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Mr John Denham (Southampton, Itchen) (Lab): I shall make a few remarks on Third Reading to summarise where we are as a result of the discussions of the past few months. The House may be aware that in what I can only describe as a spirit of total selflessness and altruism, I allowed my hon. Friends the Members for Llanelli (Nia Griffith) and for Ochil and South Perthshire (Gordon Banks) to lead for the Opposition in Committee. I thank them for doing so and for the excellent way in which they helped to scrutinise the Bill. I also thank the other Committee members and, indeed, the Minister, who I can see from looking at the Committee records and my colleagues' reports was open and helpful in responding throughout the 20 sittings for which the Committee sat. There is no doubt that, including the evidence session, there was a great deal of opportunity to consider many parts of the Bill in detail.
The problem is that the Bill comes to Third Reading with many of the fundamental issues and concerns that were raised on Second Reading and that have been raised outside the House still unresolved. The earlier debates, including that on the new clause tabled by the hon. Member for Colchester (Bob Russell), show that concerns are not by any means limited to the official Opposition. This might not have been or have become an issue on which a head of steam builds up into a full blown parliamentary revolt, but it is clear that the Government have by no means persuaded all their supporters of the wisdom of their policies and approach.
The Bill will now go to another place and no doubt the same issues will be discussed there. Those on the Labour Benches in another place will make every effort to make the progress that we have not made in the House of Commons. The central part of the Bill is, of course, enabling legislation. It enables the Government to privatise Royal Mail and to transfer this vital part of our national infrastructure to a foreign buyer. The Bill does not require the Government to do so and therefore today's debate is not the end of the story. As I shall set out, too many uncertainties still exist to proceed just on the basis of where we are today. That is not just the view of the Labour Opposition; that is the view of Consumer Focus, which has looked at the matter from a customer point of view. As I shall show, that is also the view of the National Federation of SubPostmasters-the people who in many ways are meant to be at the heart of the Bill.
The House did not agree to secure a 10-year inter-business agreement today, but that does not mean that the campaign to get one will go away. If we have not so far explained to all the constituents of hon. Members who support the Bill why their post offices are under threat, we have plenty of time yet to do so and to push for a change in Government policy. The basic problem is that the Government have still not made the fundamental case for the full-scale privatisation that they have proposed, nor have they addressed the concerns that exist. It is very interesting and, of course, welcome that a new clause has been introduced that is designed to ensure that the Queen's head remains on postal stamps. That is interesting because it has been made necessary solely as a result of the desire to privatise Royal Mail.
As long as the Post Office and Royal Mail remained in public ownership, as they would have done under the Bill introduced by the Labour Government, no one thought for a moment that it would be necessary to introduce legislative protection to retain the sovereign's head on our stamps. It is only because privatisation is being brought in that that is at risk. The problem is that the Government, by conceding on this point, have accepted that full-scale privatisation opens up all sorts of possibilities and dangers that simply do not exist if the Post Office remains in public service.
Mr Davey: The right hon. Gentleman is incorrect on this point. It was a Labour Minister in the 1960s-Tony Wedgwood Benn-who tried to remove the Queen's head from the stamp. I hope that he will correct the record.
Before Christmas, when the Minister was challenged on this issue, his response was, "Don't worry. No sensible private buyer would dream of removing the monarch's head." He has now conceded that that response is not enough. Yet when Members asked him today about a private buyer's relationship with the post office network, the same argument came into play: "Don't worry. No sane private buyer would take the business away from the post office network." If the guarantee is necessary for the sovereign's head, it is necessary for the inter-business agreement with post offices. It will not do to ask the
House to accept this on trust, because thousands of post offices are at risk. That is, and has been from the outset, the fundamental argument against a majority privatisation of the Post Office. Although Royal Mail must be run as a commercial enterprise, majority shareholding for the public gives an ultimate protection that privatisation will not provide. If the Bill is flawed, as it is, then that protection will not exist.
The case has not been made in other areas, because, in contrast with the situation just a few years ago, transformation and modernisation are under way. The challenge of bringing in capable, senior management has been met, as I am sure all Members who have met the chief executive will confirm. Investment funds are currently available, and there are mechanisms well short of majority privatisation or a minority shareholding that could be used to raise equity in future.
