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I thank my hon. Friend; I was not aware that the scheme had been piloted first in Hackney. I urge the Minister to take heed of those words and also look at places such as Wigan where the scheme has had considerable success. My hon. Friend touched on an incredibly important point. Last Friday I went to my local college, Winstanley college, and heard from students.
They said that not only was EMA incredibly important for them to get through college, but that they were now facing the double whammy of thinking that even if they get through college and face considerable hardship in order to do that, they will then have to pay incredibly high tuition fees. Those students feel that barriers are being put in their way over and over again, and many of them are wondering whether it is worth enduring such a level of hardship because even if they get the opportunity of going to university, that will not be a realistic option. We must consider that point.
A vast range of research shows that EMA has actually been incredibly successful. I have examples from the Manchester college, CfBT education trust, the Learning and Skills Council and Wigan and Leigh college, which sent me an incredibly powerful set of evidence based on surveys and interviews with students. The point made powerfully by students and the principal of that college was that EMA is not only about alleviating hardship, but it is a bargain between the state and the students. That bargain says that if someone works hard and tries hard, it does not matter what sort of background they come from and they deserve to do well and be supported. It is outrageous that those students should now be asked to face financial hardship in order to achieve at the same level as their peers. It is also outrageous that 50% of students who receive EMA in my local college have a 99% retention rate, yet they are now being told by the Government that it does not matter that they have stayed on, worked hard and kept their side of the bargain. That is particularly urgent for those students who are in their first year of college. They have recently been told in responses to questions asked by myself and my hon. Friends, that they will now lose their EMA halfway through their course. Of the 1,000 students currently in the first year of study at Wigan and Leigh college, 75% say that they will drop out at the end of this year. That is horrifying, and I hope that the Minister will listen to that.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): Apart from Askham Bryan campus in Guisborough, and Prior Pursglove college and neighbouring FE colleges in Middlesbrough, Redcar and Cleveland, a number of small and medium-sized enterprises are concerned about the withdrawal of EMA. EMA funds a number of apprenticeships in engineering and other skilled trades that have traditionally been sceptical and scared of investing in apprenticeships, unlike bigger former companies such as Imperial Chemistry Industries and British Steel in Teesside. The new SMEs have not been as proactive, and are only now beginning to increase the number of apprenticeships. By getting rid of the EMA, we may undermine those skill programmes.
Lisa Nandy: I thank my hon. Friend for his intervention. I agree with him. One of the worst things that we saw under the previous Conservative Government was that a range of young people throughout the country were left with no sense of hope for the future. Seeing people without hope for the future is devastating, but seeing young people without hope for the future is even worse. We must not return to that situation.
I have three final points. First, colleges urgently need to know what will replace the EMA. The details of the discretionary learner support fund are sketchy. Colleges need to know whether, in reality, this will be a £500 million
cut. Yesterday, the Secretary of State, appearing before the Select Committee on Education, could not confirm the position to hon. Members.
We need to know urgently whether travel costs will be taken into account and what else the discretionary hardship fund will be able to cover. In my constituency, like many other constituencies, travel is one of the prohibitive factors to attending college. Despite a number of people living in the town centre, Wigan is essentially a rural seat, and students would not be able to travel to college without the EMA.
Tessa Munt (Wells) (LD): The travel situation in Somerset is exactly the same, but there are aspects to rural education that are even more critical. Towns such as Shepton Mallet and Glastonbury do not have sixth forms attached to their schools. Therefore there is no option for students but to travel. There are schools that do have sixth forms, but they do not cover the full range of subjects, so people such as my daughter, who wanted to study environmental science and politics, had to travel to Bridgwater college, which is some distance away. Cutting the EMA will place serious restrictions on the courses that young people can study.
There is compelling evidence that the EMA pumps millions of pounds into local economies throughout the country. In my Wigan constituency, where people are losing jobs and homes, and particularly in former coalfield areas, where, despite significant investment, the legacy of those times remains, the EMA could not be more important. The policy is short-sighted from that perspective.
I draw hon. Members' attention to the IFS study published yesterday. It points out that savings in the short term simply do not make sense, because if we invested in our young people in the short term, we would more than recoup that in the long term.
Pat Glass (North West Durham) (Lab): I was very interested in what my hon. Friend the Member for Islington North (Jeremy Corbyn) had to say about the pilot in Hackney, because as a young education officer 25 years ago in Gateshead, I was managing a service that was delivering EMAs. It was paid for by the local authority. The young people who received EMAs then are now the parents of the schoolchildren in Gateshead, who, as the Secretary of State often points out, are outperforming similar children under similar authorities across the country. The EMA is not only about student support. It is a gateway to higher education. It is about investing in the local community. Indeed, it is a long-term investment in standards.
Lisa Nandy: I agree with my hon. Friend . Many hon. Members want to speak, so I shall end by saying that it is precisely in such difficult economic times that we should be investing in our young people and sending a very strong signal to them that they matter and their futures matter. I urge the Minister to think again.
Margot James (Stourbridge) (Con):
Thank you for allowing me to speak, Ms Clark. I congratulate the hon. Member for Erith and Thamesmead (Teresa Pearce) on
securing the debate just before the end of the year at such a timely point in the Government's decision-making cycle.
Before the comprehensive spending review, I wrote to my hon. Friend the Minister, urging him to retain the EMA. There are two excellent colleges in my constituency: a sixth-form college, King Edward's, where 35% of students receive the EMA, and a very good further education college, Stourbridge college, where 63% of students receive it. I wrote to the Minister to express my concern that the withdrawal of that benefit would deter students from poorer backgrounds from continuing their education, so I well understand the points that have been made in the debate.
I accept that we are in a very different situation, economically and in terms of raising the compulsory leaving age for those in full-time education to 18, from the position that applied when the EMA was introduced, almost a decade ago. My purpose in taking part in the debate is not to seek to change the decision to replace the EMA with a more targeted, enhanced discretionary fund, but to bring to this Chamber the views and concerns about the successor arrangements expressed to me by staff and students of both the colleges that I mentioned.
Last week, during the debate on tuition fees, I was lobbied by Kim Hughes, president of the student union at Dudley college. Dudley college is not in my constituency, but a lot of students studying there reside in my constituency, so it was a pleasure to meet Kim and her accompanying member of staff, Natasha Millward, who approached the mass lobby of Parliament in the true democratic spirit, seeking to inform me, as one of the Members whom they visited, in a proper manner. I was indeed informed about things that I had not previously realised concerning the enhanced discretionary fund proposals.
I shall explain the main concerns that Kim Hughes and Natasha Millward raised with me. First, the rules governing the existing learner support fund exclude the use of moneys from that fund to pay for travel, which is the point that almost every hon. Member in the debate so far has made. Secondly, they raised the issue of the increased burden on colleges in administering an enhanced form of the learner support fund at a time when colleges, like every other public sector organisation, are being expected to reduce their administrative costs.
I am particularly grateful to the principal of King Edward's college, Sharon Phillips, for questioning this week a random sample of students who attend the college. I appreciate the fact that the students took part and gave such honest feedback. Just 10% of those interviewed said that they thought that they would not have attended college if they had been unable to claim the EMA. I accept the point made by some hon. Members that that is not necessarily the only way in which we should judge whether the other 90% were suitable candidates for the EMA, but I do believe that it is a relevant point and it backs up the research already mentioned in the debate.
Some students who took part in the interviews suggested that the system has been open to abuse and that one way of dealing with that would be to substitute vouchers or free travel passes for the payment. Vouchers would
add too much of an administrative burden, but we already administer a system of travel passes for older people, so surely it is not beyond our wit to administer them to young people from poorer backgrounds. That could be a way round the administrative burden falling exclusively on colleges.
The students made other points, and I want to bring to the Minister's attention the principal's comment on the findings from her research. Although only 10% of her students told her that they would have been unable to attend college without the EMA, she felt that recruitment by colleges in less affluent areas might be disproportionately hit by the withdrawal of the EMA.
Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con): My hon. Friend makes a very powerful point. My point follows on from the one made by the hon. Member for Wells (Tessa Munt) about rurality, because that is where things get disproportionately out of sync. Even if there are vouchers or whatever, these children will not have a chance, and places such as Bridgwater college will lose a vast number of students, as will Strode college in the Wells constituency. Does my hon. Friend agree that the matter needs to be reconsidered completely where rurality is in play?
Margot James: I thank my hon. Friend for his intervention. I am not sure that we are in a position now to revisit the entire proposal to replace the EMA with the enhanced learner support fund. I very much appreciate his intention to do that, but the challenge for the Minister is to ensure that the replacement arrangements are adequate and err on the side of generosity to ensure that students from poorer backgrounds can continue to access further education.
Let me conclude by reinforcing the three messages that I want the Government to consider as they move forward. First, the enhanced discretionary fund should be revised to allow recipients to spend part of their remuneration on travel to and from college. That is particularly important, and I think that I am right in saying that every Member who has contributed so far has mentioned it.
Jeremy Corbyn: The hon. Lady must be aware that among Ken Livingstone's many achievements while Mayor of London was the provision of free bus travel for students. That has encouraged many students to stay on at college, and it has greatly assisted them. Might not other local authorities and transport areas think of following suit?
Margot James: I thank the hon. Gentleman for his intervention, and I am well aware of the former Mayor's generous travel schemes. Consideration should be given to allowing students-young people from poorer backgrounds-to have similar free travel passes. I would certainly support that proposal.
Let me return to the other two points that I wanted to make to the Minister. Colleges are closer than central Government to their students, and they are therefore better placed to decide who is in real need of financial support, but the additional administrative burden that the change will place on them needs to be acknowledged, and there needs to be some practical support.
