspaper, the Liverpool Echo, has drawn attention to the city centre, stand-alone course. Numerous students, some of whom progressed to employment and others who found a new sense of confidence, praised its worth. They stressed its value in making them more aware and active citizens as an essential part of the widespread regeneration in Liverpool.
I appreciate the context in which the decision is being made. The Governments stress on employability is commendable, and certainly highly relevant to Liverpool, but it has led to a reduction in funds for confidence-building courses that develop and educate individuals, which are also required. Such courses might be the gateway to qualifications, but they are also important in their own right in encouraging active citizenship, awareness and confidence, and are part of urban renewal and local need.
More joined-up thinking at Government level is required. Civic engagement and social cohesion are important parts of the Department for Communities and Local Governments strategy on urban regeneration. Liverpool has benefited greatly from those regeneration strategies, with significant funds coming to the city, particularly into my constituency, to develop local neighbourhoods, improve housing and employment prospects and develop a sense of civic renewal.
In 2001, the Department of Health launched the national service framework for older people. That identified the importance of lifelong learning. The Centre for Educational Research and Innovation atthe Organisation for Economic Co-operation and Development highlights the link between learningand health for older people. It seems perverse to jeopardise courses that have such a positive effect on both of those areas.
The Governments national priority of increasing employability is extremely important to Liverpool, but so is the need to build confidence and develop the individual. The facts that I have recounted today about the long-term deprivation in Liverpool, the need to upgrade basic skills, and the long-seated deprivation that leads to too many people feeling that education is not for them, emphasise the importance of courses that boost self-confidence and self-awareness. Those issues are being addressed successfully by Liverpool community college, which is an outstanding institution, but they are being put at risk by changes in funding priorities decided nationally.
Liverpool community college is renowned for its work with under-achievers. It has already secured, from its initial application, additional funding from Greater Merseyside LSC, which is aware of local needs, but is constrained by national priorities. A significant funding gap remains, and I urge the three playersthe Government, the LSC and Liverpool community collegeto ensure that those important parts of adult education do not fall victim to the schools-based priority. I urge both the Government and the LSC to make funding available so that both local priorities can be addressed.
Liverpools needs require a combination of employment-related courses following the national priority and others that develop citizens as individuals. Those two objectives might well go together, but do not necessarily do so. This is an essential part of adult education in the area of under-achievement. Both aspects are important and a part of regeneration. Second chance to learn should remain a stand-alone, city centre course, and I call on Liverpool community college to review its proposal. I ask the Government to look again at the implementation of the strategy and to increase flexibility, so that national Government policy can bring the maximum benefit to areas such as Liverpool.
The Parliamentary Under-Secretary of State for Education and Skills (Phil Hope): I congratulate my hon. Friend the Member for Liverpool, Riverside(Mrs. Ellman) on securing the debate. I am aware of the level of interest that people in Liverpool are showing in the proposals of Liverpool community college to reorganise its Second chance to learn programme. I have also had representations from my hon. Friends the Members for Liverpool, Garston (Maria Eagle), for Wallasey (Angela Eagle), and for Wirral, West (Stephen Hesford) and from my right hon. Friend the Member for Knowsley, North and Sefton, East (Mr. Howarth). I appreciate the opportunity to explain the Governments and the Learning and Skills Councils strategy in this context.
In response to my hon. Friends opening remarks, I want to outline the Departments overall strategy for dealing with the nations skills needs, and then to consider local issues in Liverpool and describe our commitment to providing learning to all those who missed out earlier in life, as she described, and to those who want to update their skills or to continue learning.
The Government have developed what I believe is a strong and coherent strategy. To meet our future skills
needs, we shall ensure that people realise their potential through learning, both as individuals and as members of an adaptable and changing work force. We shall reinforce the priorities for the public funding of adult learning and we want to find the right balance between the state, employers and individuals for the costs of adult learning. We are reforming the further education sector to make it much more responsive to the needs of the economy, employers and individuals.
My hon. Friend described the situation in Liverpool in graphic terms, and I think that we all know that the global economy presents some unique new challenges. We live in a world where new markets, productivity and new skilled work forces are emerging with extraordinary speed. However, as my hon. Friend probably knows, our productivity levels are still among the poorest in western Europe, so boosting our productivity will be a key factor in our long-term future economic success; that is true for the whole of the UK, and for Liverpool in particular. Our skills gapthe gap between our skills and those of other countriesis one of the main reasons for our productivity being poorer than it should be in comparison to those countries. That is the challenge that faces us, and it is a stark one.
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