"I think that if the Bill does not go through, you will see a continuation of what have been chronic problems for Royal Mail." --[ Official Report, Postal Services Public Bill Committee, 9 November 2010; c. 4, Q3.]
Mr Denham: I understand those remarks, but I believe that it would be possible for a Government who wished to do so to resolve the need to bring in additional investment in future through measures that fall short of selling a majority shareholding in Royal Mail. Some of those measures have been proposed by my party in the past, while other mechanisms have been proposed from outside. The truth is that the Government are driven by the desire to raise the albeit relatively paltry funds that they will get from selling as quickly as possible. That is fundamentally why they have refused to provide the safeguards on future business that many Members have been seeking. The highest price will come from giving the buyer the greatest freedom to make money through eroding the quality of service by closing post offices and transferring functions elsewhere.
If the Bill goes through this House today, and if it succeeds in another place, that is not the end of the story, because uncertainties still exist. First, there are the state aid discussions that will have to take place with the European Union. That arises from the need to deal with the Post Office deficit, and it will arise, if not in exactly the same form, if Royal Mail remains in public hands. We do not yet know whether any restructuring of Royal Mail will be required or whether profitable subsidiaries will need to be sold off, as the press have speculated, so we do not know what would be available for sale.
Secondly, there is still uncertainty about the regulatory regime. There is agreement about the transfer to Ofcom, but there is a crucial question about whether it will review the regulatory relationship between Royal Mail and its private sector competitors. Royal Mail has argued, most recently in a letter from the chief executive this week, that the current arrangements are commercially unfair, and that many of the letters that we all saw being delivered on our Christmas visits to post offices were, in effect, costing Royal Mail money because of the terms of the agreement. The crucial question on the proposed
privatisation is whether Ofcom will review that relationship and, if so, when. Clearly, any change, particularly if it conceded Royal Mail's argument, would make a very big difference to the future financing of a publicly owned Royal Mail and a huge difference to the price that could be obtained from a privately owned Royal Mail. We must begin to say that a final decision on whether to sell can be made only once it is clear whether Ofcom will investigate this issue, what the time scale of such an investigation will be, and after there is an indication of the likely outcome. That is the second reason to say that there is great uncertainty.
The final area of uncertainty is the future of the post office network. The major argument today has been about the inter-business agreement, but there are other questions about the amount of business that will go to local post offices. I welcome the Government's promise of substantial investment in the network. In some ways, that is a bold decision, because if they are wrong about the future business that goes to local post offices, that will be public money not well spent. Capital investment cannot of itself secure revenue from the Royal Mail. Promises of other work are slim and not tied down. Our plans for a Post Office bank have been dropped, and the promises from other Departments are vague.
The National Federation of SubPostmasters has supported the principle of the Bill, but the briefing it has circulated to right hon. and hon. Members for today's debate could not be more explicit. It states that
"ministers must recognise that their plans will only succeed if they deliver on access to government and Royal Mail work at post offices. If they fail on this, not only will plans to mutualise the Post Office be doomed to failure; there will be no way back for the network and our post offices will face even greater jeopardy."
It goes further and states that if adequate levels of new Government work at post offices are not secured, it believes that the separation of Post Office Ltd and Royal Mail, and the sale of Royal Mail must be "indefinitely delayed".
The House has rejected the first thing that the federation asks for, which is a long term deal. The Government have failed, as yet, to deliver the second thing that it asks for, which is a clear commitment for future levels of other Government work. The argument over indefinite delay is, I think, the battleground on which the forthcoming campaign to save our postal services will be fought.
Royal Mail is, first and foremost, a people business. It is a people business, or it is no business at all. We know that not only because of the campaigns that hon. Members from all parts of the House have conducted to save post offices in their constituencies, but because of the hard work undertaken by Royal Mail workers throughout the year, particularly in the run-up to Christmas. We also know it because of the hard and vigilant work that the Communication Workers Union has put in to help us understand the issues involved in the Bill, as I experienced when Paul Moffat, the CWU representative for my region, came to see me. We also know it because of the groundbreaking modernisation agreement that the CWU made with
Royal Mail. That is a signal triumph about which Mr Hayes and his colleagues can rightly be proud. It is that people aspect of the Bill on which I shall focus my brief comments.
