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Chris Evans (Islwyn) (Lab/Co-op): I have just watched the "Jeremy Kyle Show"-I do not want to recommend that to anybody and I cannot believe that I have admitted it in a Westminster Hall debate. During the adverts, a company called Wonga was advertising same-day loans with an interest rate of 2,400%. Is it responsible for advertising companies to allow such adverts to run?
Mr Thomas: I will not comment on my hon. Friend's television viewing habits, other than to say that I know he has raised concerns about the activities of Wonga, and I will come on to that. It is an interesting company in the consumer credit field for a slightly different reason, which I shall come to later.
I join my hon. Friend the Member for Walthamstow in asking the Government to consider including the issues that she raised within the review of the consumer credit sector, and I do so in a spirit of welcoming their review of consumer credit.
Damian Hinds: There seems to have been a tiny bit of confusion earlier about the nature of the review to which the hon. Gentleman refers. I think I heard suggestions that it was restricted to credit and store cards only, but the call for evidence was much broader, as he knows.
Mr Thomas: As the hon. Gentleman says, there has been a broader call for evidence. I hope the Minister will use the debate to call for further evidence about, and embrace, the areas that my hon. Friend the Member for Walthamstow championed in the debate and in her ten-minute rule Bill.
Stella Creasy: I am sure my hon. Friend will agree that it is one thing to ask the question, but the challenge is to set out that the answers will be listened to. The Government have, so far, only formally committed to looking at the cost of borrowing on credit and store cards in the remit of the credit review. They might be asking for evidence on the broader credit market, but there has been no equivalent firm commitment. The hon. Member for East Hampshire (Damian Hinds) is shaking his head, but I can show him the details on the BIS website; it is outlined clearly. The Government are looking at the interest rate cap on credit and store cards only, and I am specifically asking for the review to be expanded to cover all forms of lending, so that it looks at the market for the poorest consumers.
The hon. Member for East Hampshire (Damian Hinds) made an interesting speech extolling the importance of credit unions-as did my hon. Friend the Member for Walthamstow-as a crucial alternative to some of the most costly parts of the consumer credit industry. He said, rightly, that the issue is not new, but the market is continuing to change. He also raised the issue of the importance of education, as did the hon. Member for North Swindon (Justin Tomlinson), whose initiative in setting up the all-party group I commend.
The hon. Member for East Hampshire alluded, I think sympathetically, to considering how to regulate the worst excesses of the market. He made the important
point that the consumer credit industry, as part of the financial services industry, plays a crucial role in helping our economy to function effectively; nevertheless, there is genuine concern about some activities of the most controversial part of the consumer credit industry, that which provides pay-day loans.
As others have touched on, it is crucial that we consider access to affordable credit beyond the consumer credit industry, such as through credit unions and community finance organisations. The issue is about not only financial education in schools but access to financial education and assistance outside the school environment through debt advice services, and about how we bear down on illegal activity such as loan sharking.
Justin Tomlinson: On giving access to debt advice, my constituency office is working with debt agencies to train our staff, and me, in how to give the right advice. We are also working with local media to communicate constructive advice ahead of the festive period, which is a particularly risky time for people making financial commitments.
There were important contributions from the hon. Members for North West Leicestershire (Andrew Bridgen) and for Crawley (Henry Smith), from my hon. Friends the Members for East Lothian (Fiona O'Donnell), for Clwyd South (Susan Elan Jones), for Halton (Derek Twigg), for Leeds West (Rachel Reeves) and for Darlington (Mrs Chapman), and from my right hon. Friend the Member for Tottenham (Mr Lammy). My hon. Friend the Member for North West Durham (Pat Glass) made an important speech focusing our attention, rightly, on concerns about illegal loan sharking, which I want to come back to in a second. The hon. Members for Gloucester (Richard Graham), for Solihull (Lorely Burt) and for North Swindon also contributed.
My hon. Friend the Member for Walthamstow and the hon. Member for East Hampshire drew attention to the work of the previous Government in reforming the Consumer Credit Act 1974 and introducing the Consumer Credit Act 2006. It is time to look again at the definition of "unfairness" that sits as the heart of the 2006 Act to see whether it addresses the concerns of those championing reform of the 1974 Act. We need further action to tackle loan sharks, who continue to operate despite the activity of teams across the UK dealing with illegal moneylending. We also need to look at how to expand access to credit unions.
The hon. Member for East Hampshire raised the question of access to social fund loans, which are another important source of short-term lending for those in difficulty. The previous Government decided to increase the amount of social fund loans available, and it will be interesting to hear what steps the Minister's
Government plan to take on that. The previous Government also acted to increase pressure on businesses regarding how debts were collected and interest rates levied, due to considerable concern about how they were operating.
I shall end with questions to the Minister. Consumer Focus, which I understand is to be abolished, has called for reform of the pay-day lending market. It has specifically called for the number of loans taken out or rolled over to be limited to five per household, and called for the development of an industry code of practice. My hon. Friend the Member for Islwyn (Chris Evans) raised the activities of Wonga. He may be interested to know that it has developed a code of practice, and I will be interested to know what the Minister thinks about it, and whether he thinks there is merit in the industry doing more in that area.
I hope the Minister will explain the Government's intentions for the consumer advocate, and whether it will have a role in regulating unfairness. Will he explain how the Consumer Protection and Markets Authority will take over responsibilities for consumer credit from the Office of Fair Trading? Lastly, will he explain what the future holds for the growth fund and the financial inclusion fund? Both have done much to fund the expansion of access to credit unions and debt advice and, as a result, have provided substantial help to many extremely vulnerable people.
The Minister for Universities and Science (Mr David Willetts): We all wish to thank the hon. Member for Walthamstow (Stella Creasy) for securing this important debate. She made clear her views about loan sharks-even more so when she tweeted a message to me which, if clicked on, plays the "Jaws" signature tune. We know where she stands, and during the few minutes available, I hope to respond to the specific points that she raised. I also want to comment on the excellent speeches made by my hon. Friends the Members for East Hampshire (Damian Hinds) and for North Swindon (Justin Tomlinson), and the hon. Members for North West Durham (Pat Glass), for Solihull (Lorely Burt) and for Harrow West (Mr Thomas).
Sadly, time is tight, so I will go straight on to some of the points that were raised. I am sorry that the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), cannot be present, but he is involved in the Committee stage of the Postal Services Bill. As part of the development of our policy on postal services, we have published a document to secure the post office network in the digital age. The hon. Member for Walthamstow will have the opportunity to pick up a copy from the Vote Office, but let me draw her attention to paragraph 53 on page 24, which states:
"We are firmly supportive of a stronger link up between Post Office and credit unions and are actively looking into ways the two can work more closely together. Credit union current accounts holders can already access their accounts at post offices through arrangements with the Co-operative Bank, and it is estimated that...almost 80,000 Credit Union transactions have been carried out in post office branches."
The hon. Lady also asked about a levy to fund credit advice, but that is not a straightforward matter because one would have to consider on whom the levy should fall. Should it fall on credit unions? The Consumer Financial Education Body is part funded by credit card providers and other credit providers, and before we go down the route of a levy, we should await the results of our wider debt review, which I shall say more about in a moment.
The hon. Member for Harrow West asked about the consumer advocate and the consumer landscape review. Following the changes to the consumer landscape announced by the Secretary of State on 14 October, we are still considering the options. The previous Government launched a consultation on that issue, so we are not able to provide a response to that point at present.
Given the level of concern among all parties, I would like to report on changes that are already under way, which go back to the previous Government. Those changes, which will offer significant new protections for borrowers, include a new cooling-off period that will allow the consumer 14 days to withdraw from any credit agreement, a need for adequate explanations to be provided to any consumer when taking out credit, and a requirement for someone to undertake a creditworthiness assessment before any loan is made. Those changes will benefit consumers.
Let me turn to the focus of the debate: the consumer credit and personal insolvency review. A call for evidence was launched on 15 October. My hon. Friend the Under-Secretary is leading on that review and working closely with the Financial Secretary to the Treasury.
The review focuses on three key issues, the first of which concerns helping consumers and lenders to make better borrowing and lending decisions because we think that more can be done in that area. Secondly, consumers and lenders should increasingly manage existing borrowing in the long-term interest of the consumer, so we want a regulatory regime that encourages consumers to manage their level of borrowing over time and limits the scope for people to be unfairly penalised for events beyond their control. Thirdly, people in difficulties should be able to access the most appropriate debt remedy.
Chris Evans: When I visited a branch of Lloyds TSB recently, I was told that a major problem was that if good customers get into a dispute, for example with a mobile phone company, and a county court judgment is imposed on them before the dispute is resolved, their credit rating can be messed up. Do the Government intend to review that situation?
