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Jeremy Corbyn (Islington North) (Lab):
I am sorry that I missed part of the hon. Lady's speech. Will she confirm that removing academies from the ambit of the
national curriculum, as the Bill suggests, will restrict the career and life choices of those students who might leave those schools under-educated and not having been exposed at all to certain subjects?
Caroline Lucas: I thank the hon. Gentleman for his wise observation. He is exactly right. If children are put into particular training perspectives very early on, the wider set of possibilities and potential that could have been available to them will no longer exist if they have only the particularly narrow kind of education that the sponsors of academies often seem to pursue. I thank all hon. Members who have intervened and I stand by my amendment.
Diana R. Johnson (Kingston upon Hull North) (Lab): I wish to speak to amendments 25, 30 and 26 in my name and those of my right hon. and hon. Friends, but first I turn to amendment 1, the lead amendment, in the name of the hon. Member for Brighton, Pavilion (Caroline Lucas), who has just passionately explained why she put it forward.
The Opposition do not support amendment 1, which is designed to make academies adopt the whole national curriculum. The previous Labour Government's view was clear on the curriculum that an academy should follow. We said that the core national curriculum subjects of science, mathematics, information technology and English should be taught in academies, but that left room for flexibility so that academies could design their own, local curriculum to meet the needs of their local population.
The Opposition still take the view that that is the most appropriate approach to the curriculum in academies, in marked contrast to clause 1(6)(a), which refers only to the requirement for a broad and balanced curriculum. Amendment 25, which sets out the core subjects that all pupils should be required to study, would provide the best approach to ensuring that those important subjects were taught in academy schools, while retaining some flexibility for academies. I hope that the hon. Member for North Cornwall (Dan Rogerson), who spoke from the Liberal Democrat Benches, feels able to support that approach.
Amendment 30 sets out the Opposition's view that section 40 of the Childcare Act 2006 should apply to academies.
Stephen Pound: Before my hon. Friend moves on from amendment 1, I note that the hon. Member for Brighton, Pavilion (Caroline Lucas) mentioned the temptation for some academies to structure that local element, to which my hon. Friend referred, towards local employment possibilities. The pedagogic tradition of Mr Gradgrind and Dr Dryasdust concerned the hon. Lady during the early part of her speech, but the latter point concerns me. In the Opposition's amendments is there anything to prevent the situation to which the hon. Lady referred, in which an academy is in effect the employment feeder for a local company, from occurring?
Diana R. Johnson: The Opposition want every pupil in an academy and any school to reach their full potential, and closing off options early on to pupils is not the appropriate approach.
Amendment 30 sets out the Opposition's view that section 40 of the Childcare Act 2006 should apply to academies. Now that academy status will be open to primary schools, I am concerned that the Bill is ambiguous about the care and education of young children, and that section 40 of the 2006 Act does not refer to academies. That is understandable, because at the time only secondary schools could become academies, but a few all-through academies have now been developed.
Amendment 30 would introduce a clear duty to implement the early years foundation stage in academies with a nursery, ensuring that early years education in academies met the learning and developmental requirements of young children and complied with welfare requirements, too. That in turn would guarantee all young children in academies the same balanced, age-appropriate and play-based standard of care and education as children in maintained and independent schools. The Opposition believe that that is a sensible way to ensure that the excellent and well regarded early years curriculum is applied in academies. I am concerned that the Bill is silent on that subject, so it would be helpful to have a commitment to the early years foundation stage in the Bill. I listened very carefully to the Minister's earlier remarks, but it would be better if the measure were clearly signposted in the Bill.
Amendment 26 would require academies to include personal, social, health and economic education on their curriculum and to make PSHE mandatory.
Chris Skidmore: I do not see economic education mentioned in the amendment-am I misreading it?
Diana R. Johnson: When this matter was before the House in the last Parliament, economic education was part of PSHE, but I may be mistaken in still calling it that. The original name was personal and social health and education. I think that the previous Government tried to insert "economic" to make it clear that economic education was very important to young people to give them information about bank accounts and how to budget accordingly.
Chris Skidmore: If the hon. Lady is not quite certain herself about what the amendment should mean or what the definition is, surely she should withdraw it and bring it back at a later stage.
Diana R. Johnson: With the greatest respect to the hon. Gentleman, who is a very new Member of this House, it is clear, having checked the amendment, that I have made a mistake, as I said. I tried to explain why the previous Government wanted to include economic education in PSHE. We want to make PSHE mandatory in academies, and I am keen to set out why the Government have got this completely wrong.
Pupils are pupils whether they attend an academy or any other type of school, and they all need to develop the life skills to make choices on subjects such as nutrition, sex and relationship education, and personal finance. In many constituencies across the land, we are very concerned about levels of teenage pregnancy. A few moments ago, my hon. Friend the Member for Luton North (Kelvin Hopkins) spoke about teenage pregnancy rates in European countries where there is comprehensive sex and relationship education. The hon.
Member for Brighton, Pavilion also touched on that subject. We believe that making PSHE mandatory in academies and, indeed, in all schools is the way forward to ensure that young people have the information they need to make sensible and good life choices.
Dan Rogerson: I understand the point that the hon. Lady is making. I agree that it is important that all schools should have this subject as part of the curriculum; I have believed that for a long time. I understand that when there was a debate on this in the other place, a similar amendment was tabled by her noble Friends. However, given that the amendment has to work within the confines of this Bill and is therefore restricted to the new academies that it covers, it would not achieve the aims that she is talking about. Does she concede that this might not be the time and place to do this, and that we need to revisit the issue across the piece?
Diana R. Johnson: This Bill is about academies, and we have made it clear in the amendment that we want to make PSHE mandatory in academies. The position taken by my party is that we believe that PSHE should be mandatory in all schools-academies and non-academies.