Richard Fuller: No, I do not agree. I believe that they do so because they have in their hearts a sense of public service, and the Bill offers a much better, more secure way for them to fulfil their sense of public service obligation by securing a stronger foundation for the Royal Mail Group. In addition, it contains groundbreaking provisions that extend the principles of employee participation and employee ownership, which are most welcome.
I know that I disagree with the CWU about Government ownership, and in its most recent note it listed some of the things that could happen under continued Government ownership. It stated that the Post Office could move to be more profitable, raise commercial loans or enable the relaxation of competition. Those things could happen, but they could have happened in the past and did not.
What is the legacy of Government ownership of the institution of the Royal Mail Group? It is a revolving door of, let us face it, not particularly competent management until the recent past; a crippling burden of unfunded pension liabilities; and a delay of more than 18 months in giving management access to capital. Those things have held back the Royal Mail Group, so Government ownership is not the answer. The right hon. Member for Southampton, Itchen (Mr Denham) made the assertion, with which I do not agree, that the case for private ownership has not been made. I would say that the case for ending Government ownership has truly been made.
I believe that the CWU and workers now need to look forward at how we can use the Bill to extend further the principle of employee participation, and how we can continue to make it the groundbreaking legislation that many Members of all parties would like it to become. Let us ensure that employee ownership, which the Minister rightly said can be at a minimum of 10%, can truly be a model for how that principle should continue. The mutualisation of the Post Office should be thought through so that long-term business interests are secured when people put their own capital into a business to fulfil a service obligation to the people of this country.
Most importantly, as the Minister goes through the process of looking for the future owners of the business, with the participation of the CWU and the workers' representatives, it is crucial that he stresses that the management, with the unions, must secure another groundbreaking modernisation programme. That is an absolute pre-requisite if any future owner is to secure a bright future for the Royal Mail Group as it goes forward and meets the challenges of the years ahead.
I am sure that no one in the Chamber would accuse we Scots of being parochial, but I wish to take a moment to thank the posties of East Lothian, who delivered the Christmas mail in the most difficult of circumstances. Even more locally, I thank my own postie, who delivered my Scottish Affairs Committee papers and, I am sure, would have been pleased with the report contained in his delivery.
It is sad that this place has made one so young so cynical so quickly. I have had to learn a whole new language, because this Government speak in code. I could almost hear the theme tune from "Born Free" as the Minister spoke about setting free the Royal Mail.
This is a Government who do not believe in public service. When my hon. Friend the Member for Edinburgh South (Ian Murray) asked the Minister to provide assurances that no post offices would close as a result of the measures in the Bill, I once again learned that Ministers often do not answer the questions put to them. This is an issue of genuine concern to my constituents, but there is nothing in the Bill to reassure them. This is shotgun legislation from an adulterous coalition. There may be no programme of post office closures, but I am sure that post offices will close. I am sure that the Minister must have a trumpeter's lip by now, because he has been blowing his own trumpet all day, talking about "post office local" and how he has no plans for vans, but there were no plans to raise VAT, so I am not going to take that as a promise.
Mr David Winnick (Walsall North) (Lab): Much has been said, and rightly so, about the Government's decision to end the education maintenance allowance. This debate relates purely and simply to my constituency, however; it addresses the impact that the abolition of EMA will have on Walsall North.
We should be quite clear that those 16 to 19-year-olds who are eligible for the allowance come from households that would certainly be considered to have low and, at most, medium incomes. The full benefit is £30 a week, which is not a very large sum, but it is very useful for those who take it up. In order to receive that full benefit, the person concerned would need to come from a household whose gross income is under £21,000. To receive £20 weekly, they would need to come from a household whose income is between £20,818 and £25,521. To receive £10 a week, the household income-gross, I again emphasise-would need to be between £25,522 and £30,810. Since EMA was introduced, there has never been any allowance for those from families whose income is above £30,810. We know the sorts of households that will be affected, therefore. The pupils involved would, understandably, be under some financial pressure. In some instances, they could well be under pressure to leave school at the first opportunity.