In the remaining few minutes available, I shall try to reassure hon. Members about the way in which the review is being conducted. First, we know that we must engage with specific issues, such as advertising. The existing rules on advertising do not address some of the softer issues concerning the way credit is advertised, so we wish to examine that. Impulse buying on store cards is another key issue that will form part of the review. In addition, the coalition Government are concerned that some charges levied by banks, particularly for unauthorised overdrafts, may make it difficult for consumers to keep control over their finances. The review will also cover
interest rate caps, which we recognise as perhaps the most controversial issue touched on in today's debate. We are concerned that the APR on some store cards can average 26%. Despite the fall in the base rate of interest since 2008, there seems to have been no comparable fall in rates on store cards.
The hon. Member for Walthamstow asked about other terms for the review. We have asked for evidence on a specific number of issues, so if people, including hon. Members, believe that we have not flagged up a problem that needs to be addressed, they should provide evidence of that problem to the review and state how it should be identified. The coalition agreement specifically mentions the issue of an interest rate cap on credit and store cards and that of a cooling-off period. Those are specific coalition pledges, which is why they are top of the list in the review, but there was no intention to exclude other subjects from the consultation should hon. Members, or other concerned people, wish to provide evidence of problems to be included.
Stella Creasy: Is that a yes? If we provide evidence that there needs to be action on interest rates charged across the board, including for pay-day loans, home credit markets and hire-purchase agreements, will the Government look at that evidence, act and include the matters in the credit review?
Mr Willetts: It is certainly an undertaking that if people, including the hon. Lady, come to us with evidence of a problem, we will consider that as part of the review. Obviously, we cannot commit the Government to act because that raises a host of further issues. If there were time, I might have repeated for the benefit of Opposition Members the details of at least three separate studies on interest rate caps that were commissioned by the previous Government. They all concluded that there were strong arguments against such caps, including the danger that people would become more dependent on loan sharks. We are aware of the evidence from the 2004 study, the 2006 inquiry into competition and, most recently, the OFT review. We are not committed to such measures because of our concern about people becoming dependent on loan sharks, but we will certainly consider the evidence. If the hon. Lady, the hon. Member for Solihull-who has a track record of being concerned about this issue-or any hon. Member would like their evidence to be considered, they should submit it to our review.
I assure the hon. Member for Walthamstow that I and the rest of the Government appreciate the many concerns about the availability and consequences of consumer credit. When used sensibly and responsibly, credit is a tool for coping with life's uncertainties, but this is an area in which we must gather evidence before we introduce new rules, because we otherwise risk unintended consequences. That is why we have launched our call for evidence, and it is why I welcome today's debate.
Richard Harrington (Watford) (Con): I am honoured to be here, as people always say, but I am honoured in particular because this is my first Westminster Hall debate-and under your chairmanship, Mr Chope, which is much appreciated. I thank Mr Speaker for selecting me for once. It is a great honour. I suspect that there was no one else for the lunchtime slot, but one never knows.
I am here today to talk about taxation, and taxation to do with the British film industry in particular. I have a specific film interest in my constituency, which is the base for Leavesden film studios-recently acquired by Warner Brothers and, even now, one of the most successful film studios in Europe.
As I am sure the Minister is aware, Warner Brothers announced yesterday an investment in excess of £100 million in finally acquiring and developing the site. For the record, most people in this country are highly delighted that what has been Watford's little-known secret-the filming of the Harry Potter films in my constituency, which has been going on for quite a few years-is now formalised. I have not yet been offered a part in the films, but I have had a close relationship with Warner Brothers, as the Government have-the managing director has met with Ministers several times in the past few weeks.
The value of the film industry to this country is significant. People might not be aware, but it directly employs about 36,000 people. If we include the multiplier effect, which studies do, 100,000 people derive their income from the film industry. The taxation commensurate with that is significant. The industry provides about £1.6 billion in direct revenues to the country and £440 million in taxation.
The industry is very significant, with highly skilled and highly paid workers-everything we are looking for in an industry in this country. It has weathered the recession quite well, unlike many other businesses, and production activity is pretty good, I am told.
Andrew Griffiths (Burton) (Con): My hon. Friend is a doughty champion for the British film industry and he has already articulated its importance culturally and economically. It is a vast employer that brings a huge amount of investment and a lot of jobs to this country. Will he, therefore, join me in expressing some surprise that not a single Opposition Member is present-no shadow Minister or Labour politician to speak on behalf of the British film industry.
Richard Harrington: My hon. Friend makes a good point, as ever. Given the importance of the industry to this country, I had hoped that Opposition Members would be present. However, avid readers of Hansard they may be, so I am sure that they will be able to catch up in the morning.
Mr Christopher Chope (in the Chair):
Order. It is important to point out that this is a half-hour Adjournment debate, and it is not normally possible for Members
other than the Member who secured the debate and the Minister responding to participate without having gained the consent of those people. Therefore, saying that Mr X or Mr Y is not present is not really a good point, because in a half-hour Adjournment debate people who could not participate would not normally be expected to attend.
Richard Harrington: Thank you, Mr Chope, but I ought to explain that I mentioned to the Minister whom I thought would be present-my hon. Friend the Member for Faversham and Mid Kent (Hugh Robertson), who told me that he would be here-the fact that I thought there would be one or two interventions. I hope that has not caused offence to the Chair, and thank you for the clarification.
The first item of which people should be aware is the current taxation, which is a producer film relief for companies making films that qualify in the UK as British films. The relief is in place, and the industry supports it and hopes that the Government will leave it in place. My understanding is that the industry has made suitable representations to the Secretary of State and that that will be the case, although I hope for clarification.
The taxation position, however, has been complex. In 1997, when the Labour Government came to power, they decided to reward what some would say was the electoral help of media "luvvies"-but I am not one of those. Some would say that there was a lax film taxation regime, allowing high-net-worth individuals to get 100% tax credits for investing in films. That situation was, I think it is fair to say, abused by the tax avoidance industry, rather than by the film investment industry. To quote Charles Fry of Pinder Fry, a legendary accountant in this field:
"The fact that we're investing in films is irrelevant. If we could get the same tax relief investing in cauliflowers, we'd do it."
To mix my metaphors, there was a chink of light and that industry drove coach and horses through it. The end product was that in 2006 the previous Government pulled down the drawbridge-to use another cinematic analogy-and cut off the tax break for investor funding for high-net-worth individuals.
The vehicle left was the enterprise investment scheme, which is quite well used but very much on a small scale. The average investment through the EIS is between £5,000 and £10,000, so it is a good way to get small investors. However, small films are the type that tends to be funded. While they are very useful, the fact is that, while we have amazing facilities in this country and all the infrastructure, we are providing a vehicle mainly for foreign investors to do their production here while the profit, quite understandably, returns to the investors, who are abroad. Today, I am speaking to the Government about how we need to achieve a situation in which British investors can invest in British films tax efficiently.
What we need to understand about the British film industry is that the budget for a film is now about £1.5 million-the average, median cost of a British film. It was £2.9 million in 1993. With due respect to some fantastic operators, we have gone down to a kind of cottage industry.
To give an example, Mr Martin Carr, who has given me some excellent evidence from his company Formosa Films, explained to me that it is a question of finding
many investors to do one film. Films have 600 or 700 investors putting in small amounts of money. While that is obviously useful in employment terms and in benefit to the economy, we have the facilities and capabilities to do much more.
Mike Weatherley (Hove) (Con): I congratulate my hon. Friend on securing the debate. Does he agree that one of the biggest threats to the film industry is piracy? While I welcome the Gowers report and the Digital Economy Act 2010, we could do many things to improve the Act. That should also be addressed by the Government.
Richard Harrington: The Oxford Economics study, which was commissioned by the film industry last year, proved that very point. Piracy and the infringement of copyright are the major reasons why money disappears from the system and why film makers are not getting the benefit of any of their films. In many cases, that is a criminal matter and the Government will have to make progress on it-like shoplifting, it is theft, and just like any other crime.
What I am really talking about, however, is how we create an independent film industry in which the vast number of high-net-worth individuals who will take risks can have a vehicle to invest in. What went wrong last time was that clever accountants came up with a device whereby schemes were risk free. People were doing sale-and-leaseback schemes. We are talking about not risky films-everyone knows that films are risky and that people either make or lose a fortune with a film-but series of television programmes that were pre-sold to television companies, so there was no risk at all. Accounting firms were making use of the provisions, which really ruined things for genuine film operators, who are now spending all their time making presentations all over the country to get investors to invest small amounts.
There is no question but that films are risky. In this country, we have a tradition of people investing in one film, which comes from the days of theatre angels, who would invest in a particular west end play. However, serious private investors need a vehicle that bunches a group of films together, because some films obviously work and some do not. People can make a very risky investment, for which they will get some tax relief, and there will be huge benefits for the country in employment and everything else. That is what I am asking the Minister for. A working party should be set up. I and people in the industry would be happy to take part, along with the Treasury and Her Majesty's Revenue and Customs, to see whether a suitable vehicle could be devised.