Finally, I mentioned that I would like the Government to err on the side of generosity in the replacement arrangements and to increase significantly the money that we invest in enhancing the learner support fund. A greater proportion of students from less affluent parts of our country and less affluent backgrounds who really are in need will then gain some benefit. I trust that the Minister will recommend those enhanced arrangements to Parliament as soon as possible in the new year.
Karl Turner (Kingston upon Hull East) (Lab): It is an absolute pleasure to serve under your chairmanship, Ms Clark. I congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing the debate-its timing could not have been better.
I will focus my remarks on EMA and, more appropriately, on the Government's intention to scrap it. EMA is absolutely crucial for my constituents. Removing it will damage the hopes and aspirations of young people across the country, but the effect will be particularly bad in my constituency. The present policy represents yet another damaging U-turn by this Government; it is another Lib Dem let-down and a massive betrayal of the hopes and dreams of young people. It sends a resounding message to 16-year-olds who aspire to improve their lives. It leaves talent unfound and unnurtured, while reinforcing poverty traps and dividing further those who are fortunate from those who are not.
Before I develop those points further, it is important to highlight EMA's success. My hon. Friend the Member for Islington North (Jeremy Corbyn) was right to say that it was piloted in Hackney. That was in 1999, and EMA was launched across England in 2004. Research by the Responsive College Unit found that it encouraged 18,500 young people to participate in further education in the first year it was rolled out nationally. Those young people would not have had that financial support or that incentive to enter further education were it not for EMA. Similar research from the Institute for Fiscal Studies suggests that young people who receive EMA go on to achieve the qualifications required to succeed in life. The percentage of learners receiving EMA who achieve level 2 qualifications has increased by approximately 6%, with specific improvements in ethnic and minority groups.
The facts are clear: this policy was an absolute success, and we should make no mistake about that. To suggest otherwise is completely misleading. EMA truly encouraged young people to go on to achieve what they deserved and desired. It boosted attainment among those facing the biggest challenges in life and enabled them to succeed.
The Minister is well aware of the facts and of EMA's successes. So, for that matter, are the Prime Minister and Secretary of State for Education. Before the election, the Conservative and Liberal Democrat parties were
quick to deliver assurances that EMA would be protected. Referring to the then Secretary of State for Education, my right hon. Friend the Member for Morley and Outwood (Ed Balls), the Secretary of State, in a Guardian question and answer session on 2 March, stated:
"Ed Balls keeps saying that we are committed to scrapping the EMA. I have never said this. We won't."
"no we don't have any plans to get rid of them."
Seven months is a long time in politics. What message is the coalition sending to young people about politics and our society? Sixteen to 18-year-olds across the country are being told that education is for those who can afford it, while those who cannot, need not apply.
The message is clear. Young people have felt the brute force of this economic vandalism. This generation of young people have had the cruellest introduction to the world of politics. They have barely dipped their toe in the water, but they have been hit by wave after wave of ignored pledges, broken promises and closed ears. The coalition has defined politics for an entire generation in terms of distrust, and the coalition parties will not easily be forgiven. The scrapping of EMA leaves us in a situation where talent will be stunted due to inadequate means. Just under 5,000 young people in Hull will be locked out of further education and, therefore, higher education, and they will have any aspiration quashed.
As I said at the outset, my constituents are particularly affected. Gary, who lives on the Longhill estate in east Hull, cannot afford to pay for his textbooks, stationery or travel, but his EMA allows him to.
Debbie, who lives on Bransholme, does not have the luxury of ambitious parents. She says her parents do not understand the value of further education. She says that they cannot afford to, and will not, pay for her to study, but that EMA does just that. Darren lives on Greatfield estate. His parents are among the lowest 10% of earners in the country, earning just less than £16,000 a year. He needs to pay board, but he cannot afford to. However, his EMA allows him to contribute to the family pot. EMA allows individuals to break through the boundaries and access further education. It puts an end to generation after generation of young people being locked out of further education. It truly enables social mobility.
It is illogical that, on the one hand, the Secretary of State for Work and Pensions is emphasising the importance of breaking the cycle of welfare dependency, while, on
the other, the Education Secretary is removing the support that would enable young people to do better for themselves. If we want families to break free from welfare traps, surely it is important that we instil in our young people a thirst for education, and underline the importance of that. Offering students EMA provides them with an incentive and support to help them along the way. If Gary is without his EMA he will be without his A-levels, and therefore without his physics degree. The domino effect continues. Science and the state will be without that young talent. Can the Government honestly say that they will withdraw their support for Debbie to complete her course, denying her the chance of achieving her true potential? What about Darren, who will no longer be able to complete his NVQ in fashion design? Should he be locked out because he simply cannot afford to do the course without financial support?
I have not even mentioned the unprecedented hike in tuition fees. Even those who are lucky enough to make it through further education will have a mountain to climb on the other side as they face the prospect of £9,000-a-year fees. Let us imagine the situation, in which any of the 16-year-olds whom I have mentioned managed to complete access-to-university courses without support, but then are faced with the prospect of convincing their parents, who are of modest backgrounds, that they are about to embark on a three-year degree course that will cost them £27,00-and no doubt an awful lot more, when accommodation and living are taken into account. I know what my parents would have said to me. I left school at 16 with few qualifications. I ran a business for a while and eventually, when I was financially stable, I went off to do A-levels before completing a law degree. I eventually qualified as a barrister in 2005 at the age of 34. When I was nearing the end of pupillage, I was possibly the most elderly pupil at the Bar; so I know what a struggle it is to get educated.
I have no doubt that without the Labour Government's lifelong learning agenda I would never have had the academic success and confidence to reach the dizzy heights of membership of the Bar, and of being elected to this place. We should make no mistake. The Government's policy on further and higher education is not progressive. It is shamefully regressive. It effectively does away with further and higher education for those who cannot afford to pay for it. The Government are more than happy for further and higher education to become the privilege of the few. Those who can afford an education will pay for it and those who cannot simply will not have one. That is the reality of the Government agenda. I hope that hon. Members will forgive me if I appear angry, but the subject makes me extremely annoyed. The Government will not easily be forgiven by those young people, who are locked out of further and higher education.
EMA is important not only to the family and the student; it has a wider social benefit. Why do the Government insist on washing their hands of post-16 education, leaving the next generation unable to get access to the qualifications that they require to improve their lives? We hear a lot of talk from the Government about fairness. Is this fair? Is it productive, or is not it narrow-minded, ideological, regressive and wholly flawed?
I know where I stand. I ask the Minister to look again and to think very carefully about the choices that are being made, and about the aspirations of our constituents. I ask him to put the brakes on and allow Gary, Debbie and Darren, my constituents who have bothered and troubled themselves to e-mail me about their stories, the chance to improve their situations for the benefit of us all. I cannot support the Government's attempts to create a divide in the education system between those well off enough to pay and those less fortunate, who cannot. For those reasons I will actively oppose the Government every step of the way.
Dan Rogerson (North Cornwall) (LD): It is a pleasure to serve under your chairmanship, Ms Clark. I congratulate the hon. Member for Erith and Thamesmead (Teresa Pearce) on securing the debate and introducing it in measured terms that addressed the issues-unlike, perhaps, the hon. Member for Kingston upon Hull East (Karl Turner), who would not take an intervention from the Government side but was happy to repeat the same two points endlessly. I do not think he really took the debate any further forward.
I have concerns about a change from EMA to a college-based system, as, of course, do many students. My constituency has five secondary schools, four of which have sixth forms. That is the model on which much education has been delivered in such market towns. Of course, we also have an excellent and large dispersed Cornwall college group, including Duchy college in my constituency, which I visited on Friday, and several other campuses throughout the peninsula, which deliver a huge range of vocational and academic courses that are vital to the future of the young people concerned.
We must consider the situation we are in. The hon. Member for Kingston upon Hull East was very clear about where he stood and about wanting to condemn and attack the Government, but I did not hear a lot about options for doing anything different. That is what we have to consider about the present situation. I should be quite happy to enter into a debate if we heard exactly what his Government would have done. In the run-up to the election, they talked about the cuts they would have to make if they were re-elected, but of course there is no detail about where those cuts or changes would have come from.
The key question for me is how we are using money that should be targeted at the people who need it most. I have had e-mails from constituents who are very concerned, and I accept that there will be some people whose plans for the future will be affected and who will need to think very carefully about what they can do. I shall return to the issue of transport, which is crucial, particularly in an area such as mine.
I have had e-mails from a constituent in Camelford, whose daughter and son get EMA for their education and feel that it is not enough. There is a transport element to getting to the college, and other costs. They believe that they need greater support to secure that. However, they are also aware of other people in the town-and I accept that this is anecdotal-who they feel do very nicely, go on all sorts of holidays and have a wonderful time, and are still in receipt of EMA. That suggests to me that there are, as happens in all areas, some people who are getting support that would perhaps be better targeted at those who need it most.
The Government's response to the issue is, understandably, to consider the overall budget; but it is also to think about targeting. There are concerns, in a college group such as Cornwall college group, that some people have come into education in the past few years because support is available. I do not accept the argument of dead-weight, but we must also accept that there are people who get EMA who would have gone into further education at 16.
Dan Rogerson: I shall give way in a moment, but I want to finish the point. The hon. Member for Erith and Thamesmead was keen to point out that there are perhaps other benefits to the support, rather than just whether someone would attend. That is an important consideration, but the primary one, and what most of the debate has focused on-particularly the remarks of the hon. Member for Kingston upon Hull East-is people not being in education at all and getting out entirely.
Whether people in receipt of EMA may attend a bit more because it has the attendance component is a separate issue. The hon. Gentleman levelled the charge at the Government that people will just not receive education; they will just not go. I do not accept that, because the Government system will have to, and will, address-or if it does not, a lot of Members on this side will want to know why-those people on the margin, where there is an effect on the decision whether to attend.