We want to put PSHE on a formal footing to send out a clear message in academies about how important the subject is and how important it is to develop it as a professional subject and to train more teachers in it. Many schools already provide very good PSHE, including some academies, but more can still be done to improve its teaching. Hon. Members will know that in the previous Parliament the Labour Government attempted to legislate in the Children, Schools and Families Bill to make PSHE compulsory for all pupils in all schools, including, importantly in this case, academies. The key principles that we set out in that Bill were to make the teaching of PSHE promote equality, encourage the acceptance of diversity, and emphasise rights and responsibilities and the need to reflect on contrasting attitudes within society-in other words, to give children and young people the opportunity truly to develop their life skills. At that stage, the Liberal Democrat coalition partners fully supported the Labour Government's policy of making PSHE compulsory for all pupils, including those in academies. It will be interesting to see tonight whether the Liberal Democrats now differ in their position.
Young people and parents both tell us that they want PSHE taught in schools. A National Children's Bureau report showed that children wanted to be able to talk about issues important in their lives, such as emotions, relationships, mental health, sexual health and so on. In a popular survey, 81% of parents agreed that every child should have sex and relationship education as part of the curriculum, and in a survey by Parentline Plus, 97% of parents said that they wanted drug and alcohol education to be delivered in schools. The National Institute for Health and Clinical Excellence recently recommended that all primary schools should teach PSHE.
Parents say that they do not always have the knowledge, skills or confidence to engage their youngsters in discussion on the sensitive matters of sex and relationships and drugs. Of course, the Liberal Democrats may wish to
reflect on the fact that people can often get themselves into undesirable relationships if they have not had the opportunity to really think things through and consider all their options.
We know that PSHE fosters self-esteem and builds confidence, which we always want to encourage in our young people. In 2009, Sir Alasdair Macdonald held a review of the then Labour Government's proposals to make PSHE a statutory foundation subject. He made it clear that PSHE was important because of the
"unique body of knowledge, understanding and skills"
that it brings our young people.
Our amendment 26 would make the provision of PSHE mandatory in academies, but we still also take the view that we want academies to have good, open communication with parents on the issue of PSHE, and that each individual school and academy should develop sex and relationships policies.
George Hollingbery (Meon Valley) (Con): From reading the amendment, I am slightly confused. Perhaps the hon. Lady is about to develop this point, but what is the difference between compulsion and PSHE being mandatory, which is not mentioned in the amendment, and a "statutory entitlement", which is?
Diana R. Johnson: We believe that all academies-we are dealing only with academies this evening-should have the subject of PSHE on the curriculum within the school day. That is what the amendment is intended to achieve. At the moment, as I understand it, and the Minister will correct me if I am wrong, it will be down to academies to decide for themselves how, whether and in what format they wish to deliver PSHE. That is my understanding of the Government's position.
Jeremy Corbyn: Is my hon. Friend aware of any pressures being placed on the Government by those who have ambitions to run academies to ensure that they are free from what they would see as the constraint of having to have PSHE in their curriculum? It seems to me that there are some forces out there that are not particularly benign towards a society in which young people grow up recognising the need to understand relationships and to be equipped with the appropriate life skills at the end of their compulsory school years.
Diana R. Johnson: My hon. Friend makes an interesting point. We will have to see who comes forward to sponsor academies. I have not been given any information about any particular sponsor who might take that view, but we need to wait and see.
As the hon. Member for North Cornwall said, the same amendment was debated in the other place. It was clear there that the Government accepted that there was broad agreement on the importance of PSHE but argued that there were differences of opinion on the way forward. We have been debating and discussing PSHE for far too long, and we need to get on and do something about it now. The Secretary of State for Education has said several times in the House recently that he is in a hurry in his zest to reform education, as can be seen in the speed at which the Bill is going through Parliament. I say to the Government, please let us be in a hurry on PSHE. Let us get on with it and do what we all agree should happen, to prepare our young people with the life skills that they need.
George Hollingbery: May I pursue my point a little further? I am a new Member, so forgive me if I am incorrect. Amendment 26 would require
"a statutory entitlement for all pupils"
to PSHE, but it does not mention compulsion or say that PSHE should be mandatory. Could pupils who wish to opt out of PSHE do so? The word used in the amendment is "entitlement," not "compulsion."
Diana R. Johnson: The proposal is as it is. In the previous Parliament, there was a long debate on opting out of PSHE, especially regarding sex and relationship education. The proposed amendment does not address that matter, but if the Government were minded to accept it, they may have to consider it further. The proposal is for
"a statutory entitlement for all pupils"
There was huge disappointment among parliamentarians and many other organisations at the failure of the previous Parliament to legislate on PSHE owing to the fact that the Conservative party would not accept the PSHE clauses in the Children, Schools and Families Act 2010 during the wash-up period. The Conservatives and Liberal Democrats now have an opportunity for an early win on PSHE for our young people who will be educated in academies.
Dan Rogerson: The hon. Lady's telling of events of the closing days of the previous Parliament is interesting, but obviously, the wash-up process is somewhat arcane for those of us who were not party to the negotiations. Could the previous Government have dug their heels in and pushed for those PSHE clauses with other interested parties?
Diana R. Johnson: I, too, was not party to those negotiations, but I understand that that was not possible.
I intend to press amendment 26 to a Division to test the opinion of the Committee on that very important proposal.
Mr Gibb: Amendment 1 would require all academies established in future to follow the national curriculum rather than one that satisfied
"the requirements of section 78 of the EA 2002",
which is that academies must provide a
"balanced and broadly based curriculum".
Amendment 25 would mean that new academies would be required to teach the national curriculum in
"science, mathematics, information technology and English".
Academies have been regulated since their inception by funding agreements. The previous Government took the stance-for many years-that that was the appropriate mechanism, and we agree with them. We intend to retain the funding agreement as the principle regulatory mechanism for academies. Via the new model funding agreement, academies will be required to teach English, maths and science as part of a broad and balanced curriculum. Beyond that, they can choose a curriculum that both engages and meets the needs of their pupils.