Neil Carmichael (Stroud) (Con): This is an important debate. Small businesses in my constituency are involved in film making. Like my hon. Friend, they have made the point that tax is the important issue, but there are other factors. One is simply creating the right environment for investment in the sector, and I would be grateful to hear what the Minister has to say about that. For example, there are the links that small producers have with the BBC and with other small producers. A feel-good factor encourages the right kind of investment, and we need to attract people to these high-profile industries, which also produce a lot of export work.
I should also mention lottery funding, although I am referring not to charitable or community-based assistance, but to a serious vehicle for serious investors. I know that my hon. Friend the Minister is besieged by people wanting handouts. I have spoken to the Treasury about this issue, and I am talking about not a handout, but something that would be hugely beneficial to the country economically-all the evidence is there.
Angie Bray (Ealing Central and Acton) (Con): I am lucky enough to represent Ealing Studios, a very long-standing and famous set of film studios, and I agree with what has been said this morning. In America and Hollywood, there is so much money that people can afford to plan 10 years ahead. They know that a couple of the films that they take on will be duds, but they can afford to carry the duds because they know that somewhere in the mix there will be at least two or three films that make them a sensational fortune. What is it that they get so right over there that we need to look at so that we get it right here? We need a big enough investment and a big enough group of people who can plan ahead and take a couple of duds on the chin, but who can get the good films going as well.
For once in this country, we have all the infrastructure. We have studios such as Ealing, Pinewood, Shepperton and Elstree. Of course, no one would dispute that the Hollywood of the UK is Watford and Leavesden, which makes some of the lusher, more tree-lined roads in Watford very much akin to Beverly Hills.
Jason McCartney (Colne Valley) (Con): I congratulate my hon. Friend on securing the debate. There has been a lot of talk about south of Watford, but I want to stand up for Yorkshire and the north. Probably one of the most successful British films of recent years was "The Full Monty", which was filmed just down the road from me, in Sheffield, and I remember going to see it at Penistone picture house. However, my constituency has also hosted two long-running television series, which shows our expertise in film, with all the crew who were involved. We had "Last of the Summer Wine" in Holmfirth, which ran for more than 30 years, and the ITV drama "Where the Heart Is" in Slaithwaite. We have lots of wonderful skills-not just in the television industry-and it is important that we keep them employed in this country. Indeed, if we go on holiday to New Zealand or other English-speaking countries, we find that they also love our dramas, so this really is a good industry for us. Well done to my hon. Friend for securing the debate.
Richard Harrington: I greatly appreciate that point. Everything that is made in Colne Valley, and every television programme and film that is made, shows research and development working on the spot. A lot of the world-class facilities that this country has developed for graphic arts and special effects have come from films, rather than from laboratories or other fields.
There is a compelling argument here. The Government have done an excellent job on the film producer credit, which the industry is grateful for and which works, but
we should look carefully at creating an industry that is British financed and British made, and whose profits remain in Britain. Thank you very much for your time, Mr Chope.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey): It is a great pleasure to serve under your chairmanship for the first time, Mr Chope. This is perhaps a poacher-turned-gamekeeper moment for you, and I hope you will not take too many points of order during what remains of the debate.
I congratulate my hon. Friend the Member for Watford (Richard Harrington) on a stunning debut in Westminster Hall and on bringing the success of the UK film industry to the attention of the House. He talked knowledgeably about the film industry and some of its technical details, which does not surprise us at all, given that he is the vice-chairman of the all-party group on the film industry and the hon. Member for Watford/Hollywood.
I also thank all other hon. Members for their valuable contributions. My hon. Friend the Member for Hove (Mike Weatherley) talks so much about piracy that he should perhaps take a starring role in "Pirates of the Caribbean 4"-a £200 million film being filmed in the UK. He is extremely knowledgeable and has, indeed, worked in the film industry. My hon. Friend the Member for Ealing Central and Acton (Angie Bray) represents the highly successful Ealing Studios, which are run by Barnaby Thompson. My hon. Friend the Member for Stroud (Neil Carmichael) made an important point about film. My hon. Friend the Member for Burton (Andrew Griffiths) helpfully pointed out that not a single Labour Member could be bothered to come to the debate. My hon. Friend the Member for Vale of Glamorgan (Alun Cairns) has not spoken, but his presence simply illuminates the debate, and I take this opportunity to congratulate him on his strong campaigning on behalf of S4C, another broadcaster whose future the Government have stepped in to secure.
My hon. Friend the Member for Watford began by noting the investment by Warner Bros in Leavesden Studios in his constituency. The studios are quite a well-kept secret in the United Kingdom. They are the place where all the Harry Potter films have been made and have, therefore, been responsible for a massive amount of inward investment into this country. Yesterday, Warner Bros announced that it was going to invest £100 million in Leavesden to make it the only major US studio outside Hollywood, so my hon. Friend's remark about Watford being the Hollywood of the UK was in no way facetious. That announcement is a real milestone and a fantastic vote of confidence in the UK film industry.
The success of the UK film industry is built on a number of factors. We are, for example, the third-largest cinema-going nation in the world, but we also have a huge range of technical expertise. When my hon. Friend talks about the number of jobs that are directly related to the film industry, it is worth remarking that we have built a highly successful film industry that is fit for the 21st century on the back of the success of the tax credit and the inward investment from Hollywood studios. That includes elements that we might not necessarily
consider as part of film, such as the computer graphics industry and world-class companies such as Double Negative Visual Effects, which provide visual effects to the film industry. That is another reason why so many people want to make films in Britain. My hon. Friend also mentioned Pinewood-Shepperton, and it is instructive that the studios are full at the moment. People who want to bring films to the UK are having to negotiate for space with that highly successful organisation.
It will not have escaped the attention of my hon. Friends-I can say that, as all Members in the Chamber are Conservative-that the film industry has been somewhat in the news because of my Department's decision at the end of July to announce the abolition of the Film Council. One film director said that it was akin to abolishing the NHS. However, as the dust has settled it has become apparent that we took that difficult decision because we wanted to ensure that as much money as possible went to the film industry itself and that we spent as little as possible on overheads.
We will shortly be making an announcement on the future structure of support for the film industry. However, the decision to abolish the Film Council in no way reflected on its leadership. It was superbly led, and is still led, by Tim Bevan, its chairman; and was superbly led by its recently departed chief executive, John Woodward. I pay tribute to John Woodward; having been on the front line of the British film industry for 15 years, both in the British Film Institute and the Film Council, he can take a large part of the credit for the success that we currently enjoy.
Nevertheless, there have been some bumpy rides along the way. My hon. Friend the Member for Watford pointed out that the film tax credit lost its way in the mid-noughties, and that it was seen more as a tax avoidance scheme than a way of investing in the British film industry. I am glad to say that it now works incredibly effectively, and is the main reason for inward investment. We have made it absolutely clear that we guarantee its continuation. The scheme has to be approved.
Alun Cairns (Vale of Glamorgan) (Con): I am grateful to the Minister for giving way. I congratulate my hon. Friend the Member for Watford (Richard Harrington) on securing the debate. We are talking about inward investment in the UK film industry, but does the Minister recognise the fact that the industry is UK-wide and that we should not focus on any one region? Every nation and region of the UK can play its full part in film-making; it can be an effective way of spreading prosperity away from the south-east of England.
Mr Vaizey: My hon. Friend is quite right. His intervention further illuminates the debate by ensuring that I put on the record the huge success of the Welsh film industry, Welsh television productions and the Film Agency for Wales, and the way that Wales is forging ahead with its digital agenda-no doubt ably supported by my hon. Friend, who is a strong voice for Wales in the House.
The film tax credit is due to expire, on a technicality, on 31 March 2012. If anyone is worried by that statement I can tell the House that, as part of the European state-aid rules, we are required to re-notify the European Commission that we intend to continue implementing it. Officials have already begun the process of ensuring that the system continues beyond 31 March 2012 and is cleared again without a gap.
The film tax credit stands at the heart of inward investment, and I pay tribute to the team currently residing in the Film Council that implements the tax credit, dealing with the nuts and bolts and ensuring that the t's are crossed and the i's dotted. Those people do a superb job. I hear again and again from the film industry-this is perhaps for the team's benefit-that instead of saying, "The computer says no," it says, "How can we help?" That is to be commended.
There is another strand that supports British film, particularly those films with an essentially British content-national lottery funding. I am delighted that the Government decided to increase significantly the money available from the lottery for the production of UK films. The total sum available, which includes an element for training, will rise to £40 million in 2014; that is a 40% increase. Because of our decision to rationalise the bureaucracy that supports film in the UK, a far larger proportion of that money will go directly to supporting the British film industry.
It is worth pointing out that, as well as the £40 million that will eventually be available from the national lottery and the £100 million or so from the tax credit, the British film industry is supported by BBC Films and Film4. I was delighted to hear Film4 announce recently that it would increase its investment in film from £10 million to £15 million a year for the next five years; that is a 50% increase every year for the next five years. That decision, too, was taken after we announced the abolition of the Film Council. It is a huge vote of confidence in our film industry.