Joan Ruddock: I am extremely grateful to the hon. Gentleman for giving way. EMA was also piloted in my constituency, so would he accept from me that there is a dimension with which he will be less familiar than I am-ethnic minorities? At Lewisham college, half the students pursuing FE courses are from ethnic minorities and 45% of students are on EMA. He may like to acknowledge that there is a special reason why it has created new advantages and encouragement to people who might have been less inclined to stay on at school.
I welcome the right hon. Lady's intervention. There will be significant other factors in areas different from our own, despite proximity and good public transport. They will be issues such as the
ability of families to offer support. In my area, there are issues such as whether young people can physically get to education, which is why transport is crucial for me.
Simon Hughes (Bermondsey and Old Southwark) (LD): Following the point made by the right hon. Member for Lewisham, Deptford (Joan Ruddock), I have real concerns about where the Government are going on this-let me put my hands up and say that clearly. The Government have to get this right, otherwise lots of people, in all our communities, will not choose to go to FE college at 16 or 17. The viability of some FE colleges will be threatened if we do not get this right.
Does my hon. Friend the Member for North Cornwall (Dan Rogerson) agree that, before making any decisions, the Government need not only a national profile, but to know the impact of the policy by local authority area? We need to look at the ethnic mix and at the socio-economic background of the families involved, to see where the youngsters come from. Are they single-parent families, families with no parent earning or families with parents and more than one child or young person in education? They are all factors, and we need the information before any sensible, methodological decision is made.
Dan Rogerson: I thank my hon. Friend for his contribution. He is right: we need to be confident that the system the Government are moving to and adopting is fit for purpose and provides a framework in which colleges can operate. That point was made in an earlier intervention as well. How will colleges take the decisions? In what framework will they operate? That is important.
I would like to question the Minister on transport and on ensuring that, in an area such as rural north Cornwall, choice will not be restricted simply by the inability of young people to access the courses they can access at the moment, as my hon. Friend the Member for Wells (Tessa Munt) said. I hope the Minister and his colleagues will take into account all local factors when they look at the system, which will have different impacts in different areas. If the total budget is reduced, as, unfortunately, it has to be, we should have a system that is targeted effectively and ensures that people are not deprived of the educational opportunities that will mean so much to them in future.
Graham Jones (Hyndburn) (Lab): It is a pleasure to serve under your chairmanship, Ms Clark, and I congratulate the hon. Member for Erith and Thamesmead (Teresa Pearce) on securing the debate. I shall try to keep my comments brief, because I know that others wish to speak.
The discretionary learners support fund is a mere 13% of the money provided under the educational maintenance allowance. Do the Government estimate that the number of people in need of financial support through further education is only 13% of what it once
was or are Members arguing, as has been suggested, that youngsters will still go to college, but they will go impoverished?
Nearly 19,000 students in Lancashire rely on the EMA to give families the financial flexibility that allows them to continue to study. My hon. Friend the Member for Sefton Central (Bill Esterson), who is no longer in his place, and my hon. Friend the Member for Kingston upon Hull East (Karl Turner), noted that students in receipt of EMA outperformed other students-by 7% in Sefton and 6% in Hull East, I think. In areas such as my constituency, the EMA often means the difference between going on to further study and not doing so.
"will impact on the ability of poorer students to go to college".
"We can't cast them aside and just educate those who can afford to go".
The experience in the college reflects the comments of a lot of other principals; it is not only Mr Carlisle who is expressing that opinion, and when it comes from the educational establishment, I think we should listen.
I could suggest that, in reality, the figure set aside for the new fund was plucked out of thin air and does not reflect any proven need. One might go as far as to say that it is nothing more than a token attempt to ease the pain of taking money from those who need it. However, this is just one part of a wider attack on education. If the Government are so keen to show adherence to the Browne report, why are they ignoring one of its main recommendations-the increase in university participation by 10%-by scrapping a policy that has been shown to increase attendance?
Even by the estimate, which the Government accepted, of the National Foundation for Educational Research, the EMA accounted for 12% of those who attended university. They are people who otherwise may not have gone. The trebling of tuition fees has already made meeting Lord Browne's 10% increase in participation unlikely, and scrapping the EMA will make it extremely difficult.
Government Members ask what the alternative is; I think the alternative is simple. The cuts are too fast, too deep and they go too far, as we, on this side of the House, have stated. That is a basis for rejecting the proposal. To sum up, the discretionary learners support fund is a token attempt to give a facelift to a counter-intuitive policy.
Dr Sarah Wollaston (Totnes) (Con):
During the conference recess, I took the opportunity to visit the sixth forms in my constituency. Many of the students I
met were underwhelmed by EMA. Many felt that it was unfair because it was poorly targeted, and many told me stories of friends who spent the money inappropriately. Overwhelmingly, the students felt that the priority, particularly in my very rural constituency, was getting to college in the first place. The hon. Member for Islington North (Jeremy Corbyn) made the point that in London students already benefit from free travel passes. In a rural constituency somewhere such as Devon, that would be extremely difficult for the council to implement.
I would like the students in my constituency, who attend excellent colleges such as KEVICC-King Edward VI community college-South Devon college and Paignton community college, to be able physically to get to them in the first place. The students were asking for free or greatly subsidised travel. I call on the Minister to respond to the point that many hon. Members have made today and make transport part of a much enhanced programme of support arrangements-particularly for disadvantaged students, such as those from low-income families, for whom that really makes a difference in helping them to get to college. They do use the allowance for that.
Paul Goggins (Wythenshawe and Sale East) (Lab): I congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing the debate. I shall take a couple of minutes to give voice to some of the students I met on Monday at the Manchester college Benchill campus in my constituency. Manchester college has 6,000 students aged 16 to 19, 60% of whom claim EMA. They told me about the practical benefits that EMA brings them. It means that they can pay for their bus fares, food at college, books and equipment.
Some of the young men, who were explaining the training that they were doing for trades, told me that they need to build up a kit while they are studying, which can cost as much as £600. Those are real, substantial costs, which the EMA is helping to offset. They all feared for the burden that they may become to their parents, particularly bearing in mind that many of them have brothers and sisters who, when the EMA is gone, will face the same dilemmas. I agree with my hon. Friend the Member for Wigan (Lisa Nandy): we should stop using the dead-weight cost expression-it is not any way to describe hard-working students.
With regard to staying on, the majority of students told me that without EMA they would still have gone to college. Some of them would not. All, without exception, said that without EMA they would not have studied as successfully, because they would have been under more pressure to take on part-time work, and would have had the wrong balance between studying and the rest of their lives.
EMA makes an incredible difference to how students are able to focus and concentrate on their studies, settle into work on their courses and achieve a great deal. I urge the Minister to think again about this policy; it is even more destructive to the hopes and ambitions of my young constituents than the decision that the Government put through last week.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab):
I congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on securing
this important and timely debate. I also congratulate my hon. Friend the Member for Wigan (Lisa Nandy), who has had to leave. I know she has been trying for some time to secure the debate, together with our hon. Friend.
Both hon. Friends are proven great champions of young people from low-income backgrounds. I look forward to the Minister's response to the strong arguments that we have heard today. My hon. Friend the Member for Wigan is also a prolific tabler of parliamentary questions, and I commend her on her persistence on this issue; I only wish that Ministers would get into the spirit of open democracy and answer some of the questions more promptly.
This has been a good-natured and high-quality debate, considering the passion that the subject evokes, especially in our party. The debate is not yet over, so perhaps I should not speak too soon. However, I will try to stay within that spirit. We have had some strong speeches, although probably not as many as we would have liked, as a number of hon. Members have not been able to speak. I hope the Minister will take that on board and perhaps ask whether this matter should be debated on the Floor of the House in Government time.
Those who have spoken include: the hon. Members for York Outer (Julian Sturdy), for Stourbridge (Margot James) and for North Cornwall (Dan Rogerson); my hon. Friends the Members for Kingston upon Hull East (Karl Turner) and for Hyndburn (Graham Jones); and the hon. Member for Totnes (Dr Wollaston), who was very brief, as was my right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins). There were some excellent contributions and I am sorry that I do not have time to go through them all in detail.
We have had a lot of debate on EMA this week, including the "Save EMA" national campaign day in Westminster and around the country, when 60,000 young people sent a clear message to the Government that this policy is unfair. Yesterday, we had an extremely embarrassing report from the Institute for Fiscal Studies-referred to by some hon. Friends-which laid bare the ridiculously weak evidence base the Government use to support their position.
Nic Dakin (Scunthorpe) (Lab): In mentioning the IFS, my hon. Friend draws attention to the fact that the Government spent a lot of time insisting on the NFER study, which focuses only on participation. EMA, does she not agree, has four main purposes-participation, attendance, attainment and supporting the well-being of people from disadvantaged backgrounds in education? Those things have not been evaluated properly, though the IFS study reported yesterday started to do so.
This morning we had a very good seminar in the Boothroyd room, at which young people, teachers and administrators from across the country-including Becky, Codie, John and Jordan from Hylton skills campus in my constituency-talked to politicians about what scrapping EMA will mean to them. It was a shame that the Minister could not be there. With respect to all hon. Members who have contributed to this debate, it would
have been much more valuable for the Minister to have heard first-hand what young people and those who work with them say, to those of us willing to listen, about how much impact this choice will have on the lives of people from the poorest backgrounds.