The freedoms in the academy system allow school leaders and teachers to be innovative in their approaches to raising standards and improving pupil engagement
by tailoring the curriculum to the needs of their students in response to the type and quality of education demanded by parents. We trust teachers to use their professional judgment. They are the people who are best-placed to make such decisions. We want more freedom and flexibility for schools, not less.
Kelvin Hopkins: I am listening to the Minister with interest, but I am somewhat astonished. I remember him when he was in opposition speaking strongly in favour of using synthetic phonics in teaching, with which I entirely agree, and advocating imposing requirements on teachers as to how they teach. However, now he is taking a Maoist approach-let a thousand flowers bloom-and giving teachers the freedom to do what they like. That is something of a contradiction.
Mr Gibb: The Conservatives have never said, either in opposition or in government, that we will pass a law requiring teachers to teach in that way, although it is the law-as introduced by the previous Government-that phonics should be the method used to teach children to read. I believe, as does the hon. Gentleman, that that method raises standards. We believe that schools should use best practice and we will not countenance schools that use methods that do not result in young people being able to read early in their school careers, which is why we are introducing a test of children's reading skills for six-year-olds. We will say more about that in the weeks and months ahead.
The hon. Gentleman will also wish to know that we are planning a review of the national curriculum that will inform our proposals for a set of core knowledge. We expect that each academy will want to incorporate that into its curriculum and that there will be parental pressure for them to do so. However, that will be an expectation, not a requirement. We believe that the freedom to be imaginative with curriculum design within a broad and balanced context is a core freedom at the heart of the academies programme that will underpin the improvement in standards that we all want for our schools.
Kelvin Hopkins: Again, I am listening with interest to what the Minister is saying, but he will know, as I do, that there is a wide range of teaching philosophies among teachers, some of which are successful and some of which are not. We have suffered from this for the past couple of generations. There are apparently 1 million people in London who cannot read because of mistaken teaching techniques. Is it not time that we started to require successful teaching methods to be adopted in all our schools?
Mr Gibb: I would hate to be on the opposite side of this argument with the hon. Gentleman. He will have to wait until we make our announcements on this, but there are going to be reforms to initial teacher training, to the tests at age six, and to the training of teachers through continued professional development to ensure that they all use best practice in teaching children to read.
Evidence from the National Reading Panel in the United States and elsewhere overwhelmingly suggests that using early systematic synthetic phonics in the
teaching of reading is the most effective way of teaching young children to read. That is my personal view, too. In particular, it closes the gap between boys and girls and between children from poorer backgrounds and others. I have to say, however, that there might well be other methods that the hon. Gentleman and I have not come across that could be even more effective than systematic synthetic phonics. I would like to see what they are, but we cannot rule out teachers being innovative and using such methods, if that results in children learning to read sooner and more effectively.
Jeremy Corbyn: May I take the Minister back to the subject of PSHE teaching? If an academy does not include it in its curriculum because the governors do not believe it to be appropriate, but groups of parents want it to be taught in the school, who will decide whether the parents' wishes should be granted? Might they be prevented from allowing their children to receive PSHE education?
Mr Gibb: That is the position in every school at the moment. PSHE is not a statutory requirement in any maintained school or academy. The essence of our reforms is to give parents greater choice-a genuine choice, not the faux choice that parents in many areas now face when they have been denied their first choice of school. The thrust of the Bill, and of the Government's education policy more generally, is to give parents more choice by providing a diverse range of schools to which they can send their children. They will then be able to find a school with the education orthodoxy and philosophy that they agree with, and that could also involve subjects such as PSHE.
Amendment 30 seeks clarity about the arrangements for the very youngest in our schools. I hope that I can reassure hon. Members that the amendment is not needed, because the requirements it seeks are already in place. It seeks to ensure that the provisions in the Childcare Act 2006 relating to learning and development, welfare and assessment will apply to every academy that provides for the very youngest children. However, the Act already provides for that. Section 40 requires all schools to deliver the early years foundation stage if they provide for pupils aged three to the end of the academic year in which they turn five. That includes independent schools. The Act does not use the word "academy", but academies are legally categorised as independent schools, and all schools providing for the under-threes-academies, independent and maintained schools-are required to register with Ofsted and to deliver the early years foundation stage. There is a limited number of exemptions from that requirement, such as when the provision is for a very short amount of time per day, but the requirement applies to all providers, and there is no difference for academies.
I should also point out that the Minister of State, Department for Education, my hon. Friend the Member for Brent Central (Sarah Teather) announced on 6 July an independent review of the early years foundation stage, which will report in the spring of 2011. It will look at precisely the areas that hon. Members-the hon. Member for Kingston upon Hull North (Diana R. Johnson) in particular-wish to deal with in the amendment. I hope that that provides further reassurance.
Amendment 26 would require all new academies to teach PSHE-I will give the hon. Lady that-as a statutory subject. This issue was debated at length in Committee and on Report in the other place, and no one doubts the importance of children learning these essential skills for life. However, we know that many academies are teaching PSHE right now and teaching it very well. There is no reason to believe that academies teach PSHE any less well than maintained schools, or that a maintained school that becomes an academy will suddenly teach it less well. The key point is that if we make PSHE a statutory part of the curriculum in academies, it will mean imposing greater requirements on academies in this respect than on maintained schools, where PSHE is not a statutory subject. We are not in the business of reducing freedoms for academies; that is not the direction we want the academies programme to be travelling in. In addition, it does not make sense to single out PSHE and place it on a statutory footing, while not doing so for other subjects. That does not seem the right thing to do in this circumstance.
Diana R. Johnson: Is it now the coalition Government's position that they are not going to proceed with making PSHE statutory in maintained schools or academies?
Mr Gibb: The coalition's position is that we are having a curriculum review and all these issues will be addressed in it.