EMA was introduced by the Labour Government to encourage such pupils to stay on at school beyond the compulsory school leaving age. We should bear it in mind that it is almost taken for granted that the sons and daughters of MPs and other people earning a reasonable sum will carry on their schooling beyond 16. There are exceptions, but they are very much the exception. We should therefore be clear about the people we are talking about in this debate.
The purpose of EMA is not only to encourage pupils to stay on at school beyond 16; it is also to give them some financial assistance. Although £30 a week may not seem much, it is certainly a help. It helps pay for fares, food and other costs, and it comes in very handy.
I decided to write to the heads of the secondary schools in my constituency and Walsall college to find out the proportion of their students who are in receipt of EMA. Let me give some of the figures from the replies I received. The head of Willenhall school sports college stated in her reply to me that 63% of those in the sixth form received EMA. The figure for Pool Hayes arts and community school is 57%; for Frank F. Harrison engineering college, it is higher, at 75%; and for Walsall academy it is 51%.
Valerie Vaz (Walsall South) (Lab): I congratulate my hon. Friend on securing this debate on what is such an important issue for Walsall. Does he agree that while cuts to EMA affect all communities, they hit the Asian community hardest, because the Pakistani community has a take-up of 77%, and the Bangladeshi community has a take-up of 88%?
"Walsall College provides education and training for the largest number of young people in the...borough".
The college has 2,136 pupils-slightly more than 58%-in receipt of EMA. I said that these figures and percentages are not surprising because the annual income in my borough is about £21,000. Obviously I am pleased that these pupils are staying on, and I am sure that my hon. Friend would say the same about the pupils in her constituency. Many of them are likely to be the first generation in their family to continue in education beyond the school leaving age. I would have thought that we should use every means to try to persuade youngsters, particularly those to whom I have just referred, who might leave school at the first opportunity, to stay on. I would have thought that we should also give them some financial support. That is why I, like my hon. and right hon. Friends, think that the introduction of EMA was a welcome step.
What will be the position of those currently in receipt of EMA who will not have completed their course and will not be at the maximum age of 19 by the end of this academic year? They had no warning that EMA was coming to an end; they were certainly given none by the Conservative party when it was in opposition. The Prime Minister denied that EMA was going to go when he was Leader of the Opposition. What will happen to these students at the college and at secondary schools in my constituency and elsewhere? They will certainly feel that they have been left in the lurch.
All those who replied to me-the heads of the schools and the college principal-expressed much concern about what will follow the abolition of EMA. The Minister is almost certainly going to emphasise that a substitute is being put forward: the enhanced discretionary learner support fund. However, there is not much doubt that all the evidence indicates that the total amount of central Government money-the only money involved is central Government EMA and what I have just mentioned-will be much more limited than under EMA. That is the justification for getting rid of EMA.
Mr Winnick: One does not normally give way, given the very limited time available and the fact that the Minister should have adequate time to reply. That is the normal parliamentary procedure, but if the hon. Gentleman is so desperate, so be it.
Gavin Williamson: I greatly thank the hon. Gentleman, my constituency neighbour, for giving way. Does he not accept that EMA is a very flawed system and does not take into account families' current needs because it actually looks at the last tax year? It never dealt with a lot of people-for example, families where the main income earner had lost their job. It is a truly flawed system.
Mr Winnick: The figures on household gross income show that, without any doubt, those who receive EMA come from households with a much more limited income than us and than those who earn much more than Members of Parliament and so on. I have given all the reasons why EMA was justified and why I would like it to continue.
What the heads particularly emphasised in their replies to me, apart from their concern about the abolition of EMA, was that there is a possibility-perhaps it is more than that-that under the substitute they will be in the rather invidious position of deciding which of the pupils staying on beyond 16 should receive the financial help, limited is it will be. At the moment, of course, the school is not involved. The school or college is only involved over attendance, ensuring that those who receive EMA attend. If they do not, they lose the allowance, and rightly so.