Catherine McKinnell (Newcastle upon Tyne North) (Lab): I wanted to put that question to the Minister, had I had the opportunity to speak. How many colleges have the Government spoken to about this policy? I spoke recently to staff from Newcastle college, which carried out a survey of all its EMA recipients, 85% of whom use it for transport costs. I was alarmed to hear it stated in this debate that EMA is regularly and widely abused. That is not the experience of colleges that I have spoken to.
Mrs Hodgson: That was definitely not the experience that Members heard from students this morning. We heard some powerful and at times very moving contributions. Many students told us how EMA is barely enough at the moment to cover their travel costs and their lunch. A young man called Luke told us of his peers who could not eat before or at college because their money did not go far enough. How many more will be in that position when EMA is removed? We know that eating well leads to better attainment. Even though the Minister and his colleagues scrapped the extension to free school meals, he must acknowledge the scientific evidence.
We heard from the principal of Lambeth College that EMA had led to a rise in participation and achievement and a fall in drop-outs. We heard from Cath and Alex, who had brought the young people all the way down from my constituency in Sunderland, that EMA helps young people with financial planning, which reduces the likelihood of their getting into debt in later life. We heard from a student who had dropped out of school in year 8, but was now studying towards GCSE-level qualifications because of EMA. We heard from a young single mother, who could only attend college and take her child to the crèche because of EMA. We also heard from all the staff that EMA was helping young people.
"Sharon said on Friday that I should follow my dreams. EMA gives me the chance to follow my dreams, and if you take it away, I don't know what I'll do."
Lilian Greenwood (Nottingham South) (Lab): I will be brief. I wanted to share an example from my constituency. Kyle Simpson is a young Olympic hopeful training alongside Rebecca Adlington. He says EMA makes such a difference. His mum contributes to his training fees, and EMA enables him to go to college and have a little bit of money for transport, food and something of a social life, when he is not training and competing in swimming competitions.
Mrs Hodgson: That is another very good example. Many of the young people I met today were in their first year of study, and had undertaken to stay on in the sixth form or college on the understanding that that support would remain for the full two years. Why would they think otherwise?
After all, the man who painted himself as a modern, trustworthy leader of the Conservative party went around telling people that EMA was safe. In March, the current Education Secretary told the Guardian-in the nicest possible terms, as is his way-that his predecessor was a liar for suggesting that a Conservative Government would scrap EMA. In June, the very Minister sent here today to defend this policy put his commitment to the future of EMA on the parliamentary record.
Imagine the surprise of these young people at finding out that a promise from any of these men is not worth the paper it is written on. If the Minister and his colleagues in the Conservative party were as committed as they say they are to the principle of helping working-class kids access further education, why have they now turned their backs on them?
In the last debate on this subject, I heard the Government and the Minister, as well as some Government Back Benchers here, repeatedly trot out the line that 90% of EMA recipients are what they call "dead-weight". We might hear it again in the Minister's response-I hope not-despite the fact that we have heard plenty of contradictory evidence over the last hour. They should not be referred to in that manner.
I have a lot of respect for the Minister but, frankly, I find it disgusting to hear him and his colleagues talk about ambitious but poor young people as dead-weight. Never mind the fact that without EMA they might have to work every evening and weekend just to afford bus fares, food and books, because they want to better themselves. Because they want to better themselves, he believes that they are undeserving of support.
I do not know about the Minister, but I have actually bothered to go to my local colleges, as have hon. Friends to theirs, and speak to young people who receive EMA. The Minister says that nine out 10 of them would fall into the category of dead-weight, but I can inform him that the young people whom I visited are very much alive and working hard to better themselves, and they are angry with him. Some of them are around today, and they might try to catch his ear as he leaves. Perhaps he should prepare a response.
The Minister will undoubtedly be aware that the Hylton skills campus is part of the City of Sunderland college. Its excellent principal, Angela O'Donoghue, e-mailed me yesterday to tell me that the cuts would have a massive impact on her college. Some 70% of her students receive EMA, and 90% of those receive the full £30. How many of those young people would the Minister say are undeserving of help?
I shall bring my remarks to a close because we want to hear what the Minister has to say. I have done loads of sums-I know that people like to hear about my calculations-but I may have to save them for another day. However, I might write to the Minister and pass the benefit of those sums to him.
"Whilst I accept that these are difficult times financially, I believe that financial support for young people continuing their education and training is a valuable investment towards creating a sustainable future for us all."
The Minister of State, Department for Education (Mr Nick Gibb): It is a pleasure to serve under your chairmanship, Ms Clark. I congratulate the hon. Member for Erith and Thamesmead (Teresa Pearce) on securing today's debate. I know that she cares passionately about supporting young people in their continuing education, a passion that I share.
One of the Government's objectives is full participation in education, training, or employment with training, for all young people up to the age of 18. I listened to the hon. Lady carefully, and I understand the concerns of students at Bexley further education college, where 43% of students qualify for education maintenance allowance, and those at Greenwich community college, where 38% of students qualify. Nationally, 45% of students qualify for EMA, so I am aware that the decisions that we have taken affect a large number of 16 to 18-year-olds.
The interest on accumulated Government debt to date is £42.7 billion per year, which represents 70% of the entire Department for Education budget. Unless we take serious measures to tackle the deficit, we will face a higher cost of borrowing as capital markets demand greater compensation for the heightened risk. Without the action that the Government are taking, we would ultimately face the economic crises that now confront Ireland, Greece, Spain and Portugal. This country was on the brink of financial crisis.
This country took action in the emergency Budget and the spending review. As a result, that crisis has been averted. I listened to the 14 or 15 Opposition Members who spoke during the debate, and I did not hear one alternative suggestion of how to find a saving of £500 million elsewhere in the Budget. They had no answer on how to avoid financial meltdown, or how to tackle the record Budget deficit that the Labour Government left for this Government to clear up. They had no answer on how to bring our economy back from the brink.
Labour's stewardship of the economy has left young people struggling to find jobs, as employers freeze recruitment. Unless we get the economy moving again, that tragedy will persist. Not tackling the deficit will put that recovery in jeopardy. I give way to the hon. Member for Hyndburn (Graham Jones), to see whether he can tell us how to find £500 million of savings elsewhere in the Budget.
Is it not the case that it was the Government's choice to cut so deep? Is it not the case that, before the election and afterwards, the Government accused Labour Members of not cutting deep enough? Is it not the case, therefore, that the Government chose
to remove the EMA for the economic decisions that the Minister has outlined? The Opposition would not have needed to do that, nor go as far, because, as the Minister says, we would not have cut the deficit so fast.
EMA costs £560 million a year. As we heard, it has been in existence for about six years; it was rolled out nationally in 2004, following a pilot. It was successful in raising participation rates among 16-year-olds from 87% in 2004 to 96% this year. As a consequence, attitudes among 16-year-olds to staying on in education have changed. When the National Foundation for Educational Research questioned recipients of EMA, it found that 90% would have stayed on in education regardless of whether they received EMA.
Dr Julian Lewis (New Forest East) (Con): I am grateful to my hon. Friend for giving way. Does he accept that the two strands of the allowance are becoming intermixed? There is the role of the allowance in persuading people to stay on, and there is the role of the allowance in enabling people to stay on who might otherwise not be able to afford to do so.
A briefing from the Conservative Councillors' Association points out that the staying-on age will be raised, but that will not happen until 2015. What worries people such as the principal of Brockenhurst college in my constituency is that the EMA will stop in September 2011. In the limited time that remains, I hope that my hon. Friend will focus on the transition arrangements, which are of great concern to us all.
The fact is that 90% of recipients of EMA would have stayed on in education regardless. Given that evidence, the fact that we have a major Budget deficit crisis and the fact that the programme costs so much each year, it was clearly going to be a candidate for major reform.
In reaching the decision to end EMA, we were of course concerned that the 10% of recipients whom the evidence said would have been put off from staying in education but for the money might then drop out of education. We believe that a payment designed as an incentive to participate-a point hinted at by my hon. Friend-is no longer the way to ensure that those facing
real financial barriers to participation get the support that they need. That point was made well by my hon. Friends the Members for Brighton, Kemptown (Simon Kirby) and for York Outer (Julian Sturdy).
We therefore decided to use a proportion of that £560 million to increase the value of the discretionary learner support fund. Final decisions about the quantum of that extra funding still have to be taken, but we have already spoken of increasing the value of that fund by up to three times its current value, which stands at £25.4 million. A fund of that size would enable 100,000 young people to receive £760 each year. Those 100,000 students represent about 15% of the those young people who receive EMA, which is more than the 10% about whom we are particularly concerned who might not stay on in education. The figure of £760 is more than the average annual EMA paid in 2009-10 of £730, and only slightly less than the £813 paid to 16-year-olds who received the full £30 a week, or the £796 paid to 17-year-olds receiving the full £30 per week.
We are erring on the side of doing all that we can to assist the poorest, as sought by my hon. Friend the Member for Stourbridge (Margot James). However, the Government will not set expectations on how much young people should receive from the enhanced discretionary fund. It will be up to schools and colleges to determine which young people should receive support under the new arrangements, and what form that support should take. In answer to a question, I can tell the House that colleges can use 5% of the fund for administration.
To help schools and colleges administer the fund, and to ensure that those young people who really need support to enable them to continue their education or training have access to the new fund, we are working with schools and colleges, and other key organisations such as the Association of Colleges, Centrepoint and the Sutton Trust, to develop a model approach that schools and colleges can choose to adopt or adapt.
In the remaining minute, I shall try to answer some of the questions raised during the debate. Many hon. Members asked about transport. Under current arrangements, discretionary support funding cannot be routinely used for transport to and from college. It is local authorities that have the statutory responsibility for making the necessary transport arrangements. However, we will consider that restriction as we develop the arrangements for enhanced discretionary learner support funding. The House can be assured that on that point.