Sadly, one gap remains. I note that Sky now has 10 million subscribers. I hope this successful British broadcasting company will follow the lead of BBC Film and Film4 and establish its own film fund. I am sure that, in a 10-minute conversation with Sky, my hon. Friend the Member for Watford could explain that with the tax credit, the ability to leverage in private investment and possibly the ability to gain lottery funding, a small financial commitment could see substantial British films being made in this country.
As for direct grant in aid, the Government will be putting in about £73 million over the next four years. That includes our support for the British Film Institute. The institute is another important element in preserving our film archive and heritage, but it also promotes British film, particularly with the highly successful London film festival, which garnered a lot of attention this October and brought many film financiers and investors to London.
We also want to ensure that we are known in the world. We have a highly successful British film commissioner in Los Angeles, who helps with inward investment. He is aided by Film London, ably led by Adrian Wootton, and I put on the record my commendation of his work. Pinewood is expanding, with Pinewood Toronto studios becoming a leading production facility for film and television in Canada. We intend to work closely with UK Trade & Investment to ensure that British film has a presence throughout the world.
A side effect of our decision to abolish the Film Council is our wish to establish a more direct relationship with the British film industry. I was pleased to announce recently that we are to have a biannual ministerial forum on film, where all elements of the British film industry can discuss important matters with Ministers.
The key thrust of my hon. Friend's excellent speech was that we need to build a sustainable British film industry. We want to take it, as it were, beyond the cottage-industry state. It is a highly successful industry that makes excellent films, but the perennial question-the gold at the end of the rainbow-is how to make it sustainable. It is difficult to replicate the US model, which integrates distribution and, with the huge amount of capital that is available, allows investment in a slate of films. However, we shall not take our eye off the ball.
We need to consider a number of the imaginative measures that have been proposed. The Producers Alliance for Cinema and Television proposes what it calls a lot-box; the key to its proposal is that producers should keep some of the intellectual property in their films. Too often, it is given up in order to raise private finance. We need to consider imaginative proposals on leveraging private investment on the back of the substantial money that is available from lottery funding. We must also keep close scrutiny on the need for a distribution model that works for British film, because without distribution the job of making a successful film is only half done.
The film industry in the UK is highly successful-one of the most successful in the world. We have a huge range of talent, not only in our brilliant actors but in our formidable technicians and fantastic world-beating companies. I am delighted to say that through our increase in lottery funding, our guarantee for the film tax credit and proposals that we hope to announce shortly, we intend to build on that success, maintaining and increasing it.
I am pleased to have secured my first Adjournment debate and to be speaking about food security in Africa. I declare an interest: in September, I was lucky to be part of a parliamentary delegation to Kenya that was organised and paid for by the all-party group for agriculture and food for development. I am pleased to say that one of my fellow travellers, the hon. Member for Calder Valley (Craig Whittaker), is in the Chamber. I plan to limit my remarks to 10 minutes in the hope that he and other hon. Members will be able to speak before the Minister responds.
My week in Kenya is undoubtedly one reason why I applied for the debate. I am not an expert on food security or on Africa, but I am, I admit, a child of the '80s. The television images I saw as a 10-year-old of starving children in Ethiopia made a deep and lasting impression. I have called the debate because I never want to see those images again, because emergency food relief has to be the last resort, and because I believe that Africa has the ability to feed itself and that we in the UK should be doing more to help African agriculture to realise its potential.
I also passionately believe that at a time when much of our political discussion is focused quite understandably on the state of our domestic economy, it is important that we all remember that there are 265 million people suffering from chronic hunger in sub-Saharan Africa. That is the UK's population four times over, and a third of the region's total population. Sadly, that number is set to grow by 2020, when it is estimated that, if current trends continue, half Africa's population will be affected. We must not let that happen.
I have come here today to ask the Minister to put tackling hunger and malnutrition for millions of Africans at the heart of his Government's fight against global poverty. I also come to remind him-although I hope that I do not need to-that the primary aim of our overseas development assistance must be to tackle the basic needs of the poorest people in the poorest countries, and to help them help themselves. I also come to say that while maternal health, access to family planning and the fight against disease are all vital, so too is investing in smallholder farmers, most of whom are women. Ironically, it is those smallholder farmers who are most likely to face severe hunger and malnutrition.
I also wish to ask the Minister to increase the UK aid that we spend on helping African farmers so that they can improve their harvests and the productivity of their livestock, to increase the amount of agricultural expertise provided by his Department within African countries, and to use our influence within the international community to ensure that African Governments honour the commitments that they made at Maputo in 2003.
I know that I have set out a long wish list, so let me tell hon. Members why I am convinced that refocusing UK and international efforts in this area could make a significant difference. The availability of adequate food of the right nutritional quality is fundamental to people everywhere. Undernourished mothers give birth
to underweight babies. Children who are malnourished in the first two years of life are at a much greater risk of ill health when they are older. How will a child learn if he or she is starving? How will the child's mother fight off malaria if she does not have a decent diet? How will women be empowered if they cannot feed themselves?
When I was preparing this speech over the weekend, I came across reports of fishermen in Malawi using malaria nets to secure their catches in Lake Victoria. If ever there were an example of the way in which food security underpins so many other development goals, surely that is it. If there were a ready supply of food in Malawi, I would suggest there would have been much more chance of the nets being used for their intended purpose.
When the all-party group visited Kenya in September, we met family after family who told us that while their livelihood was their land, that land often did not produce enough for them to live on. They are not even subsistence farmers; they are sub-subsistence farmers, and there are millions of them in Africa. Given the effects of climate change and more irregular rainfall patterns, there are likely to be many more in years to come.
The sad thing is that it does not have to be that way. The use of better seeds, appropriate fertilisers and access to basic knowledge about planting and irrigation can have a dramatic impact on yields. The current agricultural output in Africa, measured in tonnes per hectare, is less than the UK's wheat output in 1680. Better storage, cross-breeding of livestock and access to micro-finance can mean the difference between feeding one's children or not, and the difference between having a small surplus to sell at market or not. None of that is rocket science, yet there is a huge challenge in getting the basics right, and getting the best seeds and right sort of agricultural knowledge to the farmers who need them.
There are fantastic projects, however, that have the potential to be scaled up in a way that could offer real results. Take FIPS in Kenya-Farm Inputs Promotions Africa-a Department for International Development-funded, not-for-profit company, which, through a network of village-based, agricultural advisers, works with the private sector to get new seeds and fertilisers out to the farmers who need them. Take Farm Africa's dairy goat project in the semi-arid area of Kenya around Mwingi, which trains local people in the cross-breeding of goats to increase milk yields and resistance to drought. Better yields can not only feed the family but generate small amounts of additional household income, which creates a virtuous circle of economic activity.
As the recently published Montpellier panel report says, however, there is a "potentially dangerous gap" between a rich patchwork of on-the-ground activities, such as those I have just mentioned, and a "top-down global response" to addressing food security, which is characterised by much-lauded international conferences and big set-piece policy statements. Do not get me wrong: the pledges of large-scale funding at L'Aquila last year are welcome, but they must translate into real improvements in the lives of the poorest in Africa.
I hope that I have been able to explain why I feel that a focus on food security and agriculture in Africa is so important. I ask the Minister, in the light of what I have said, to consider increasing the proportion of bilateral aid spent on agriculture in sub-Saharan Africa to 10% of total DFID money spent there. According to a recent reply to a parliamentary question, the sum for
agriculture in that area amounted to £51 million in 2008-09. I calculate that that is just 3% of UK bilateral aid for the region in that year.
Does the Minister agree with World Bank estimates that suggest that a 1% increase in agricultural GDP in Africa reduces poverty by three to four times as much as a 1% increase in non-agricultural GDP? Does he agree that agriculture would, therefore, fit neatly with his Government's desire to get as much bang for their buck as possible from their overseas development assistance? Will he tell me the position that the UK will be adopting on food security at the G20 summit in the next few days? Will he tell me how much of the £1.1 billion commitment made by the UK at L'Aquila last year has been disbursed in sub-Saharan Africa? Does he know how many of the staff his Department has working in Africa have agricultural training or experience? I understand that there is only one DFID employee with such a background in Africa, who is based in Uganda. I ask him to consider how that might impact on the delivery of the £1.1 billion of commitments. Has he thought about how such a lack of in-country expertise might have affected the offer that each of DFID's in-country teams have been asked to prepare as part of the bilateral aid reviews? If I were the Minister, I would not be too surprised if those returns were characterised by scant reference to agriculture as a route out of poverty, although perhaps he could reassure us. I appreciate that some of my questions are detailed and that the Minister might not be able to reply to all of them today, but these points are critical if we are to make 2010 the year in which we set the agenda for dealing with the fight against hunger in the decades to come.