Jim Shannon (Strangford) (DUP): I congratulate the hon. Gentleman on securing the debate tonight. It is a very important issue for a great many of us. The situation in Walsall is replicated in other constituencies, including Strangford. There are more students than ever in this financial year, more courses than ever and a greater demand for EMA. I support the point that he is making, but does he agree that the largest number of people who will be affected will be those who can least afford it?
"are primarily drawn from the poorest parts of the Borough. This financial support has enabled parents to encourage their children to stay on in education and training, where previously they would have encouraged them to take low paid employment rather than fund their studies."
"Unless we see a significant rise in our DLSF to offset the reduction in EMA, we will undoubtedly see a reduction in enrolments from learners from the poorest families."
"If we do not support our young residents to become skilled, professional and enterprising by supporting them to access and remain in high quality post 16 education and training,"
"will never achieve its ambitions for regeneration and sustainable prosperity."
I hope-although it is rather optimistic for me to do so-that even at this late stage, Ministers will reconsider the position and recognise that there is a great deal of justification for continuing with EMA. The argument has been paraded before and will be again-I understand that there is a debate on this subject of a national character next week-that, in the main, those who are eligible for EMA would stay on all the same. I question that, but again I come back to the point that I made earlier. Even if that were so-I do not accept it for one moment-is it not right to give a modest sum, and this is a pretty modest sum, of £30 weekly to those who come from low-income households? Is it not right to
give some help to those who would otherwise be short of financial assistance in carrying on their education? Is it wrong? Is it some sort of crime to give this sum-£30 a week? I find that difficult to believe.
I do not want to make too much of it, but if we look at the Cabinet and at where they were educated and where it is quite likely that their children will be educated, we know that those children will not receive EMA. If someone comes from a prosperous household, they know full well that there will not be any financial difficulties in their staying on in education right up past university. I am dealing with constituents, and their children, from a very different background. I, like my hon. Friend the Member for Walsall South (Valerie Vaz), want to do everything in my power to encourage the 16 to 19-year-olds who would otherwise leave school at the first opportunity to continue in education for all the reasons that we know are so important: for their future and for the future of our country.
The Minister of State, Department for Education (Mr Nick Gibb): I congratulate the hon. Member for Walsall North (Mr Winnick) on securing the debate. I know that he cares passionately about supporting young people in continuing their education, as he said in his closing remarks, and we on the Government side share that passion, as do I personally.
The context to this debate is the state of the public finances, with spending outstripping income to the tune of £156 billion a year. Capital markets no longer regard sovereign debt as being risk-free, particularly for countries such as Ireland and Greece that have huge structural deficits. It is to avoid that fate that the Government have had to take difficult decisions to tackle our structural deficit, which is the highest in the G20. We pay £120 million in interest charges and the independent Office for Budget Responsibility reports that if no further action to tackle the deficit were taken, interest payments would rise to a staggering £67 billion a year by 2014-15. That is almost two years' worth of the total spending on all the schools in England-twice what we spend on the salaries of all the teachers in England and twice what we spend on running all the state schools in the country-just to pay interest on the debt.
That is all assuming that the capital markets would be willing to lend us those huge sums, but the experience of Greece and Ireland demonstrates that they might not and that if they did it would be at significant cost.
Mr Gibb: I shall explain how it fits in with tackling the deficit. The longer our economy languishes in crisis, the later the economic recovery and the later we have the jobs that are so desperately needed, particularly for young people, including the young people about whom the hon. Gentleman is concerned in his constituency. It is young people who bear the brunt of a stagnant economy as companies freeze recruitment. We do not want to be in the position of the economies of Ireland and Greece, which stumble and teeter from crisis to crisis, so that their economies are not revived and their young people bear the brunt of their economic crises.
Our starting point was that this £560 million spending programme had to be in the scope of spending review decisions. The research of the National Foundation for Educational Research that was commissioned and published by the previous Labour Administration showed that about 90% of EMA recipients would have stayed on after the age of 16 even if they had not received EMA. In making changes to EMA, we were determined that the 10% or 12% of students who might be prevented from staying on in education because of financial difficulties should be helped.