Mr David Burrowes (Enfield, Southgate) (Con): I commend the position that my hon. Friend is taking on amendment 26. Does that amendment not highlight the seeming lack of respect for the fact that governors, in conjunction with parents and teachers, take PSHE seriously, are concerned about its quality and want it to be properly taught with proper values-based teaching underlying it?
Mr Gibb: My hon. Friend is absolutely right, and that is the sort of issue we will look at when the review takes place. The curriculum review that is taking place later this year must be the right place to look at PSHE, to ensure that this important subject is debated properly. Members will have every opportunity to contribute to that debate, but at this point it makes sense to ensure that academies' policy on PSHE does not go further than PSHE policy in maintained schools.
Clause 28 of the model funding agreement already states:
"The Academy Trust shall have regard to any guidance issued by the Secretary of State on sex and relationship education to ensure that children at the Academy are protected from inappropriate teaching materials and they learn the nature of marriage and its importance for family life and for bringing up children."
I hope that that provision reassures my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) and the hon. Member for Brighton, Pavilion (Caroline Lucas), who raised the question of why the national curriculum is not on the statute book for academies. As I mentioned before, there is statutory provision in section 78 of the Education Act 2002 for a broad and balanced curriculum. Creationism cannot be taught as fact in academies or in maintained schools, and it cannot be taught as part of science lessons. The hon. Lady's notion of the purpose of education-enabling the potential of any individual to be fulfilled, whether that is academic or vocational-I
agree with 100%. She is absolutely right: fulfilling the potential of every child to the best of their ability, in whatever field that is, is the purpose of education.
The hon. Lady referred to the Manchester academies, which are jointly sponsored by the local authorities and by business. Their ethos is built around this partnership and is not solely related to the skills needs of those businesses. As I said before, the Bill requires academies to have a broad and balanced curriculum, so she can be reassured that the things she described as happening at those academies are not happening.
Dan Rogerson: Earlier, I talked about monitoring the meeting of the criteria. On ensuring that academies deliver a broad-based curriculum, would there be a number of triggers-things that would concern Ofsted and encourage it to take an interest in an academy, if reports of them reached it?
Mr Gibb: Ofsted will, of course, continue to inspect academies. It will conduct those inspections against the independent school standards, which are rigorous, and against section 78 of the 2002 Act. If it discovers that a school is not teaching a broadly balanced curriculum, the school will be put into special measures, so I think that my hon. Friend can be reassured. The reports will, of course, be monitored on behalf of the Secretary of State by the Young People's Learning Agency. I hope that with those few remarks I have reassured all hon. Members on both sides of the House-
Mr Gibb: Apart from the hon. Gentleman, who is rarely reassured by any Front Bencher on either side of the House. On the basis of my remarks, I urge hon. Members not to press their amendments.
Caroline Lucas: I thank the Minister for his reply, but he will not be surprised to hear me say that I do not think that he goes far enough. Nothing in what he said reassures me that academies will teach a genuinely objective and balanced curriculum. Perhaps part of the problem is in the language, because what might feel objective and balanced to one person is patently not to another. There are not sufficient safeguards in the Bill to prevent the real risks that other hon. Members and I discussed; they are just not there. However, reluctantly, I have decided not to push the amendment to a vote. I beg to ask leave to withdraw the amendment, but I hope very much that this debate means that the Government will give more thought to those particular concerns.
Amendment, by leave, withdrawn.
Amendment proposed: 26, in clause 1, page 2, line 2, at end insert-
( ) the school has a curriculum which includes personal, social and health education as a statutory entitlement for all pupils;'.- (Diana R. Johnson.)
Question put, That the amendment be made.
Amendment proposed: 23, page 2, line 8, at end insert-
(e) the school must comply with the provisions of the Code for School Admissions issued from time to time by the Secretary of State.'.- (Diana R. Johnson .)
Que stion put, That the amendment be made.
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab): On a point of order, Mr Evans. Rather a lot of Members who voted in the Aye Lobby seem to have slipped away. Will you please check that the count has been reported accurately?
The First Deputy Chairman of Ways and Means (Mr Nigel Evans): Will the Tellers please come to the Table so that the numbers can be clarified? There now appears to have been a recount. The Ayes were 218, and the Noes were 321. The Noes still have it.
Proceedings interrupted (Programme Order, 19 July).
The Chair put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83D).
Amendment proposed: 27, page 2, line 8, at end insert-
(e) the school complies with provisions on pupil exclusions and behaviour partnerships as set out in EA 2002, EIA 2006 and ASCLA 2009.'.- (Vernon Coaker.)
Question put, That the amendment be made.
Clause 1 ordered to stand part of the Bill.
Amendment proposed: 14, page 4, line 21, leave out subsections (3) and (4).- (Vernon Coaker.)
Question put, That the amendment be made.
Clause s 6 and 9 ordered to stand part of the Bill.
Amendment proposed: 33, page 7, line 13, leave out subsection (1) and insert-
'(1) Before entering into Academy arrangements with the Secretary of State in relation to an additional school, a person must consult-
(a) local parents and children,
(c) the relevant local authority,
(d) all school staff and their representatives, and
(e) any other persons deemed appropriate.'.- (Vernon Coaker.)
Question put, That the amendment be made.
Clause 10 ordered to stand part of the Bill .
The occupant of the Chair left the Chair to report progress and ask leave to sit again (Programme Order, 19 July ).
The Deputy Speaker resumed the Chair .
Progress reported; Committee to sit again tomorrow.
That, on Tuesday 27 July, the House shall meet at 11.30 am and references to specific times in the Standing Orders of this House shall apply as if that day were a Wednesday.- (Sir George Young.)
That, on Tuesday 27 July, the Speaker shall not adjourn the House until any message from the Lords has been received, any Committee to draw up Reasons which has been appointed at that sitting has reported, and he has notified the Royal Assent to Acts agreed upon by both Houses.- (Sir George Young.)