If I may, I will leave the Minister with this thought. Investment in small-scale farming will help not only the rural poor. On the first day of our all-party group visit in September, we met a man called David, who lives with his three children in the Nairobi slum of Korogocho. His home is a two-metre by three-metre hut, edged by dirt tracks and foul-smelling gullies. David left the countryside because of family breakdown and because he was unable to feed his children. When he got to Nairobi, however, his life was no better. His saviour was, in fact, a cash-transfer project being run by Concern Worldwide and Oxfam. David's dream is now to own a piece of land to provide for his family. I could not help but think that if the right type of support had been provided to him and his rural community when it was needed, perhaps he and his family would not be trapped in the Nairobi slum in which they are today.
For millions of Africans, food security is not a fancy concept-it is a matter of life and death. I urge the Minister to do all that he can to address the challenge facing Africa and to use the UK's position as a world leader in overseas development assistance to ensure that this decade is the one when we really make a difference.
Craig Whittaker (Calder Valley) (Con): I congratulate my colleague, the hon. Member for Lewisham East (Heidi Alexander), on securing the debate. I also congratulate her on her speech, which outlined the reasons why investment in smallholder farming underpins many of our country's development goals and why greater investment in agriculture could yield much wider benefits.
At my last "meet your MP" public meeting in my constituency, I was asked why we are spending so much money on foreign aid when our own country's financial plight seems so dire. The answer is quite simple: foreign aid not only brings untold benefits to the recipient country and its people-when we do it right-and untold long-term benefits to our own economy and country, but produces a sustainable, stable foreign country that helps and grows itself, which in turn helps to make a safer and more secure world.
I want to expand on my comment about "when we do it right", because the hon. Lady highlighted several charities and non-governmental organisations that do some fabulous work in Kenya. I must also declare an interest, because on our trip to Kenya with the all-party group on agriculture and food for development, we saw not only the excellent examples to which she referred, but the fact that it is not always necessary to spend great deals of money to implement a change for the better. In the smallholder farming stakes, we saw an excellent project in Mwingi, where Farm Africa is doing some fantastic work with the cross-breeding of goats. We were told that a local goat produced a mere 80 ml of milk a day, but if it is cross-bred with one of the stronger breeds of goat, such as a British variety of goat or a German Alpine goat, it produces up to a litre of milk a day. If that cross-breed is then cross-bred further to 75%-that is a goat that is 75% of the stronger foreign goat and 25% of the local goat-the yield of milk goes up to a staggering 3 litres a day.
When that simple, low-cost exercise is carried out by local farmers, it helps them to become much more sustainable within the food chain, because they can sell their milk to hospitals for money that they can use to buy a variety of food to achieve a balanced diet. Furthermore, the resulting milk has tremendous effects by improving the nutrition of newborn children, and indeed their mothers. It is a real "win-win" situation, whereby a low-cost project empowers local people to strive towards sustainability and, eventually, to excel and become sustainable.
Our Government have a huge vested interest in the big society. We need look no further than British NGOs and charities to see examples of organisations that are living and breathing the big society on a daily basis. Through their volunteer programmes, they empower the people with whom they work to map out their own sustainable futures. The power, innovation, leadership and enterprise of our NGOs are absolutely second to none. The NGOs deliver with passion and genuine innovation for smallholder success, without the corruption and self-interest that we often see in national Governments. They are good at mapping out a sustainable future for smallholder farmers but they need help, both from ourselves and our partners.
For the first time in two generations, Africa has a real opportunity to achieve food and nutrition security through agricultural development. As the hon. Lady mentioned, the Montpellier report was published recently. It shows that, despite the fact that the international donor community started to pull out of agricultural development well over two decades ago, there is growing optimism in sub-Saharan Africa that the region can achieve its anticipated green goals.
Food security is a key intermediary outcome in the development process and we have seen a new and growing commitment from African countries to increase resources for agriculture and rural development to at least 10% of national budgets within five years. The challenge for our country, and indeed for our European partners, is how to help to co-ordinate those strategies and how to help to ensure that the momentum is sustained in terms of even greater commitment and funding by the key African and European partners.
The Montpellier report believes that we are well placed to take the lead and drive forward that change. It highlights three key areas that need urgent attention: sustaining the momentum, as I have already mentioned; reducing price volatility; and tackling chronic hunger. My main wish is that the Minister accepts the Montpellier report as a solid blueprint for real sustainable change and that the recommendations in the report, as well as the excellent work of our NGOs and charities in agriculture in particular, are incorporated within our aid programme to help eradicate chronic hunger in Africa for good.
One of the basic requirements in life is food. If we can drive forward our quest to empower people to become self-sustainable with food, the human instinct to survive, along with our aid to empower potential, will ensure that other basic requirements, such as education, health care and housing, will follow. It does not take a rocket scientist to understand that the key catalyst to a safer and more secure world is investment in agricultural development and food sustainability.
The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien): I want to start by congratulating the hon. Member for Lewisham East (Heidi Alexander) on securing this debate on a very important subject, and on the powerful and passionate way in which she presented her argument. She also presented the context for any debate on food security, recognising the enormous range of challenges, of which food security is one. The question is how we achieve the critical balance between determining what will be most effective, and what will have most impact in assisting Britain to partner countries to help them graduate away from aid over time, simultaneously meeting the needs of the very poorest people in those countries.
I was delighted that both the hon. Lady and my hon. Friend the Member for Calder Valley (Craig Whittaker) had an opportunity to travel to Kenya with the all-party group on agriculture and food for development-there is no substitute for seeing things for oneself in order to bring these issues to life. To some degree, I have seen these things for myself, as I was born in Tanzania and partly raised and educated in Kenya. The scale of this issue is immense. More than 200 million people in Africa-more than one in four of the continent's population-suffer chronic hunger. Although Nigeria, Ghana, Rwanda and Ethiopia have all made significant progress in reducing hunger, many countries have made little or no progress and, frankly, some are going backwards. Levels of hunger in the Democratic Republic of the Congo have nearly trebled since 1990, and the levels in Burundi, Botswana, Swaziland, Zambia and Gambia have also increased due to conflict, rapid population growth, economic stagnation or HIV/AIDS. In the years to come, climate change and the scarcity of natural resources will add to the challenge.
The Government are determined to make faster progress in helping to reduce hunger. That is why, at the millennium development goals summit in September, we reaffirmed our determination to tackle malnutrition and to focus our efforts on "the first 1,000 days"-the period from conception until a child's second birthday-after which intellectual and physical damage from chronic under-nutrition is irreversible.
In doing so, we agreed to work with six major donors to co-ordinate and accelerate our work in countries with high levels of malnutrition. Ghana, Malawi and Uganda are among the first countries to request assistance to reduce under-nutrition rates, which will please the hon. Lady as she referred to a very good example of this type of work in Malawi. It is also why, soon after taking office, the Government reaffirmed our commitment to the L'Aquila food security initiative, which was agreed at the G8 summit in 2009. The agreement aims to increase food production in developing countries, make food more affordable for the poorest and most vulnerable, create wealth and lift the poor out of poverty.
The hon. Lady asked how much of the £1.1 billion in L'Aquila commitments have been spent so far. Although that figure is not yet available, we will certainly write to her as soon as it is. However, I can tell her with confidence that the UK will have met its commitments, which I hope reassures her. Within the G20, we have committed to improving food security by making agricultural trade and markets function more effectively and reducing food price volatility in order to protect those most vulnerable to food price increases.
Jeremy Lefroy (Stafford) (Con): I am grateful to the Minister for giving way, and I congratulate the hon. Member for Lewisham East (Heidi Alexander) on securing this debate. Does the Minister agree that one of the most important things that can be done for food security is to improve food storage facilities? On the ground, I have seen food go to waste many times simply because appropriate food storage was lacking.
Mr O'Brien: I defer to my hon. Friend's experience and expertise in such matters, as he has shown great commitment to them over the years. He is right. No supply chain can be managed without the ability to store foodstuffs and distribution points that make it accessible, particularly to the hardest to reach. He is right to emphasise that we should consider a well-designed, holistic approach to solving the big challenge.
Heidi Alexander: I would like to bring to the Minister's attention a fantastic resource in this country, the Natural Resources Institute, which I was lucky enough to visit during the past couple of weeks. Its researchers are working on technical solutions to some of those storage problems. I urge him to look into the work the institute is doing, as it holds some good potential solutions.
Mr O'Brien: The hon. Lady is right to highlight that. There is nothing more important than an evidence base and designing in what works to ensure that the programmes and resources being supplied in partnership to other countries have the greatest impact.
The point is well made. It also ties in with the hon. Lady's question as to whether Department for International Development personnel could include more agricultural
technicians and professionals. I can confirm that we currently have more than one, which will come as some relief. A newly appointed senior economist in Tanzania used to be the head of the agriculture team in the policy division, and we are in the process of recruiting senior agricultural advisers for Rwanda and Mozambique. I am due to visit Mozambique before long and have been to Rwanda and Tanzania.