I understand the concerns of the hon. Gentleman and the college principals whom he quoted. He mentioned Walsall college, at which 2,136 students receive EMA-58% of the students there. That percentage is significantly above the national figure for EMA recipients, which is 45% of the national cohort. In Walsall as a whole, 4,182 students are receiving EMA in this academic year. We share his concern about those students, which is why we have decided to use a portion of the EMA budget to increase funding to the discretionary learner support fund, which is used to support those who have financial difficulties. Final decisions about the quantum of that extra funding have still to be taken, but we have spoken of a value of up to three times the current value of the fund, which is now at £25.4 million.
Mr Winnick: Let me ask two questions. First, what will be the position of those who continue to receive EMA who have not finished their studies and who would have continued to receive it as their studies continued? Secondly, will schools be involved in deciding who should receive the funding the Minister just mentioned?
A fund of the size I was talking about would enable 100,000 young people to receive £760 a year-about 15% of the number of students currently receiving EMA. That £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 receiving the full £30 a week or the £796 paid to 17-year-olds receiving the full £30 a week.
The Government will not set expectations for how much young people should receive from the enhanced discretionary fund. It will be up to schools and colleges themselves to determine which young people will receive support under the new arrangements, and what form that support should take. We are currently consulting on how the fund will be administered and disbursed, with the National Union of Students, the Association of Colleges, students from Northamptonshire college and a whole range of other stakeholders-head teachers and colleges involved with the original trial areas for raising the participation age in education or training. We are working with my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) in
his role as advocate for access to education for the most disadvantaged young people.
We shall not dictate to schools and colleges how they should use the fund. It is discretionary, and schools and colleges will have the flexibility to allocate it in ways that best meet the needs of their students-for example, on how much young people will receive. [ Interruption. ] I do not think that is invidious.
Mr Winnick: It is invidious to the extent that schools do not decide about EMA, but now they will apparently need to make a judgment. As one of the heads replied to me, it is not the role of heads to decide whether A, B, C or D or X, Y or Z should receive financial support. I am sure my hon. Friend the Member for Walsall South (Valerie Vaz) agrees. That should be outside the professional role of a teacher or head teacher. The way that the whole scheme is being planned is unfortunate, to say the least.
Mr Gibb: We are consulting on the issues right now. At present, a £25 million discretionary support fund is being distributed by college principals and head teachers with sixth forms. Principals who do that work do not regard it as invidious.
The enhanced discretionary funding will not be an EMA and it will not necessarily be paid in the form of a weekly allowance. Current discretionary support is often provided in the form of books or equipment, or payment for field trips. We know that discretionary support works because discretionary learner support funds are already used very successfully in schools and colleges. They allow the professionals who actually work with students to decide what type of support the young person needs to stay in education. Colleges value the
fund because they can provide support to the young people they consider to be most in need.
The hon. Gentleman did not mention transportation, but it is a concern of students in many areas. I emphasise that local authorities have a statutory duty to ensure that no young person in their area is prevented from attending education post-16 because of a lack of transport or support for it. If that duty is not being met, young people and families should raise that matter with local authorities, but they were never expected to use a significant proportion of their EMA to pay for transport costs. Under the current arrangements for discretionary support funding, EMA cannot be used routinely for transport to and from college, because local authorities have that responsibility, but we will consider flexibility in that restriction as we develop the arrangements for the enhanced discretionary learner support fund.
In today's economic climate, we have a duty to ensure that we continue to invest where investment is needed and to get the best possible value for taxpayers' money. We cannot justify spending more than £560 million a year on an allowance when 90% of its recipients would have stayed on in education even if they did not receive it. Of course, we want all young people to benefit from post-16 education. We are committed to full participation for all young people up to the age of 18 by 2015, but a payment designed as an incentive to participate is no longer the right way to ensure that those who face real financial hardship and barriers to participation get the support that they need. That is why we have looked again at the most effective way to support the most vulnerable young people to stay on in education.