Motion made, and Question proposed, That this House do now adjourn. -(Stephen Crabb.)
Mr Clive Betts (Sheffield South East) (Lab): Thank you, Mr Deputy Speaker- [ Interruption. ]
Mr Deputy Speaker (Mr Nigel Evans): Order. Would Members who are leaving the Chamber do so quietly?
Mr Betts: Normally when a Member speaks in an Adjournment debate at this time of night, they stand in the Chamber in splendid isolation. It is obviously pleasing to see so many right hon. and hon. Friends here tonight, particularly four other Sheffield MPs, my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), and my hon. Friends the Members for Penistone and Stocksbridge (Angela Smith), for Sheffield, Heeley (Meg Munn) and for Sheffield Central (Paul Blomfield). It is also pleasing to see my right hon. Friend the Member for Rotherham (Mr MacShane) and many other colleagues.
This issue affects not merely Sheffield-it has touched a nerve across the nation-but forging and forgemasters are very important in the history of Sheffield. As a child growing up in the city, the pounding of the drop forges down in the Don valley, which is now part of my constituency, was like the very heart of the city beating.
However, this debate is not only about the history of industry in Sheffield, but about its future. In 2005, when the company was part of the Aitchison group, there were major financial difficulties. Eventually, the company was saved by a management buy-out led by chief executive Graham Honeyman, who by putting his own money in saved the firm, its workers' jobs, debts to suppliers and, with the help of the pension protection fund, the workers' pensions. Despite initial problems with cash flow and rising energy prices, the company became profitable and increased in size to 700 employees, taking on 70 new apprentices. The company has full order books and 80% of its work is for export, and it has a turnover of £100 million. All the company's profits to date have been reinvested.
Two or three years ago, the company saw a major opportunity in the nuclear industry. With £150 million of investment, it could buy a 15,000 tonne forging press. However, as that was larger than the company's total annual turnover, it needed additional help. It went to my friend, the previous Member for Sheffield Central, Richard Caborn, who deserves a great deal of credit for the help he gave at that time.
That package would have created 400 jobs. The Government were approached and over a two-year period, very detailed negotiations were held. Eventually, an £80 million loan was agreed as part of a package involving private investment, including support from Westinghouse, loans and equity release. There was a full appraisal by Department for Business, Innovation and Skills officials and Treasury officials. It was confirmed in parliamentary answers that the independent Industrial Advisory Board gave its assessment, and that Deloitte and Allen & Overy looked at market opportunities and additionality, and at cost-benefit and commercial considerations. After all that, it was concluded that a
loan of £80 million was the right way to go as part of an overall package. The loan was also part of an industrial strategy with a nuclear research centre and the Advanced Manufacturing Park. I do not think that France and Germany would have such a dilemma about what to do about investing in such a company.
After the election, we were told that there would be a review. Funnily enough, most of the reviews that took place actually approved schemes that were in train, so let us examine what the review of the Forgemasters loan amounted to. There was no new cost-benefit analysis and no new external advice was sought. Indeed, the Government did not get back to the original advisers. There was no contact with Forgemasters. The first time the company learned anything of the review was when the chief executive got a phone call from a Minister, who said, "Your loan has been withdrawn." That is no way to carry out a review. The kindest thing I can say is that it was a virtual review; the worst thing I could say is that it was an absolute sham.
Since then, various reasons have been given for the refusal of the loan, including that the directors would not dilute shares. The Deputy Prime Minister and the Prime Minister said that, but the former has had to write to the chief executive to apologise for making inaccurate statements, although he did not apologise today in the House.
Private funding was involved via an element of equity release, but the company would not continue with extra equity release to the point at which control passed back to an absentee owner-the very sort of owner that nearly bankrupted the company in 2005 when the workers and management had to save it.
It was said that commercial options were available. Indeed, the Lib Dem leader of Sheffield city council, Councillor Paul Scriven, said that the commercial markets would provide the money. Will the Minister confirm that at a meeting with Forgemasters and his officials the other day, it was agreed that there were no straightforward commercial options without the loan?
We have been told that there is no money, and that this is unaffordable, but we are talking about an £80 million loan, not a grant. It would have been repaid with interest, making a repayment of £110 million, plus additional money from equity warrants if the investment had been successful, plus the tax revenue from those employed by Sheffield Forgemasters and by companies in the supply chain such as Davie Malcolm, Siemens and Rolls-Royce. This loan would actually have made a profit for the Treasury. The Business Secretary almost admitted as much to the Select Committee the other day.
We were also told that the loan had been a pre-election bribe to buy up a few votes at the general election, but the negotiations had been going on for between 18 and 24 months before the election. So what was the real reason for this decision?
Angela Smith (Penistone and Stocksbridge) (Lab): I have here correspondence released following a freedom of information request. It indicates that Andrew Cook, of William Cook Holdings, wrote to the Government to urge the cancellation of the loan. Does my hon. Friend agree that this approach from a major donor to the Tory party seems to provide the only basis for the Government's decision to cancel the loan?
Mr Betts: I have not heard any other reason. I have read out four reasons, all of which have been proved to be inaccurate and untrue. I shall read out some of the letter that Andrew Cook sent. There were lots of letters sent in during the review, but I think the Minister will be able to confirm that this was the only one that objected to the loan and said that it should not be granted. It is dated 25 May, and it begins:
I am the largest donor to the Conservative Party in Yorkshire and have been since David Cameron was elected leader. I am delighted you are at last back in power, albeit in coalition."
"I have specialist knowledge of the situation which I would like to share with you confidentially. The loan is probably unnecessary and possibly illegal under EU rules. I believe the private sector could provide the required finance without the taxpayer shelling out...It is a typical labour 'sacred cow'. I believe you may be the best person to consider this matter as Vince Cable may find it a difficult nettle to grasp, being as Nick Clegg is a Sheffield MP."