Early next year, the Government will publish a major new foresight review of the future of farming and food that will consider how the world can continue to feed itself sustainably and equitably over the next 40 years. I hope that the foresight review will have the opportunity to learn from the research and support that the hon. Lady mentioned. We expect its recommendations to influence a wide range of practitioners and policy makers.
I assure the hon. Lady that we are making a difference. In Rwanda, our work on land tenure reform is helping to underpin wealth creation and food security, particularly for women and girls, who drive it. In Malawi, our support for the Government's agriculture programme has helped farmers produce a maize surplus in each of the last four years. In Ethiopia, our support for the productive safety nets programme has benefited nearly 8 million people previously dependent on emergency aid. In South Africa, we are funding work on zero tillage technology that conserves soil, reduces water losses and improves yields. This year, our immediate assistance in response to severe food shortages in the eastern Sahel-she will have read about them-helped avert a major humanitarian crisis.
Increasingly, African Governments are giving agriculture higher priority, with support from the comprehensive African agriculture development programme, which we strongly support. The CAADP is leading to increased budget provision in the sector. Above all-I think this is the point the hon. Lady was hoping to elicit from me-it is an Africa-owned and Africa-led initiative. It aims to increase productivity by 6% a year.
As the hon. Lady knows, however, farmers do not work for this or any Government. Agriculture is a private sector activity, whether it involves subsistence farmers, smallholders-as my hon. Friend the Member for Calder Valley mentioned-or large-scale commercial farming. The bulk of the investment needed to ramp up productivity will come from the private sector: from farmers' own pockets, from banks and micro-credit agencies and from local and national investors.
That is why the Government are seeking to increase our engagement with the private sector. A new private sector department is being created within the Department for International Development, and we are working to encourage increased levels of responsible investment in all aspects of agriculture, including production, processing, transportation and retail. That will be recognised as the results of the bilateral aid review emerge. The results on food and agriculture are much more positive than was suggested, although the hon. Lady will not be aware of that, inevitably, as we have not yet been able to aggregate and publish them. We shall do so in due course.
Food security in Africa is high among my priorities. Since taking office, I have visited Rwanda, Uganda, the Democratic Republic of the Congo, Tanzania, and Sierra Leone, and I am off to Nigeria this evening. During my visits, I have seen what a contribution agriculture makes to combating poverty and hunger. It is also
hugely important for empowering women, who provide much of the agricultural labour but control just a tiny fraction of the productive assets they need to support themselves and their families. That is why we have made it such a priority.
I am pleased that the hon. Lady was able to visit Kenya as a member of the all-party parliamentary group and to see for herself something of how food security works and should work. I hope she was able to see some of the projects that DFID, under the coalition Government, supports. Much of our work aims to ensure that new agricultural technology, which she was keen to highlight, is taken up swiftly by smallholder farmers, who make a substantial contribution to food production in Africa. Our cash transfer programme for Kenyan pastoralists has reduced the poverty of 376,000 people and had a clear impact on nutrition. That relates to the point about agriculture versus nutrition, which is often a false dichotomy but must be addressed. Increasing private sector investment is clearly important, but the ultimate prize is reducing hunger and malnutrition.
Roger Williams (Brecon and Radnorshire) (LD): I congratulate the hon. Member for Lewisham East (Heidi Alexander) on securing a debate on an issue that would have justified an hour and a half of debate, had we been given more notice. The Minister has highlighted the role that science will play in many such programmes; I am pleased that the Government safeguarded the science budget in the comprehensive spending review. How will the Department for International Development, the Department for Environment, Food and Rural Affairs and other Departments co-operate on science and consider how it can be delivered in Africa?
The hon. Gentleman makes an extremely powerful point. The commitment to science can lead to an evidence base that gives us the confidence and sustainability to design the programmes that will have
the greatest impact over time. That is precisely why holding on to our precious science budget in the comprehensive spending review was so important. He makes an equally important point: this is not just about a single Department's efforts, but must involve cross-Department working. We have a number of the inevitable committees and other initiatives. Importantly, I was talking yesterday to my counterpart at DEFRA about precisely such issues of food safety and how the expertise within DEFRA can be harnessed to ensure that the design of our programmes is even more likely to secure the impact and benefits of spending our money well, transparently and in areas of greatest need.
The hon. Lady asked for us to allocate a certain percentage to the issue. It is always more complex than calling for a simple amount within a budget to be allocated; clearly, trade-offs would have to be considered. I hope she will recognise that, as we go through the bilateral and multilateral aid review and, indeed, the humanitarian and emergency response review-coupled with the regional reviews, where there is a real opportunity to look at some regional sharing-she can look forward to seeing how we will aggregate the call for a greater emphasis on food, farming and agriculture with the nutrition elements.
I noted that the noble Lord Cameron-the leader of the all-party group on agriculture and food for development, of which the hon. Lady is a member-highlighted a particularly interesting point about Shujaaz FM radio, which I think all the team must have seen. Important evidence from such trips comes back to DFID, which we can incorporate into our thinking as we move forward, particularly as the foresight group will be reporting early next year.
I pay tribute to the hon. Lady for introducing the debate and raising the subject. I look forward to working with her and other hon. Members as we find the best way to support those concerned, particularly smallholder farmers, in playing a role in tackling hunger where it is most necessary to do so. We need to ensure that we do so on the basis of evidence and knowledge.
Tony Baldry (Banbury) (Con): A number of right hon. and hon. Friends want to intervene during this debate. As I have told the Minister what I intend to say, I hope hon. Members will excuse me if I take my speech at a bit of a canter because that will, I hope, give colleagues the opportunity to intervene when they can. Given the interest in this topic, I slightly regret that I did not enter the ballot to have an hour and a half debate.
"We accept that the term 'NEET' is imperfect. In particular, its use as a noun to refer to a young person can be pejorative and stigmatising. It is, however, a commonly used statistical category, and-in the absence of an appropriate alternative-we have accepted it as a first step in understanding the issues."
A NEET is someone under 25 who is in employment for less than 16 hours a week and who is not in education or training. My constituency has two main towns, Banbury and Bicester. In September this year, 7.5% of Banbury's 16 to 18-year-olds-approximately one in 12 young people-were not constructively engaged in education, employment or training. Nationally, the Prince's Trust estimates that almost 15% of 16 to 24-year-olds in England are NEETs, which is around 874,000 young people. The Prince's Trust estimates that the cost to the state of young people who are NEET is £3.65 billion per year.
As hon. Members may know, in recent years, I have helped to establish job clubs in Banbury and Bicester and, earlier this year, we set up a working party involving those running the job clubs-including Jobcentre Plus and Connexions-to consider what more could be done to help NEETs back into education, employment or training. We also considered how to improve the NEET situation in future years and assist the 142 or so existing NEETs in and around Banbury.
I know my hon. Friend the Minister takes the issue seriously. He inherited a skills system that he has rightly described as over-complicated, over-bureaucratic, incredibly micromanaged and top heavy. He has observed that the previous Government went wrong by basing their skills policy on target-driven bureaucracy, failing to provide sufficient attention to community-based adult learning and effectively abandoning a generation of NEETs. However, during the work I have been doing this year, I have become concerned that a number of policy changes might have the unintended consequence of worsening the opportunities for less skilled and disadvantaged young people to move into further education or employment with training.
We need to consider whether returning the contractual relationship to the Young People's Learning Agency from councils has reduced local flexibility to provide what is needed post-16, and whether removing the ring fence from Connexions funding has put at risk the work needed to prevent NEETs. It is not possible for me to show in Hansard a diagram of what we are doing locally to try to prevent NEETs and to help existing NEETs. However, the simple fact is that Connexions is the gateway for existing NEETs and provides the signposting,
engagement and intervention to help them. That is done through support with apprenticeships, engagement with things such as SKIDZ motor mechanics, work trials, personal advice, interventions, or through programmes such as the new projects in Banbury, including the very welcome new Prince's Trust programme. We need to ensure that Connexions can effectively undertake that work, because we should be in no doubt that the long-term cost to society of a youngster dropping out at 16, 17 or 18 is far greater than the money that would be spent in ensuring they have educational or training opportunities.
Anne Marie Morris (Newton Abbot) (Con): I am certainly grateful for the debate. The comments my hon. Friend makes about the costs are absolutely on point. I am sure he is well aware that the cost to the taxpayer is £97,000 per individual over their lifetime-some estimates put the figure at £300,000 if benefits are included. Does he therefore agree that such figures need to be borne in mind when the Government consider how to resolve this intractable problem?
Mr Andrew Smith (Oxford East) (Lab): I congratulate my fellow Oxfordshire MP on securing this important debate and on the initiatives he is pursuing in our area-I would certainly be pleased to support such projects. Does he agree that what these young people most need is continuing support in the form of advice, mentoring and the monitoring of progress? They need ongoing engagement with work-focused practical experience that can lead to a job, and some modest incentives to reward their progress.