I have dealt with the question about administration. The hon. Member for Erith and Thamesmead asked about the sum of £174 million. That is the estimate of what will be spent on EMA in the 2011-12 financial year, the payments being made during the 2010-11 academic year. However, it will not be available in the next academic year.
Siobhain McDonagh (Mitcham and Morden) (Lab): This debate is about small businesses and it is also about people. In September 2005, the life of my constituent, Don Wilson, was turned upside down when his son was tragically killed in a rugby accident while serving in the British Army. Toby was just 29 when he died, and he left behind an eight-year-old daughter. Don wanted a new start and a chance to get on with something that would ease his grief. A short while later, the opportunity came along. Don had joined Loughboro Designs (UK) Ltd in July 1984 as a metal fabricator. He rose to be a foreman and worked on high-profile projects for international clients, including New York's Mayor Bloomberg and the Saudi royal family.
Shortly after Toby's death, Don's boss retired and Don was given the chance to buy the company. Given everything that had happened in British industrial manufacturing over the past 25 years, it seemed like a good opportunity. Any high-skills specialist metals manufacturing company that could prosper for so long-the Loughboro name had been trading for more than 50 years-must be doing something right. Don said that when he bought the company, his whole family became involved. He said that it was a way to move forward in memory of Toby.
Not long after 2005, there was the sub-prime mortgage crisis in the US that led to the credit crunch and then worldwide economic meltdown. Over 18 months, the economy in Britain contracted by 6%. It is estimated that our economy is about 10% smaller now than it would have been had the recession not taken place. Inevitably, that has had a major impact on small businesses, particularly on those that are heavily reliant on capital investment for their success, because loans for capital investment dried up. In short, the slump that began with bad lending policies by the banks has hit industrial manufacturing twice as hard because of yet more bad lending policies. Loughboro is one of many firms that is under threat. My first point is about the banks and what they should do to help companies such as Loughboro for the sake of the British economy.
In August, Loughboro's bank, HSBC, announced half-yearly profits of more than £7 billion. That is the equivalent of nearly £1 million profit every half hour of every day, or of a brand new general hospital, such as St Helier that serves my constituency, every 10 days. Also in August, the Chancellor warned the UK's banks that they needed to start increasing their lending to businesses. He said that the Government would
"not tolerate banks piling the pressure"
on to small firms. Moreover, the banks have an economic obligation to assist small and medium-sized businesses. However, many small businesses still find that they are unable to get the support that they need from the banks. In Loughboro's case, despite having worked hard to reduce significantly its loan from £30,000 to £6,000, HSBC cut its overdraft facility from £25,0000 to £5,000. With new contracts due to begin in January 2011, Loughboro's inability to increase its cash flow and invest in capital puts the future of those contracts in jeopardy.
Reading other reports from elsewhere, it is clear that firms such as Loughboro are not the only ones that are teetering on the edge partly as a result of the banks' policies. The BBC recently highlighted the plight of a number of similar firms. For instance, Abcoma, a manufacturing company in Oldham, had predicted the economic downturn and had managed to pay off all its debts about four years ago. It complains that even though the downturn is over, it cannot get any working capital from the banks to make the machinery that it needs. That is despite the fact that it has a full order book worth some £1 million and that it wants to employ an extra 10 to 12 engineers. Abcoma says that even though the local bank manager wants to lend money for working capital, the powers above him make that almost impossible, even with security against property.
I have been in touch with the Merton chamber of commerce, which covers my constituency, about these issues. It has done a light-touch survey of its members. Although 45% think that next year will be good for business and 53% think that they will grow, 31% say that 2011 will be worse than this year and nearly half think that they might not grow. One of the key reasons for such pessimism is the banks' policies. Some 30% of businesses say that their main challenges in 2011 will include constraints on their working capital and 16.5% complain about the difficulty of raising finances.
I thank the Merton chamber of commerce for its help, and praise it and other business organisations for the work that they do in promoting local business. I have also contacted the Federation of Small Businesses-I cannot praise it highly enough-about banks' lending policies. It, too, made a range of very good points. As small businesses do not have the range of options that medium and large businesses have to raise finance, they rely heavily on banks for support. The FSB complains that small manufacturers have not been able to access affordable finance from the banks, and that that has been holding back the economic recovery. It also complains that many bank managers, particularly those who are distant from the firms, do not understand the manufacturing sector and do not appreciate the kind of finance that it needs from them. Many firms that want loans of only £10,000 to £20,000 are told that £35,000 is the minimum, and that adds unnecessarily to their costs.
Mr Andrew Smith (Oxford East) (Lab): I congratulate my hon. Friend on securing this very important debate. Small businesses are so vital to economic recovery. May I draw my hon. Friend's attention to this recent report by IfM Education and Consultancy Services on effective support for smaller manufacturing businesses? The key finding to emerge from all its studies was the common-sense one that effective support has to be carefully targeted at the particular circumstances and priorities for growth of each individual small business. Does not the experience of the firm in her constituency and the others that she talks about bear that out, and is that not something that the Government need to take on board?
I wholeheartedly agree with my right hon. Friend. Loughboro found that its most flexible short-term access to money, through its overdrafts, was suddenly and arbitrarily cut. The FSB would like to see a broader range of affordable finance to small manufacturers to reduce the dominance of the banks-for
instance by creating community development finance initiatives to help small manufacturers. The FSB also wants high street banks to create a central contact point for manufacturers so that they can be supported more effectively, and reform to the banks application systems better to understand the needs of small manufacturers.
I am sure that the expensive lobby firms and the in-house public affairs teams employed by the banks will be listening to this debate or reading it in Hansard. I urge them to tell their chief executives and their boards that they are doing themselves and our economy no favours, and that the British public will continue to hold them to blame. I call on them to listen to the points that our small businesses are making through me today.
Earlier today, nearly a month after I contacted HSBC about Loughboro, and after weeks of chasing, I had a phone call from Andy Grisdale, its head of strategy implementation for UK commercial banking. I cannot say whether it was because of this debate that I finally got the call from HSBC, but we can all draw our own conclusions. I have just been informed by Dee, my secretary, that within the last few minutes I have also received an e-mail from HSBC. I am sorry that I do not know its contents. I was on my way over here and so did not have the chance to read it.
Mr Grisdale said that the reason the bank was not prepared to offer any more money to Loughboro was that the information that it had about the company was out of date. He said that it has not had details of profit-and-loss projections or up-to-date accounts for more than a year, that the bank needs to lend responsibly, and not just throw good money after bad, and that it was not HSBC's role to help pay off debts to Her Majesty's Revenue and Customs. No doubt some of those excuses are valid, but small firms are made up of human beings, and sometimes the help that they need is to do with planning ahead responsibly, and the banks have a role there, too. I therefore hope that HSBC will think again about its policy towards Loughboro and work more proactively and urgently with people such as myself to help us, rather than ignoring us or hoping that we will just go away.
If this firm goes over the edge because of a short-sighted approach to lending by banks, yet another little bit of Britain's manufacturing industry will be gone and eight more real, live human beings will lose their jobs after a lifetime of hard work-real people such as Don Wilson, who have real families. If the worst happens, we in this House will not forget. Almost all of us have met people such as Don and we will not forget the role that banks such as HSBC play in killing their dreams, when they could play a role in keeping those dreams alive.
I think that that is a fair summary of what many Members feel about the approach of the banks at this time. However, I also want to ask the Minister what he can do to put an end to bad practice in the banking sector. It is four months since his right hon. Friend the Chancellor told the banks about their "obligations". On the ground, however, there is little evidence of increased lending. What can this Government do to make the banks lend and what can they do to help firms directly if the banks will not help them?
Many firms fought bravely through the recession, often thanks to Government measures such as the cut in VAT, but what will be the point of that fight if, now that the economy appears to be stabilising thanks to those
policies, the taps are turned off again and the manufacturing sector suffers a double-dip? I believe that there are parallels between what is happening to firms such as Loughboro and what could happen to the wider economy. Perhaps if the tap of investment is turned off too soon in an attempt to end the deficit quickly, the businesses and the human resources capacity that are needed to build a solid recovery will be killed off.
That brings me to my second point. It is not just the banks that are bringing down firms such as Loughboro. In this case, the other and more immediate villain of the piece is the inflexibility of the public purse, in the guise of Her Majesty's Revenue and Customs.
Siobhain McDonagh: Just as with HSBC, I have had great difficulty getting anyone at HMRC to answer my calls or respond to my messages. I called for this debate much as a result of how difficult it has been for the two organisations to deal with my constituent's case with any sense of urgency. Perhaps if they had responded with more courtesy towards me and my constituent, the debate would not have been necessary. We have almost come to expect that the banks, with their billion-pound profits and eye-watering bonuses would behave arrogantly, as if they are untouchable masters of the universe, but it is disappointing that a public body such as HMRC has proved equally uninterested in people's lives.
The past year has been a continuing struggle for small businesses. In the case of Loughboro, the amount owed to HMRC has been the biggest indicator of that. Over the year, its debt to the taxman has grown to around £60,000. Loughboro has been trying to negotiate with HMRC, but the bailiffs are now involved. Before the debate was announced, the bailiffs were due to go in today, to take away machinery, which would have meant the end of the business. Again, we can only speculate about whether today's debate is the reason why the bailiffs are not going in after all-HMRC has been particularly difficult to talk to, so it has not been able to tell me.
I understand that Loughboro has written to HMRC today to offer three different payment plans: one to repay the £60,000 over nine months, another over six months and the last over just four months. The last would mean having to pay back nearly £4,000 a week, which would be difficult considering that wages, rents, suppliers and costs still have to be paid, but Loughboro was willing to try.