Well, he needn't have worried about that, need he? A second letter from Andrew Cook, dated 9 June, states:
"For the record, I am convinced from my own industrial experience that the necessary finance could be raised from the private sector."
"the reluctance of local management to accept outside equity investment."
Where have we heard those comments repeated subsequently?
Did the Minister, or any other Minister or civil servant, reply to this letter? Who knew about the letter? Did the Deputy Prime Minister or the Business Secretary know about it? Did the Chief Secretary to the Treasury know about it? Tonight, Downing street has issued a statement saying, "Not us, guv. It was all down to the Liberal Democrats. It was down to the Business Secretary and the Chief Secretary to the Treasury. They made the decision." It will be interesting to hear people's response in Sheffield to how the Lib Dems have treated them in this regard. When did Ministers know about this letter? Was it taken into account in reaching the decision? It is difficult to believe that it was not, because there was not one other shred of evidence thrown at the review that could have led the Government to change the decision that had been taken previously.
In the end, Sheffield Forgemasters will continue to be a successful company without this loan. Without it, however, the losers will be UK workers, UK industry and the UK economy. In the light of the cloud that these letters have now cast on the real reason for the withdrawal of the loan, and in the absence of any other real reasons being provided, will the Minister now accept that the case for a proper independent review into this whole matter is unanswerable?
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk): I congratulate the hon. Member for Sheffield South East (Mr Betts) on securing this debate. I suspect that he was hoping that it might take place a bit earlier this evening, but it is nevertheless an important debate. It is good to see Members from all parties here, although I suspect that some might not be here entirely in the sole interest of the company.
I should like to set out the current position. Then I will address the individual questions that the hon. Gentleman has quite rightly raised. Sheffield Forgemasters is a good example of a successful British manufacturing company. The Government whole-heartedly support what the company does, and I would like to place on record our recognition of its excellent work.
I am well aware that since 2005, the chief executive, Dr Graham Honeyman, and the current management have, as the hon. Gentleman rightly said, grown the business and made sure that it has developed into a highly skilled manufacturing firm. Remarkably, this was achieved during a recession that has been very difficult for manufacturing, but it has got through that without making any staff redundant. That is a testament to the commitment and dedication of Dr Honeyman and of everyone who works in that business.
So let there be no doubt about this Government's admiration for Forgemasters, and nor should there be any doubt about our broader commitment to British manufacturing. It is precisely because of our desire to see a thriving UK economy and a vibrant manufacturing sector that, yes, we have had to take a number of difficult decisions in recent weeks. The decision not to proceed with the conditional offer of an £80 million loan to Sheffield Forgemasters was not taken lightly, but ultimately, we came to the reluctant decision that the loan was simply unaffordable at this point.
Mr Denis MacShane (Rotherham) (Lab): What comment would the hon. Gentleman make on the allegations by the Deputy Prime Minister that Dr Honeyman was actually involved in looking after his shares, rather than seeking a loan in the private market? He has had to repudiate that in the Yorkshire Post, and it has caused enormous distress in Yorkshire that the Deputy Prime Minister of our country can make such outrageous allegations about a decent chief executive.
Mr Prisk: This decision has got nothing to do with dilution of equity, which I shall come to in a moment in detail, if I may. The point we are trying to establish is that there is no question of dilution. The issue for us has always been commercial affordability.
Some people have said that the decision is somehow a reflection on the company, the project, its management or staff; in fact, quite the opposite is true. We fully recognise that the project is commercially worth while, but the key point here is that this Government are serious about addressing the deficit and rebalancing the UK economy so that it can recover and grow once more. We are absolutely determined to ensure that all companies, including manufacturers, can operate in the right long-term business environment, so they can thrive and grow.
As a result, the first priority for this incoming coalition Government has to be to restore confidence in the UK's finances, because confidence is the bedrock of our future economic growth. That means that we have to get to grips with the record budget deficit that we inherited, in order to ensure that this country is once again a good place in which to do business.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab):
But if the reasoning is not the letter from Andrew Cook or some other spurious reason
that has already been knocked down by my hon. Friend the Member for Sheffield South East (Mr Betts), and it rests solely on the budget deficit, why was Forgemasters one of only two projects reviewed that were refused by the Government, and 12 projects were not?
Mr Prisk: I am just about to come to that. I believe that the critical issue here is affordability. We have had to deal with very difficult circumstances, not least the fact that on taking office, it became clear that the structural deficit is £12 billion more than we were led to believe by former Labour Ministers. If apologies are due, in my personal opinion they should come from the former Labour Ministers who were in this Chamber and failed to be straight with the British people about the size of the deficit. That is the critical issue.
Of course, the ideal outcome would be for the project to proceed with private sector finance, and I very much hope that in the longer term, that will still happen. However, I must make it clear that, given the scale of the budget deficit that the country faces, we considered the issue from the point of view of unaffordability.
Angela Smith: I respect the way in which the Minister is trying to respond to the debate tonight, but is not the £500,000 that Mr Cook donated to the Conservative party, along with the £54,000-worth of plane flights for the right hon. Member for Witney (Mr Cameron), the real reason for the cancellation?
Mr Prisk: No. Let me make this very clear: in the letter that Mr Cook wrote, he mentioned a number of things. I have the letter with me. [Interruption.] I will answer the question fully. As the hon. Member for Sheffield South East correctly says, Mr Cook states, right at the top of the letter, that he is a donor to the Conservative party. He goes on to say that he is a senior industrialist in Sheffield with two casting plants in that city. [Hon. Members: "Oh!"] If the Labour party will listen for a moment, the point about that is that it tells me that we are talking about somebody who has some interest in and knowledge of the industry. He goes on to say that he may consider whether or not there is an issue of legality.