Tony Baldry: I entirely agree with everything the right hon. Gentleman has said; he puts the matter in a nutshell very well. Do the current targets for retention rates on courses for further education colleges mean that they may be tempted to turn away applicants with poor school attendance records? That would effectively write off the already disadvantaged, and potentially create a group of long-term disengaged and unemployed young people with little possibility of improving their position. My impression is that, locally, people are working very hard to try to engage NEETs and get them back into education or training. However, that is not easy. By definition, NEETs have mostly decided to opt out or they have other difficulties-although it is important to recognise that young people who are NEET are not a homogenous group with the same issues, and that they are not even necessarily at the same stage of disengagement.
We also need to recognise that some groups of youngsters clearly have particular challenges. Mencap has sent me a copy of the detailed submission that it made last December to the Children, Schools and Families Committee. In that document, it makes the point that three in every 10 disabled young people aged 19 are NEET, and that a youth cohort study found that young people who recorded themselves as having a health problem or disability are twice as likely to be NEET as others.
When a young person is without or not in education, employment or training they require-as the right hon. Member for Oxford East (Mr Smith) said-support in many different ways. Of course, ultimately that support
may have little impact if an appropriate offer of employment or training is not available. I am concerned that the present system to provide further education perhaps does not provide a favourable environment for this group of young people. There seems to be a fundamental policy problem. If I understand matters correctly, that problem is money. Each youngster who stays on in school or goes to an FE college takes with them a pot of money by staying on at school or college to do A-levels or other training-their place gets funded. A NEET has effectively opted out of the system and receives no funding. Any organisation set up by the local authority or by anyone else to help NEETs get back into education or training also does not receive any funding. Those with the greatest need receive no funding and those trying to help them are left scrabbling around to find funding elsewhere. It might be worth considering some sort of system of NEET vouchers, so that if a youngster who is a NEET undertakes approved activity or enrols in an appropriate course, that activity or course receives some funding. Otherwise, it is difficult to see how we will break out of this NEET Catch-22.
It goes without saying that we need a name for programmes supporting NEETs that is sympathetic and has an overall project title-"Dealing with NEETs" clearly does not do it. We need a name such as "Youth Engagement," and the subject needs a brand. There will be those who say that one of the reasons why there are NEETs is that such people feel that they will not find a job. However, there is something of a chicken-and-egg issue here. The Prince's Trust has observed that the first concern for disadvantaged young people is often their need for money and a job, and the skills they want are those they need to give them a practical route to employment.
The Chartered Institute of Personnel and Development has observed that, despite financial difficulties and a reduction in vacancies, the majority of organisations remain enthusiastic about recruiting new talent. However, many organisations that require specific skills find that those are not being met by job candidates. The CIPD's recruitment, retention and turnover survey of this year found that two thirds of organisations report that a lack of necessary skills is a barrier to recruitment. It also found that a lack of necessary specialist skills was a greater problem for the manufacturing and production professions-76% of that group-than any other. If young people do not acquire skills, the reality is that they are unlikely to be able to access jobs.
Julian Smith (Skipton and Ripon) (Con): Does my hon. Friend agree with me that the Government's recent decision to add 50,000 apprenticeship places this year, and hopefully more next year, is a step forward regarding some of the issues he is talking about? Moreover, the Government are committed to moving away from programme apprenticeships, in which most of a young person's time is spent in the classroom, towards work-based apprenticeships, which are based around the workplace.
Tony Baldry: I think that the increase in apprenticeships is fantastic. The difficulty is that NEETs often need to improve their maths and English before they can access apprenticeships. There is sometimes a gap between where they are and where they need to be.
Ian Swales (Redcar) (LD): Although the increase in apprenticeships is extremely welcome, in many areas, including my constituency, one of the problems is finding enough employers who will commit to them. Does the hon. Gentleman agree that further education colleges should be given more licence to start apprenticeship programmes, with a view to finding employers perhaps after one or two years?
Tony Baldry: Employers are crucial to apprenticeships, and we all have a duty to encourage employers in our constituencies to take on apprenticeships. Those who engage with apprenticeships realise that it is actually a really rewarding thing to do. That has been demonstrated by a number of employers in my constituency who have taken on apprenticeships as a consequence of their involvement with the Banbury and Bicester job clubs.
As it happens, a number of substantial construction projects are about to start in north Oxfordshire, and I suspect that it would be daft for the developers to rush to recruit people from eastern Europe when they start to run into skills shortages. It must be sensible to liaise with those doing the construction and development work locally, so that they consider the extent to which they would be prepared to work collaboratively with the local FE college, Oxford and Cherwell Valley college, the Construction Industry Training Board and others. By encouraging young people training in the construction industry, they can start to grow locally some of the skills they will need.
I also understand that the bizarre situation exists whereby youngsters, once they have completed their construction skills training, are required to buy a certificate demonstrating they have the necessary competences, which costs about £200, but if they are under 18 Jobcentre Plus cannot fund that. It is slightly bizarre that young people who have acquired skills are unable to demonstrate that because they cannot afford the necessary certificate.
I am glad to say that in Banbury, with the support of Cherwell district council and the national affordable housing programme, we are staring a self-build scheme at Miller road for young people who are NEET. The scheme is unique in providing a blend of education and learning opportunities, to level 1 diploma standard, in construction for approximately 20 NEET young people so that they can improve their employment prospects and life skills development. When the houses are built, the young people will be re-housed in the completed scheme. It is hoped that that pilot project will demonstrate a model that can be replicated on other affordable housing developments. There are several partners in the scheme, including Cherwell district council, Sanctuary housing association, Southwark Habitat for Humanity, Oxford and Cherwell Valley college, Connexions and the children, young people and families services at Oxfordshire county council. The college has designed a bespoke course to meet the requirements of the scheme and is in the process of recruiting young people to the course. The intention is that work will start this month.
In short, that new affordable housing scheme will provide 10 rented units for young people, who will all participate in the building process and receive training from the FE college, leading to a level 1 diploma in construction, and 20 young people, NEETs, will be involved in the building process. I am sure we would have no difficulty in filling more such construction
apprenticeships, and there are other successful initiatives, such as SKIDZ, which encourages youngsters to learn motor mechanic skills that are now extremely difficult to fund.
There is clearly a need to keep NEETs engaged. They are often youngsters who, for all sorts of reasons, did not enjoy school or who do not want to try something new simply for fear of failing. As I understand it, Jobcentre Plus and Connexions run a red, amber and green coding system for NEETs: green is for those who are engaged and want to move forward, and red is for those who have simply dropped out. The predominant colour in my patch appears to be amber, verging on red, which suggests that for those who stay engaged there ought to be some incentive, such as the possibility of outward-bound adventure training, or even free swimming. They are young people, and research shows that if a youngster drops out as a NEET, over their lifetime in various ways they are each likely to cost the state and state agencies £1 million.
Jason McCartney (Colne Valley) (Con): I thank my hon. Friend for giving way-putting an amber light on his pacy speech-and congratulate him on securing the debate. Last week, I was honoured to be invited to present the school awards for Moor End technology college at Huddersfield town hall. The school has faced many challenges in recent years. For example, 27 different languages are spoken among its pupils. What really stood out was that the head teacher, Jane Acklam, who provides inspirational leadership, was proud to tell me that only one of the 150 pupils who left the school last year is currently a NEET. Does my hon. Friend think there would be any value in keeping such statistics coming, so that schools can retain some interest in what happens to the children after they leave at 16? That would bring an added motivation and could then link in with the colleges and the wonderful schemes he has mentioned.
Tony Baldry: The right hon. Member for Oxford East made the point that young people need support, and hopefully they will receive that from their schools during their school careers, but youngsters become NEETs for all sorts of different reasons. Time has prevented me from giving details-I have given them to the Minister-of young people in my constituency who are NEET for all sorts of reasons. They can be young mums, or they might have become offenders when they were younger. The reasons are not necessarily the result of the school's failure, but the fact is that a combination of different factors has caused them to disengage.
Rosie Cooper (West Lancashire) (Lab): Skelmersdale and Ormskirk college in my constituency is seen as an example of best practice. It offers very flexible programmes for NEETs, starting with early interventions for 14 to 16-year-olds. The point I really want to make is that the college might very well be penalised for its investment in its NEETs programme by disinvestment in the county council and by the Government's employment and support allowance regulations.
The point I made earlier, which I hope the hon. Lady heard, was that we must between us work out how NEETs who have dropped out get funded back into the system. There is a double whammy, because
they have dropped out and are not getting money, so the organisations that are helping them have to find money from somewhere else, which is often difficult. That is the challenge for us all.