If HMRC does not behave reasonably, companies will not be able to continue trading. If that happens, not only would the taxman fail to get back all he is owed, he would not get anything in future-no more tax receipts from the company or its employees-and, indeed, the taxpayer would probably end up having to pay benefits to the workers and their families. Taxpayers would also end up paying the staff statutory redundancy which, as
some of them have been with Loughboro for 25 years, is likely to be around £35,000. If I had not secured the debate today, HMRC's bailiffs could have already taken away Loughboro's last hope, removing specialist machinery for scrap and putting people on the scrapheap, even though that would cost the taxpayer more in the long run than the machines are actually worth.
The FSB says that there are many ways in which the tax system could be improved to prevent such things from happening. Many small businesses complain that the tax system is too complex and confusing for them-it is a disincentive. The FSB wants the tax system simplified to allow more manufacturers to take advantage of the allowances and reliefs available. It also believes that there is a lack of confidence in the tax system and wants the Government to create a dedicated unit in HMRC to help small manufacturers. As people say, "Tax shouldn't have to be taxing."
People whose expertise is in manufacturing rather than accountancy often need help, and they should be given it. Indeed, on occasion, Governments have listened to small manufacturing businesses, to the benefit of all. The Time to Pay scheme for small businesses has been successful, and the FSB is working with HMRC to ensure that it is part of a wider shift to a friendlier approach to small businesses. Time to Pay has been crucial to thousands of businesses with limited cash flow, and more such schemes are needed.
Unfortunately, many small business owners still find the taxman very unsympathetic and obstructive. For instance, some businesses have asked HMRC if they can spread payments but are being told that, if they have paid any dividends during the year, they will be disbarred immediately from any help. That is even though they have done nothing illegal, just arranged their affairs to minimise outgoing payments, and the FSB has told me, forcefully, that that is unreasonable.
I am therefore calling on the Minister to instruct HMRC to be helpful-not to ignore MPs and their constituents, not to be uninterested in businesses that are struggling, but to be helpful. In my constituent's case, I also ask him please to talk to HMRC and persuade it to take a pragmatic approach towards Loughboro. It might take longer to get the money, but spreading payments over a longer period could save the country money in the long run. I appreciate that the Minister's bosses have taken a more short-sighted view with the wider economy, as they want to pay back the deficit sooner and quicker than many people believe is sensible, irrespective of the damage that might be caused. However, I hope that he can persuade HMRC to take a longer-term view with Loughboro.
I do not often get contacted by manufacturing businesses-Mitcham and Morden is not a big industrial centre. Firms such as Loughboro do not often appear on our radar, but small businesses make up 99% of the 4.8 million businesses across the UK. They employ approximately 50% of the UK work force and are responsible for almost 40% of our economic output. The manufacturing sector in the UK contributes £155 billion to the economy and employs 2.6 million people.
Even in constituencies such as Mitcham and Morden, which do not seem to be hubs of business enterprise, small firms make a big difference. For the economy to
have any chance of emerging successfully from the recession and from the cuts, we depend on the success of small manufacturers, and they should be listened to by the Government. If our small manufacturing firms suffer, we all suffer. We need those firms. If companies such as Loughboro cannot be helped to survive, how will we persuade people such as Don to take them on in the future? Why would anyone want the grief? Yes, they are businesses, but they are full of human beings and, if they struggle, the cost is a human cost.
Don Wilson has already been through many difficult times in his life. He is a human being who did a good thing. He worked hard and took over a company employing local people when the previous owner retired. He kept it going and brought in new contracts. However, Don Wilson told me:
"I have had to lay men off, I have literally halved my work force and still have found it hard to continue. Some mornings, I don't want to get up and go to work, but I think of my son and the people who are depending on me and this is what drives me on-my wife, my children, my family."
Now that it looks as though we are coming through the worst of our economic troubles, I hope that we will not let him, his family or his employees down. They are good people, the sort that this country badly needs, and the banks, HMRC and Ministers should stand up for them, just as Members like me are standing up for them. Thank you for the opportunity to put their case.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk): I congratulate the hon. Member for Mitcham and Morden (Siobhain McDonagh) on securing the debate, but also on setting out with real passion and determination how we ensure that the smallest enterprises are able to cope in difficult times. Given the Division, I think I am right, Ms Clark, in saying that I have until 4.40 pm. I want to ensure that I do not either run out of puff or get the wrong deadline and not get to the questions asked.
There are a number of broader issues, as well as the specific issue of this particular business. I would like to start with Loughboro Designs, so that I can then move on to the broader issues raised by the hon. Member for Mitcham and Morden and the right hon. Member for Oxford East (Mr Smith), on cash flow, tax and the ability of small and medium-sized enterprises to access finance.
Having run my own business, I understand the problems that the hon. Lady described. I was concerned to hear about the difficulties that Loughboro Designs UK Ltd has had, and she is absolutely right that the tragic death of Mr Wilson's son adds to the human aspect of the case. I totally agree that we often forget that SMEs are in many ways about people far more than about cash sheets or balance sheets. The character of a business is always shaped by the character of the owner, and the difficulties on a personal level, to which she has referred, should be borne in mind.
When I learnt about the hon. Lady's concerns, I instructed my officials to investigate the case, and they have been holding discussions with HMRC to see whether it would be possible to arrange a repayment plan for Loughboro Designs's VAT bill. The hon. Lady highlighted some initial difficulties about contact with HMRC, which I have noted and will raise with my colleagues
and officials. HMRC has been shown to be sympathetic to SMEs, and in the case of Loughboro Designs it has confirmed that it is willing in principle to conclude a further agreement under its Time to Pay initiative. It is willing, exceptionally, to receive a further payment proposal, which the business obviously will now need to draft.
Before seeing that new proposal, we cannot guarantee that it will be accepted, but I will ensure that it gets a fair hearing. In the meantime, the distraint action that the hon. Lady described will be held in abeyance. I hope that an agreement can be reached so that the company will be able to fulfil the orders that I understand it has for next January and thereafter. I hope that she will agree that those are initial, positive steps to try to unpick what is obviously a difficult problem.
My officials have also been in contact with the company's bank, HSBC, to explore whether there is any scope for making additional lending facilities available. I share the hon. Lady's concern that no viable company should be driven out of business unnecessarily. In that context, once the Time to Pay agreement is resolved, that will be the moment when the bank can act. We will keep in contact with her and the business, and I hope that those measures will give some comfort to her and to Mr Wilson. I also hope that that brings to the attention of Members the role of our "Real help for businesses now" team within the Department, which is able, willing and ready to help viable companies in distress.
The hon. Lady referred to the broader question of HMRC and the Time to Pay initiative, which I think is important. To be fair to HMRC, although there will inevitably be times when businesses are frustrated about discussions, it has set up the business payments support service so that companies that find themselves under pressure can quickly and easily arrange an agreement. Under that scheme, businesses can delay payment of VAT, corporation tax and other taxes to help manage short-term financial difficulties.
In that context, I take the view that cash is king. Time to Pay is about providing a lifeline for SMEs, which, more than any large business, find that tightened cash flow is the factor that drives them down and prevents them from proceeding. Interestingly, the figures available to date show that more than 370,000 such arrangements have been agreed, involving the deferral of around £6.3 billion in taxes.
I emphasise-it is a fair point to make-that Time to Pay is intended to support businesses that are fundamentally sound. The taxman clearly cannot support businesses whose financial viability is dependent on not paying taxes. That would not make sense; it would be good neither for them nor for the economy as a whole. The issue is about helping companies that are fundamentally sound, but might have a short-term problem.
The hon. Lady also mentioned how the tax system works and referred to the FSB. We agree with it that we need a simpler, more predictable and internationally competitive corporate tax regime. That is why in our first few months in government we have tried to take some positive steps. It is one of the reasons why we stopped much of the previous Government's planned rise in national insurance contributions.
The FSB reckons that that rise could have cost about 57,000 jobs, so we have made an important change. We are also cutting the main rate of corporation tax over
the next four years from 28% to 24%, so that this country will have one of the lowest rates of any major western economy. That means, particularly for manufacturers, that the balance between the corporation tax reforms and the reforms that we are planning for capital allowances will leave £250 million a year in the coffers of manufacturing businesses, which is good news. With regard to smaller firms, we are also reducing the small companies corporation tax rate to 20p, rather than increasing it to 22p, as the previous Administration planned to do.
The hon. Lady rightly mentioned access to finance, which is important. Clearly, some businesses are still feeling that pressure, and as we move out of recession and into the early stages of recovery, there tends to be a tightening on the position for businesses, particularly on the availability of working capital. Our view with banking is clear: where we are presented with evidence that banks are behaving unreasonably on lending decisions or the terms and conditions related to them, we will consistently and persistently challenge the banks involved. We need to ensure that we have that evidence. Where we do, we act, and we will continue to do so.
It has been encouraging in the past six months to see the banks start to step forward with clear commitments. The British Bankers Association brought forward 17 commitments in its new proposals to help move things forward, and those words now need to become actions. The proposals include a revised lending code for small firms and a new appeals process for cases in which finance has been declined, and those proposals are especially relevant to smaller businesses. It also includes a £1.5 billion growth fund to be spread over the next 10 years, which is important for companies wishing to grow.
I suggest that the question of competition is just as important so that business have a choice. At the moment, the choice is narrow-principally four high street banks. That is why we have asked the Independent Commission on Banking to look carefully at how we can broaden that, and it will set out its initial ideas in the spring.
The hon. Lady rightly asked what the Government can do in the meantime to bridge the gap. We are taking action to extend the enterprise finance guarantee, which was rightly established under the previous Administration, and are now providing £600 million extra over the coming year. We are rolling the enterprise finance guarantee out over the next four years, which means unlocking about £2 billion extra in bank lending.