When I receive something of that nature, as a Minister, I do not give a monkey's whether the person is a donor to the Conservative party, the Labour party, or any other party. What I am primarily concerned with is making sure that the matter is dealt with equally. With all representations-whether a person donates to the Labour party through the trade union movement, to the Conservatives, the Liberal Democrats or any other party-my view is that they should go to the officials; they must decide on the issue of legality.
Caroline Flint (Don Valley) (Lab): Will the Minister give way?
Mr Prisk: Just one moment, because I think that the letter to which we are referring is not something that all Members have seen. As the hon. Members for Sheffield South East, and for Penistone and Stocksbridge (Angela Smith), know perfectly well, I made sure that the letter was made available-they nod in assent-so that we could look at it in the debate. If I had something to hide, I would not have done that, and hon. Members have noticed that.
I also say to Opposition Members that it is peculiar logic to suggest that a Conservative party donor is the reason why a Liberal Democrat Cabinet member in the Department for Business, Innovation and Skills, and a Liberal Democrat Chief Secretary, should support the proposal. If the Labour party's argument is that somehow, a Conservative party donor is managing to twist events in the interests of that party, it has made a mistake, and that is the problem.
Paul Blomfield (Sheffield Central) (Lab): Does the Minister therefore concur with the statement from Downing street that the decision was solely the responsibility of Liberal Democrat Ministers?
Mr Prisk: That is not actually what the statement says. The decision was taken by the Government as a whole, and rightly so, but nevertheless, it is one on which the Secretary of State for Business, Innovation and Skills and the Chief Secretary to the Treasury obviously had the lead. As I made perfectly clear, the argument that somehow a Conservative party donor is twisting the arm of the Liberal Democrats does not make any logical sense.
Caroline Flint: We have already heard that Andrew Cook, a Tory donor, has approached and lobbied the Government on the issue. I just wonder to what extent his sister, Angela Knight, a former Tory MP and head of the British Bankers Association, is also part of a cabal that is influencing yes-or-no decisions on major projects that bring jobs to our country.
Mr Prisk: That is complete nonsense from the right hon. Lady. The sad part about this is that while I totally respect the interests of the local Members of Parliament here, who want to see a decision taken, the national Labour party Front Benchers are using the issue as a method of trying to unsettle the coalition Government.
Mr Prisk: I will move on, because the hon. Member for Sheffield South East, the constituency Member of Parliament, has asked a series of questions, and I want to try to answer them. I appreciate that Members from Wales and elsewhere may wish to intervene, but the matter relates to Sheffield, and I am going to try to deal with it. Let me move on, if I can.
I said that a private sector outcome was an important possibility. Hon. Members alluded to the fact that the company has set out its views in just the past 48 hours. It might help the House if we listened to those views. Dr Honeyman has said, in the past 24 hours:
"We are still keen to undertake the 15,000 tonne press development but feel that the company's best interests will be served by suspending work on the project for the time being."
[Interruption.] One moment, and I will give the answer that the right hon. Member for Don Valley (Caroline Flint) seeks. The statement continues:
"The opportunities in global nuclear will continue to grow.
This pause will give the company, which has invested more than two years and significant funds to this project, time to resume a greater focus on growing our business into civil nuclear and other sectors."
Dr Honeyman concludes-this is very relevant to the issue that Members are concerned about:
"As our thinking develops we will of course take up the Government's offer of further discussions. The company recognises the difficult financial position faced by the country and accepts the loan offer will not be reinstated."
Meg Munn (Sheffield, Heeley) (Lab/Co-op): I am listening to the Minister very carefully and he is making a great deal of the issue of unaffordability, but the Government have continued with projects in relation to Nissan and other industrial projects. Why Sheffield Forgemasters, when clearly the Government are saying to us that they appreciate just what a great company it is?
Mr Prisk: There are difficult decisions in this issue, and we have taken the view that the project is unaffordable. That is the challenge that we have had to deal with.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab) rose -
Mr Prisk: No, I will not give way. The right hon. Gentleman can shout and scream all he wants. I will try to answer the constituency Member's questions.
Having quoted the company chairman, I want to point out the position from the Government's point of view. Yesterday, the Secretary of State, on receiving a note from the company, said:
"I will keep the situation under review and reconvene the meeting of experts with the Sheffield Forgemasters Board when they are ready, to review the investment potential with the company."
Mr Byrne: I appreciate the argument that the Minister is rehearsing this evening. As the Chief Secretary to the Treasury at the time, I was involved in negotiations about this loan. I insisted on certain conditions and certain restructuring, including the issue of equity warrants. Is he aware of advice to me from Her Majesty's Treasury officials that recommended acceptance of the loan on the grounds that it was indeed value for money?
Mr Prisk: When it was the right hon. Gentleman who told us in a letter that there was no money left, it is a little rich to be lectured by him on financial prudence. I am more concerned with making sure that we move on so that this company can do its job and stop the Labour party from playing party politics. It is bad for local jobs and it is bad for the company.
Mr Byrne: I appreciate the partisan point that the Minister is trying to rehearse. My question was much simpler. Was he aware of Her Majesty's Treasury officials' advice to me that this loan should have been accepted and was, in their judgment, value for money? Yes or no?
Mr Prisk: The right hon. Gentleman knows perfectly well that Ministers receive a wide range of different advice. He knows that perfectly well. The issue, as I have said time and time again, is affordability. That is what I am dealing with.
Let me move on from the machinations of the Labour party and deal with the economic issues, which I think are the crucial ones. There has been some good news for Sheffield Forgemasters in the last few days. It has recently signed a £30 million trade agreement to oversee the development of power generation forgings with the Indian state-run power equipment maker, Bharat Heavy Electricals Ltd. It is important here to bear in mind-I know that the local Members will be concerned about this-that the venture will be operated as a technology transfer agreement, and it will see BHEL buy both the technology rights and share Sheffield Forgemasters' specialist engineering knowledge. That is an important issue. It is a 10-year agreement and it will help to strengthen and protect future markets for Sheffield Forgemasters in the Indian subcontinent. Also important is that the agreement will mainly serve India's rapidly growing domestic market for turbine and power generation products, including the nuclear power plants.