In north Oxfordshire, we are grateful that programmes such as that run by the Prince's Trust are now getting involved locally. That programme will take 12 16 to 24-year-old NEETs through an intensive 12-week course, but funding has to be found locally to support the initiative. That is additional funding that we have to find from somewhere. If that is the situation in a constituency such as mine, and if we are looking at anything like one in 12 youngsters becoming NEETs, nationally that is a truly serious issue. We have to find a better and, I suggest, more positive description for that group of young people. We have to recognise that, by definition, they will be youngsters who will need encouragement and support. They will not necessarily always want to undertake mainstream activities. Indeed, they might find accessing colleges and courses difficult.
Rehman Chishti (Gillingham and Rainham) (Con): I congratulate my hon. Friend on securing the debate. Does he agree with me that there needs to be more emphasis on schools equipping youngsters for work, beyond the one or two-week work experience placements?
Tony Baldry: Yes, and the more one can engage youngsters in school, the better. Indeed, many of the schools in Banbury already involve youngsters not only in work experience, but, where appropriate, in programmes such as SKIDZ, because they want to keep them engaged.
There are clearly a number of pieces of the jigsaw that we have to get right. They include Connexions and its ability to support youngsters, and apprenticeships, as has been said. My understanding is that the Government want one in five school leavers to become apprentices by 2020, so we need to do more to encourage employers to provide opportunities, particularly in those areas where youngsters particularly want to work, such as construction. The Select Committee made the following observation in its report earlier this year:
"We recognise that future solutions to reduce the proportion of young people not in education, employment or training will have to be more cost-effective and will require efficient joined-up working at local level."
In Cherwell and Oxfordshire, we are doing everything possible to ensure that there is joined-up working at local level. We all recognise the financial challenges that every sector faces, but clearly it is doubly hard to help young people if they are NEET and therefore receive no funding. With the Banbury and Bicester job clubs, we have made it clear that we want to do everything we can to support people in our community while they are out of work, and help them back into the world of work as speedily as possible. The desire to give that support applies just as equally to youngsters who are NEET.
However, there are some policy issues that need to be resolved if we are to make the progress that we should like. I appreciate that my hon. Friend the Minister inherited some skills and training structures that he clearly believes are flawed, and we are fortunate that his present ministerial post is the one he shadowed extremely ably for a number of years. Many Members are keen to know about the Government's overall approach in trying
to ensure that a far smaller percentage of youngsters between 16 and 24 are not in education, employment or training.
The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): As ever, it is a pleasure to serve under your chairmanship, Mr Chope. It is a particular delight to respond to this debate, secured by my hon. Friend the Member for Banbury (Tony Baldry), who I know cares deeply about such matters. I make it clear that I share his doubts about the label "NEETs". For some reason, young people seem perpetually prone to being pigeonholed in unhelpful ways-from mods and rockers to hoodies. Of course such terms do not reflect reality and therefore do not do people justice. There is no such thing as a typical NEET; there are different groups of young people with particular kinds of challenges, different circumstances and different needs. As my hon. Friend said, it follows that we will be more effective in dealing with the problems and challenges they face if we have the flexibility to draw on a range of different options and build on best practice.
I intend, in the course of the all too short time that I have, to make nine points of substance and then move to an exciting peroration. My hon. Friend will forgive me if I rattle through those points, but I hope they are relevant to him. Along the way, I will attempt to answer some of the particular issues that he raised. Next week-I know that you, Mr Chope, and the whole Chamber, are waiting with bated breath-we will publish our skills strategy, which will set out the direction we intend to take regarding the funding and management of skills. It will be radically different from the assumptions that have underpinned policy over recent years, and will challenge much of the orthodoxy upon which that policy was based.
Let me deal with one point at the very beginning. I have asked officials to look at the issue regarding certification, which my hon. Friend raised. I agree that it does not seem appropriate-it is anomalous to say the least. We will look at that closely and deal with it.
The young people whom my hon. Friend mentioned, and those whom I meet, have ambition. They want to get on with their lives, and they recognise that learning can help them make something of themselves and can make them objects of admiration and respect. By attaining skills through learning, people gain a sense of value and are recognised by others as having worth. We believe that and care about it, and we will adopt policies that will enable young people to gain that sense of value. The investment we make in young people is our gift to future generations.
I do not doubt that the previous Government cared about such matters too-no party in this place has a monopoly on wisdom, and certainly not on compassion. The matter is one that understandably generates strong sentiment, and sentiment is not something we should disregard in politics; we are not dull utilitarians, are we? None the less, there were real problems with past policy. Many millions have been spent on a bewildering succession of schemes, but to what effect? At the last count, some 874,000 young people between the ages of 16 and 24
-or about one in seven-were not in any form of education, training or work. For a nation that cares about fairness and opportunity and about its own future, that is simply unacceptable.
Let me move to my nine points. The first is that we will certainly take a close look at job clubs such as those in Banbury and Bicester. They are good examples of what can be achieved by local people using prudent public investment, drawing together industry, local government, community groups and charitable organisations. I have discussed the matter with my hon. Friend, and I know they are examples that can be followed. I have asked my officials to look at them to see what can be done to share that good practice.
The second point is again implicit in my hon. Friend's analysis. We need a more holistic approach to the way we deal with the problem of such young people. It ranges from the circumstances at school and their prior attainment, to family circumstances and the particular physical or mental health issues they may face, to simple matters of confidence born of inadequate skills-a lack of confidence that is inevitable for those who have poor literacy and numeracy skills. However, it is not as simple as that-indeed, it is not simple at all-which is why we need the joined-up approach that I think has been lacking in the past.
Thirdly, we also need to link the issue closely to our benefit reforms. I am speaking to the Department for Work and Pensions about those matters, and I assure my hon. Friend that part of the discussion is about funding. He made a good point about such people carrying funding with them and therefore being attractive to learning providers. We are on the case, and we will look once again next week-I do not want to give away any secrets-at the principles of learning accounts and the part they can play in driving the system through learner choice and employer need. I am mindful of those who are moving from disengagement to engagement in those terms.
Anne Marie Morris: There is certainly an attraction to that approach. South Devon college, in my constituency, goes out on to the streets to where the NEETs are to find them. It is a win-win situation. I think we need to go out to get them rather than waiting for them to come to us, which is the point the Minister is making.
Mr Hayes: My failure to respond to that point has nothing to do with its salience but with the time I have available. I will certainly take the matter up with my hon. Friend; it is a well-made argument.
The fourth point is about careers guidance. We need, as my hon. Friend the Member for Banbury said, to give such people the right advice and guidance. We will be launching an all-age careers service, which I spoke about last week in Belfast. Those who are interested may have a copy of my speech; those who are very interested can have a signed copy.
The fifth point is that raised by the right hon. Member for Oxford East (Mr Smith) about pre-apprenticeship training. As others have said, it is about getting people to the point where they can enjoy more formal training by the skills they acquire early on. We need a continuum of training, and I am working on that, too. However, it has to be progressive. I have said to the DWP that the offer must be authentic in terms of training and skills,
and progressive-it must lead to further learning that makes people more employable, and then takes them into work.
The sixth point is the need for early intervention. When dealing with such multi-faceted problems, we need to look at disadvantage; let us be frank about that. It means using the pupil premium, announced by the new Government, in the most imaginative, creative and productive way possible, and seeing how that can leverage real outcomes for people's subsequent progress in learning and work.
My seventh point is that the Government made a big commitment in the comprehensive spending review not just on apprenticeships, about which I will say a little more in a moment, but on community learning. Adult and community learning was protected in the CSR. I am passionate about the fact that there are different routes into learning. Some of them are informal and others formal, but we must not take the view that there is only one ladder to climb. People will return to learning, and people with a poor history in their prior experience will need a gentle approach. Small, bite-sized chunks of learning, highly accessible, very attractive and often linked to practical competencies can often be the way forward. That is why we protected both the basic skills and the adult and community learning budgets in the CSR.
Eighthly, I have already mentioned apprenticeships. I do not want to trumpet the Government's achievements in that respect. People are right: we will need to get employers involved, which is why we sent out tens of thousands of letters last week to small businesses to get
them involved in an apprenticeship programme and to back the £250 million we have put in, with a view to creating not just 50,000, or 60,000 but 75,000 more apprenticeships, which is more apprenticeships than we have ever had in Britain.
Ninth and finally, we certainly need to give institutions more flexibility. We need to make the system more responsive to the needs of such young people, and generally. A more dynamic and responsive system, shaped around employer need and driven by learning choice, can deliver the skills the country needs, and it can also change lives by changing life chances.
As a result of the initiative of my hon. Friend the Member for Banbury in securing the debate, I have done three things. First, I have asked my Department to develop a cross-departmental strategy to deal with the NEETs problem. Secondly, I am looking at simplifying the funding process for accessing the right money to run community-led projects to address NEET issues. Finally, in particular, I have asked officials to see what we can learn from job clubs in north Oxfordshire.
The issue is about the value we place on individual lives, and the value we place, too, on social mobility, social justice and social cohesion. When each feels valued, all feel valued. It is about building the big society from the bottom up-a brighter Britain where lives are illuminated by the power of learning, and a bigger Britain where all have their chance to grow.