The hon. Lady also rightly referred to community development finance institutions. I am pleased to be able to tell her that on Monday I met the Community Development Finance Association and spelt out that we will not only reform the enterprise finance guarantee for existing lenders, but do so in a way that makes it easier for CDFIs to be part of it. The Government will therefore be able to underpin our lending to those small micro-businesses that, frankly, many of the banks do not reach. Those will make some important differences to some of the micro-businesses involved. We are also increasing the enterprise capital funds by around £200 million over the next four years, which will provide around £300 million in additional venture capital investments. Therefore, there is help with debt and with equity.
However, there is another aspect that I find is increasingly raised by the small business community, particularly in those areas of manufacturing where capital investment is important: the role of business angels. We are keen to see an expansion of business angels and are interested in how we can make the climate for them more investment friendly. That is why we are encouraging them, together with Capital for Enterprise Ltd, the Government's SME investment arm, to put a bid to the regional growth fund to create a business angel co-investment fund.
Mr Prisk: I think that they have been helpful. Certainly, the representations I have received indicate that the fact that the entrepreneur's relief, which is now 10%, has been extended from £2 million to £5 million, has been welcomed by many people in the investment community and the small business community. Those reforms matter, because if we can make progress in that area, we can move forward.
I am conscious of the time and so will bring my remarks to a conclusion. I commend the hon. Lady on securing the debate and hope that the specific actions to which I have referred for supporting Loughboro Designs will progress. The Government are also trying to help with regard to tax, finance and cash flow, all of which are crucial. I hope that the developments I have mentioned will proceed, and I will be happy to talk with her after the debate and in the coming weeks to see whether further action will be necessary in the case that she has discussed or similar cases in her constituency.
Stephen Gilbert (St Austell and Newquay) (LD): I am delighted to introduce my first Westminster Hall debate with you in the Chair, Ms Clark, and I am pleased that this important debate is happening almost a month to the day since the floods hit Cornwall early in the morning on 17 November. It is a mark of how significant the events were in Cornwall that other Members of Parliament are present and hoping to make a contribution. My hon. Friends the Members for Truro and Falmouth (Sarah Newton) and for South East Cornwall (Sheryll Murray) are here. Both of their constituencies, like mine, were affected by the flooding.
At the outset, I would like to take a moment to commend the professionalism and dedication of the Cornish emergency services, Cornwall council, local town and parish councils, the Environment Agency, and local churches, chapels, clubs and residents associations which, in a typical display of Cornish solidarity, pulled together to do an outstanding job in difficult circumstances. As the extent of the damage caused by the floods became apparent, all those groups rallied together to do what they could to help.
When I spoke to people in St Austell, Polmassick, Mevagissey, Pentewan, St Blazey and Par, having seen for myself the devastation that had been caused, I heard stories about the responses of neighbours and family who provided the essentials that people needed.
It is not often that a local MP welcomes both the Prime Minister and the Prince of Wales to their constituency on the same day. It would be wrong of me not to put on the record how grateful we in Cornwall were for their time on that day and for their continued interest since then-and, indeed, for the continued interest of the Secretary of State for Environment, Food and Rural Affairs. On a personal level, I am grateful for the support that the Minister gave me throughout the following days and weeks.
The combined information from the Environment Agency and Cornwall council indicates that hundreds of homes and businesses were damaged. The repair bill is estimated to be tens of millions of pounds. The Environment Agency and partner organisations have been working in the affected areas on clean-up, inspecting and repairing flood defence systems, and speaking with communities to learn what they thought went wrong in the places where schemes already existed. There are particular issues in each part of my constituency, and I believe that it is worth bringing them to the attention of the House.
In St Austell, there are concerns that over-development of the hillsides surrounding the town has led to added risks of flooding in basements in the town centre. In Pentewan, a recent flood defence investment did not work as it should have. In St Blazey and Par, pumps seem not to have been turned on in a timely way, and there is the issue of the regular cleaning of culverts and storm drains, which might have eased some of the problems.
In Polmassick, the ancient bridge simply could not cope with the volume of water trying to get under it to the flood plain just beyond it. Across the constituency, the warning systems that were supposed to notify residents of problems ahead universally failed.
Sarah Newton (Truro and Falmouth) (Con): Although there were far fewer homes affected in my constituency, businesses and homes in Portloe on the Roseland peninsula were badly affected. I very much agree with my hon. Friend that, in the future, timely warnings of impending flood risk would help people to prepare what defences they are able to prepare.
Stephen Gilbert: I thank my hon. Friend for that point, because she could not be more accurate. There was the potential to deliver warnings, and we must ensure that when warnings are issued by statutory agencies, they are passed on to the public.
Despite the problems, steps are already being taken to facilitate the clear-up. In Mevagissey, 30 tonnes of flood debris has been cleared away. In Pentewan, a demountable defence system is being installed as a temporary defence on the beach channel to balance the tidal and fluvial flood risk in that community. In St Blazey, like other places, Cornwall council and the Environment Agency have been holding flood surgeries where local residents can share their experiences and concerns. And, of course, the Environment Agency is conducting a thorough review of the events of the few days of the flood to identify what other steps it can take.
The Environment Agency told me that approximately 3,250 homes and businesses in Cornwall were protected by schemes already in place. It is worth commending that work, which has been done over several years. Despite all that, as my hon. Friend the Member for Truro and Falmouth suggested, we can undoubtedly learn lessons from the experience in Cornwall. I shall spell out some of my concerns, and I hope that the Minister will be able to respond to them.
The first issue is about providing early warnings to residents. The Met Office issued a severe weather warning with an 80% chance of flooding at about 10.30 pm on the night of 16 November. That was some six hours before any damage had been done to homes and businesses, but the warning never made it to the majority of residents, who could have taken action to protect their property or business.
We all know that weather prediction is not an exact science, but if the emergency services and emergency responders could be notified much earlier in the day of a 20% risk of a severe flooding event, surely it behoves us as a Government to ensure that the public are made aware when the risk reaches 80%, so that they can take the measures that they deem appropriate.
The Government also need to do more to support the establishment of community flood plans, which could include dedicated flood wardens with access to state-of-the-art household defences. I was pleased to hear similar thoughts from the Secretary of State during departmental questions last week.
Taking steps to prepare for a flood will help communities to avoid damage and to keep the costs of future repairs low. It may also help those in flood risk areas to obtain insurance after the 2013 end of the insurance industry's statement of principles. In the vast majority of cases, the insurance industry responded in a timely way, getting loss adjusters in, assessing the damage and closing claims quickly, but we need to ensure that all homes, not just in Cornwall but across the country, are able to access insurance at affordable premiums now and when the statement of principles ends in 2013.
The third and final subject I would like to raise is the need to look at the financial support that is available to local authorities when such emergency situations happen. As the Minister will know, the Bellwin scheme provides financial support to local authorities, but, in the case of Cornwall, it has become clear that the scheme might not be working in quite the way it was originally intended.
Cornwall council's threshold for help under the scheme is 0.2% of the authority's net budget requirement, which includes the delegated schools grant. Therefore, the threshold in cash terms is just shy of £1.5 million-that is, the money that the council must spend before central Government will step in.
Cornwall council is at a distinct disadvantage as a new unitary authority. If we were still under the old system, the burden would have fallen on two district councils with a total threshold in the region of some £60,000 before the Government stepped in, not the £1.5 million that Cornwall council has assessed the figure to be. Many would argue that the new unitary authority would have more resources and could use them in the best way, but the calculation does not seem to be in line with the costs that could be incurred, and it is certainly unfair when compared with the calculations for counties with two-tier systems.
Furthermore, as well as being a unitary authority, Cornwall is a fire and rescue authority. Again, that is atypical. In Cornwall, the costs incurred by fire and rescue are part of the unitary authority overall, and they have the effect of increasing the council's threshold further, by some £40,000.
In summary, as a new unitary authority, and a fire and rescue authority to boot, Cornwall council seems to be treated unfairly under the Bellwin scheme. It also seems unfair to all top-tier organisations to include the delegated schools grant in the calculation. The Minister is well aware that local authorities have no control over the allocation of the schools grant; it simply passports through the council. I would ask the Minister to consider whether the Bellwin scheme should be reviewed, particularly in the light of some of the examples thrown up by the case of Cornwall.
The flooding in Cornwall last month brought to the fore the community spirit that I grew up with in Cornwall. There are lessons to be learned. We need to improve the early warning system, work with the insurance industry and look again at the threshold at which the Government step in to help local councils. These issues need to be dealt with so that we in Cornwall, as well the rest of the country, are as prepared as we can be for possible events in future.
Sheryll Murray (South East Cornwall) (Con): I praise my neighbour, my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert), for securing this debate. I also thank the Minister for the prompt communication that his Department had with me and, I am sure, my hon. Friend, when the flooding and the serious situation in Lostwithiel in my constituency first became known.
I reiterate the points that my hon. Friend made about the Bellwin formula. Cornwall's transition to a unitary council happened a couple of years ago. Sadly, this
formula is outdated. Will the Minister consider updating and reviewing it so that it does not act against unitary authorities in future incidents?
I praise the work of Cornwall council and the Environment Agency. I accept that nobody could have predicted the level of flooding that we saw in Lostwithiel, particularly, which resulted from surface flooding rather than the normal, historical flooding. It may not happen again for another 100 years, but we have to get the message out to the community, and to other communities that could be affected, to ensure not only that they put in place flood prevention measures when they get the warnings, but that at least lockable metal gates are put on doors every evening to prevent the kind of damage that we saw from happening.