Forgemasters specialist forging skills are in demand in markets around the world, and that will continue to be so. It will continue to play a part in the emerging UK nuclear supply chain, not least through the Nuclear Advanced Manufacturing Research Centre, which the Government continue to support.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op): On a point of order, Mr. Deputy Speaker. The Minister alleged earlier that there were all sorts of people here who were not from Yorkshire. There are many Yorkshire Members of Parliament, and one on the Government Benches has just been wheedled into the Chamber.
Mr Deputy Speaker: The Minister is responsible for his own speech. A number of questions have been asked, which the Minister has a right to respond to. If the House could be quieter, I would appreciate that.
Albert Owen (Ynys Môn) (Lab): On a point of order, Mr. Deputy Speaker. The Minister said that people from Wales and other parts of the United Kingdom have no interest in this. That simply is not the case. There is a national interest here. Investment from Sheffield Forgemasters will impact on hundreds of millions of pounds of investment in my constituency. This is not just a local issue; this is a national issue, and the Minister should acknowledge that.
Mr Deputy Speaker: That is not a point of order for the Chair, and the Minister is responsible for the interventions that he takes. As I said, a number of questions have been asked by the constituency Member who has called the debate, and he deserves to have his answers.
Mr Prisk: Thank you, Mr Deputy Speaker. I entirely agree with that.
I turn now to some of the other questions that were raised by the hon. Member for Sheffield South East in his opening remarks. First, he questioned the issue of affordability, and other Members have also raised that. One of the key points to bear in mind is that, in the light of the huge deficit that we inherited, this Government had to take the decision on the grounds that this project was not affordable. One of the key changes is that the structural deficit emerged after the election as being £12 billion worse than Ministers announced.
Paul Blomfield: Will the Minister give way?
Mr Prisk: No, because it is important that I try to answer some of the other questions that were raised and I have only five minutes left. The hon. Gentleman asked some eminently sensible questions and I want to try to give him the answers.
Chris Ruane (Vale of Clwyd) (Lab): What about the letter?
Mr Prisk: I will come to the letter in a moment.
The hon. Member for Sheffield South East asked me what affordability actually means. There seems to be some confusion about this on the part of Labour Members. Financing a loan of this nature needed £80 million more debt to be issued. That would have meant £80 million more debt on the Government's books this year. So to claim that somehow this loan would not be as challenging as all that or would not really represent debt on the books of the Government is not correct. The reality is that by taking on that commitment we would have been adding to the enormous debt, regardless of the nature of the assets it financed.
I turn now to the question of the letter and the background to it, which Labour Members appear to be more interested in than the question of the company- [ Interruption. ] I exclude the local Sheffield Members, but their colleagues appear to be more concerned about the party politics. Local Members have made representation to the Department by means of a freedom of information inquiry. They put their letters forward. On seeing those I ensured that their requests were answered, so that they received all the information this evening for this debate. That is an important point, because one of the accusations against us is that somehow we are not being transparent. In making sure that those hon. Members who tabled freedom of information requests received the information for this debate, we are being-let me be crystal clear on this point-absolutely transparent on this matter.
Ian Lucas (Wrexham) (Lab): Will the Minister give way?
Mr Prisk: No, because the hon. Member for Sheffield South East has asked questions that need to be answered- [ Interruption. ] When the hon. Member for Wrexham (Ian Lucas) calms down, I will reply.
The Department received an email from Mr Cook's company. While it was noted, as every representation is noted, it had no bearing on the decision-making process. That is an important point.
Ms Rosie Winterton (Doncaster Central) (Lab): Did you see the letter?
Mr Prisk: Of course I saw the letter, because it was emailed to me. As I have made clear, it was apparent from the letter that this was a business man who had knowledge of Sheffield and the industry and was making various representations. My view was that that should go to the officials. It went to the officials and the answer that came back was "We have noted your letter, Mr Cook." That was it. There has been no further- [ Interruption. ] The reply is included in the replies that I have given to the local Members. It is clear- [ Interruption. ] No, I am sorry, but that is wrong.
The other question that has been raised by several hon. Members is the issue of the dilution of equity. I set out the situation clearly in my remarks earlier. The Government's decision had nothing to do with the shareholder structure. In my view, Dr Honeyman and his team deserve credit for putting this together-
Mr Pat McFadden (Wolverhampton South East) (Lab): If the Minister says tonight that this decision had nothing to do with the directors' shareholdings, why did the Prime Minister and Deputy Prime Minister allege that that was the case as justification for this decision?
Mr Prisk: The right hon. Gentleman usually makes intelligent contributions, but that was just part of the knockabout nonsense- [ Interruption. ] This has always been, as my colleagues and I have made clear, an issue of affordability. That is the crucial point in this debate.
Mr Betts: Will the Minister give way?
Mr Prisk: No. I have 60 seconds left and I want to ensure that I draw my thoughts to a conclusion.
Business in this country cannot prosper while we have a record budget deficit hanging over us. That is the simple fact, but it is one that-sadly-the Front-Bench Members of the Labour party seem unable to grasp. A clear plan to eliminate the structural deficit by the end of this Parliament can leave the markets in no doubt that the Government will live within their means. That is why we have placed fiscal discipline at the top of our programme for governance. Our job in government is to create a stable, long-term framework so that all companies-
House adjourned without Question put (Standing Order No. 9(7)).
That this House welcomes the work of the United Kingdom Youth Parliament in providing young people with an opportunity to engage with the political process; notes that the House agreed on 16 March 2009 to allow the Youth Parliament to meet once in the Chamber; recalls that this meeting took place on 30 October 2009; and accordingly resolves that the UK Youth Parliament should be allowed to meet once a year in the Chamber of this House for the duration of this Parliament.