Just before Christmas, many businesses in Lostwithiel were flooded when they should be preparing for a busy time, and a lot of their stock was damaged. I praise the insurance companies for sending their loss adjustors, who were working hard on the ground with people. I drove through Lostwithiel at the weekend and business is going on as usual. I praise the community for showing resilience and community spirit to ensure that business carried on as best it could as soon as possible.
I should like to hear from the Minister about the Bellwin formula, and about any ideas that he has that my hon. Friend and I can put in place to help the community prevent flooding, which is expensive-I know that there is no money to do that in these economic times-and to put in place some flood damage prevention schemes, so that if it happened again, the properties of the people of Lostwithiel might be saved.
I pay tribute to my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert) for securing this debate, and to him and my hon. Friends the Members for South East Cornwall (Sheryll Murray) and for Truro and Falmouth (Sarah Newton) for their leadership in dealing with the aftermath of this incident, which is to their credit. It is also to their credit that they have generously praised many others, whom I will talk about. The good contact that we had with my hon. Friends and their understanding of the problems is noted in the Department for Environment, Food and Rural Affairs. I am delighted that that communication worked so well.
As my hon. Friend the Member for St Austell and Newquay said, the intense rainfall in the early hours of 17 November had a huge impact on his constituency and the constituencies of my hon. Friends the Members for South East Cornwall and for Truro and Falmouth. Such events are not unknown in the south-west. We have seen from previous flooding how resilient communities in that part of the world are. The recent flooding only reinforces that view.
The Prime Minister and the Secretary of State were both moved by the obvious examples of good neighbourliness-the work that people were doing to support their friends and neighbours in this crisis. My
hon. Friend rightly mentioned the good work done by Cornwall council, the emergency services and many others. I echo every word of his praise.
The severity of the flooding came as a surprise to many, but that is not to say that the forecasts were wrong. The flood forecasting centre issued an extreme rainfall alert at 16.22 hours on 16 November, highlighting the risk of heavy rainfall overnight that may lead to surface water flooding. The main purpose of such alerts is to allow local authorities and emergency responders to prepare to respond in accordance with their multi-agency plans. I will talk in a minute about my hon. Friend's important point on widening the recipient base of these warnings to ensure that we can get to more people when such events are predicted.
My hon. Friend made a good point about surface water flooding, which I noticed in my constituency in 2007; if we can develop flood warden schemes, similar to the neighbourhood watch scheme, that would be a useful, successful way of allowing people to do emergency resilience work to protect their homes and belongings. Not everybody is on e-mail or able to get a mobile phone signal, particularly in remote parts of the country. Nevertheless, if we can find ways to get the information to people so that they can start preparing, on a street-by-street basis or by locality, we can improve it. We are not yet where we want to be in terms of getting more people aware of flood risk. I welcome my hon. Friend's suggestions, some of which I will discuss shortly.
The Met Office issued a flash severe weather warning, as my hon. Friend said, at 22.32 hours on Tuesday 16 November. Flash warnings are issued when the Met Office has 80% or greater confidence that severe weather is expected in the following few hours. The Met Office routinely issues early warnings in advance of severe weather that is expected to lead to significant and widespread disruption. In this case, the Met Office, in consultation with the FFC and the EA, did not issue an early weather warning, as the rainfall was considered unlikely to result in widespread disruption.
In the lead-up to the event, the national and local weather forecasts on television and radio, and on the Met Office website, highlighted the risk of heavy rain and gale-force winds in the south-west. Forecasts of heavy rainfall and extreme rainfall alerts are not rare, as we all know. The total amount of rainfall in Cornwall was not as great as in other significant flooding events. However, it is important to note that the intensity of the rainfall-38 mm in one hour in some locations-was unusual and a combination of surface water, small watercourses being overwhelmed and drains not being able to cope with the intense rainfall, resulted in torrents of water flowing through the streets and into people's homes and businesses.
Weather forecasting plays a critical role in flood-risk management and the Met Office is independently recognised as world-leading in this regard. However, it is important to manage expectations in terms of what is currently scientifically possible. Those very localised weather events are challenging to predict with a long lead time, but I am confident that the Met Office will continue to push the boundaries of what is possible. It remains as important as ever that local authorities, emergency responders, utility companies and others have well practised plans for dealing with flooding events. In Cornwall, those
plans clearly worked very well. The speed of the emergency was matched by the speed of the emergency responders, for which they deserve great praise.
In the cold light of day, the hon. Gentleman, not unreasonably, pointed to the need for improved warnings for those who are at risk of such events. The Prime Minister and the Secretary of State commented on that when they visited Cornwall in the days following the flooding. Let me stress that the Government are committed to improving their warning and information systems for all types of emergency, including flooding, and are looking at a number of options to deliver better public warnings.
The current consultation on our flood and coastal erosion risk management strategy for England says that the Environment Agency and the Met Office will continue to develop and improve the national flood warning service provided through their joint flood forecasting service. They will do so by providing, among other things, warnings and flood information that are geographically as specific as possible so that all who receive flood warnings will know what to do and, where possible, have enough time to take action. These are not simple tasks, and it will take time to get them absolutely right.
The extreme rainfall alert that was first issued at 16.22 would not have been issued before the Pitt review following the 2007 floods. We witnessed the welcome sight in the Met Office of meteorologists sitting next to hydrologists and being able to predict much more accurately where flooding is likely to occur, and to warn communities accordingly. We are building on that capacity and partnership working to ensure that we get better and better at getting it right. We will not get it right every time, because of the freak nature of some extreme rainfall conditions.
We would all prefer our flood management to focus on preventing extreme rainfall from causing damage to property in the first place. I do not want to play down the impact of flooding, but it is right to point out, as my hon. Friend the Member for St Austell and Newquay did, that more than 3,000 properties in vulnerable areas throughout Cornwall were protected as a result of flood defence schemes. I share his concern about the failure of some flood defences, and it is imperative that, with the Environment Agency, we look at where those failures occurred, learn from them, and provide the right protection in those places as a matter of urgency.
I take the points that my hon. Friends the Members for St Austell and Newquay and for South East Cornwall made about the Bellwin scheme. I may be going above my pay grade, but I represent a constituency that is part of a small unitary authority. My hon. Friends represent constituencies that are part of a relatively large unitary. When my constituency was flooded in 2007, we triggered Bellwin very quickly. Clearly, the matter is a cause for concern that I understand. Bellwin is dealt with by my colleagues in the Department for Communities and Local Government, and the Treasury, but review is important. In the light of changing weather patterns, we must liaise at ministerial level, as the Department is doing, to ensure that Bellwin is not too blunt a tool, and that local circumstances are taken into account. However, that is a matter higher up the governmental tree.
Many of those who were affected have already done a huge amount to get their lives and businesses back in order, which is more evidence of the remarkable resilience
of people in that part of the world, and of a thriving big society. The Environment Agency has been doing its bit to help clear up and provide full support for the county council. I pay tribute to the surgeries that were held last month in St Blazey, Mevagissey, Lostwithiel and Pentewan.
The Environment Agency is also working with local people to develop community flood plans in those areas. Part of the work will consider what improvements can be made to flood warnings for those communities. That is not a new concept; it already exists. Fill-in-the-blank toolkits are readily available, and are being taken up in the constituency of my hon. Friend the Member for St Austell and Newquay. I hope that we can expand the flood forums to communities that have been affected, and to communities that have not been flooded, because those are the difficult ones to reach.
Over the next few years, there will be huge technological advances. We are looking at rolling out opt-out schemes for text and telephone warnings, and there is the possibility one day, if it is not too intrusive, of a cell basis so that an emergency can be flashed to a mobile phone cell area and everyone in the area with a mobile phone receives it. That will not reach everyone, but it is a possibility, and such technologies are coming forward. We want to be at the cutting edge, not just because we want to, but because we must if we are to cope with the changing climate.
Insurance cover, and its future availability, is always a concern for those who have suffered damage from flooding. It is fair to say that the Association of British Insurers was very quick to state at the time that insurers' first priority was to ensure that every claim was dealt with as quickly as possible. Advice was provided on its website for people who were affected. More generally, at a flood summit that I hosted on 16 September, we agreed that the Government, insurers and other stakeholders would continue to work in partnership towards 2013 when, as my hon. Friend said, the current agreement between insurers and the Government will expire.
Looking forward, we know that the risk of flooding is likely to increase. We also know that the current economic situation is very challenging and that, although the floods budget was protected as far as possible in the recent spending review, there will always be a limit to what national taxpayers can be asked to fund. Currently, the costs fall almost entirely on general taxpayers, and that constrains how much can be done, as well as creating the potential for inequity in the system. Nevertheless, DEFRA expects to spend at least £2.1 billion on flood and coastal erosion management over the next four years, and to deliver better protection to 145,000 households by March 2015.
In future, the Government would like to encourage additional local investment in flood and coastal erosion risk management in return for giving areas at risk a bigger say in the action taken. We want decisions to be made locally and voluntarily on whether and how to contribute to schemes. Government support will, of course, continue to focus on those most at risk and least able to afford to protect themselves. That is important.
These are difficult matters and we must get them right. That is why we are consulting on the national flood and coastal erosion risk management strategy for England, and why it is so important. It will help us
make the difficult decisions about what Government funding is used for, and how it should be allocated between the different tasks and risk management authorities. I urge everyone with an interest to have their say.
The events in Cornwall four weeks ago posed a huge challenge to individuals, communities, businesses and organisations. None of us wants that to happen again, and we must learn the lessons. But it would be naive to think that we will never face similar challenges in the
future. Such events are consistent with the predictions for climate change, and are likely to occur more frequently. The good news is that the people of Cornwall have shown us again their remarkable resilience and capacity for recovery. That was shown not least in the leadership of the Members of Parliament for the constituencies where the flooding took place.