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Westminster Hall

Tuesday 8 February 2011

[Mrs Linda Riordan in the Chair]

Independent Debt Advice

Motion made, and Question proposed, That the sitting be now adjourned.-(Angela Watkinson.)

9.30 am

Yvonne Fovargue (Makerfield) (Lab): I am pleased to have secured this important debate and to serve under your chairmanship, Mrs Riordan.

Research from Money Advice Trust suggests that at any given time up to 5 million people report being in arrears with consumer credit and mortgage payments or find that their credit commitments are an unsustainable burden. However, planned cuts to funding will significantly reduce the capacity of independent advice agencies to assist such people, which could result in potentially serious consequences both to the individual and the state.

I shall quote an example from my local citizens advice bureau in Wigan. John-not his real name-was receiving numerous letters from creditors. He came for assistance when his debts were beginning to get on top of him. He had even mentioned suicide. His community psychiatric nurse was concerned that the increasing pressure from his creditors was causing further harm to John's mental health. An urgent home visit was arranged. A specialist debt adviser went through John's benefits and discussed his options. John had wrongly believed that bailiffs could take all his goods and that he could be imprisoned and evicted. Time was taken to reassure him and to go through both his options and rights, and those of his creditors. He decided that bankruptcy would be the right option for him. The adviser completed the forms and accompanied John to court. The creditors can now no longer contact him. Moreover, the adviser helped to reinstate John's benefit entitlement, which had been the reason why he got into debt in the first place.

John now needs less input from his care co-ordinator. He said, "I was in a real state, but I am now no longer afraid to answer the telephone, open my door or open my post." John needed face-to-face advice to help deal with his problem. Without it, he would still be a suicide risk, living in isolation and fear.

More than 500 specialist advisers in independent local advice agencies are funded by the financial inclusion fund. Since 2006, more than 380,000 people have been helped to manage debt worth more than £6 billion in an extensive network of outreach settings, community centres, GP practices and Sure Start units. People who do not normally feel comfortable about seeking advice are able to go to such centres and speak in a place where they feel comfortable.

The CAB service managed the largest proportion of that funding, and it supports 338 advisers in local bureaux. Loss of the funding reduces the capacity of
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the CAB service by more than 70,000 cases a year, which is a cut in casework capacity of between 40% and 50%.

Tim Farron (Westmorland and Lonsdale) (LD): I thank the hon. Lady for being generous so early in her remarks. I completely agree with everything that she has said. The financial inclusion fund is of immense importance to my citizens advice bureaux in South Lakes. Most people think that the CAB is a state service; they do not realise that it is a charity, and that its ability to raise funds from other sources is incredibly limited. The fund is critical to its survival and to its ability to help people who are often in the most desperate circumstances.

Yvonne Fovargue: I totally agree. Having worked for a CAB, I know that people are extremely confused about where the funding comes from. The organisation gets very few donations. The depth of its service is often misunderstood as well. I have heard people say, "Oh, CAB, they tell people where to go." We did not often do that.

Chris Ruane (Vale of Clwyd) (Lab): My hon. Friend has given us some of the current statistics. Looking ahead over the next few years when hundreds of thousands of public sector workers will be sacked by the Conservatives and Liberal Democrats, what burden does she think that will place on Citizens Advice? In my constituency of Vale of Clwyd, some 50% of workers are in the public sector, about 4,000 of whom may be laid off. What effect will that have on citizens advice bureaux in my constituency and elsewhere?

Yvonne Fovargue: Indeed, over the past year, the number of debt clients seen by the CAB has risen by 23%, and a significant increase is expected in the next few years as well, so the loss of skilled advisers in local bureaux will have a catastrophic effect. It is essential that local links are retained. The trust that has been built up between local agencies, such as that between the bureau and the local authority council tax collection department, will be lost, to the detriment of local people who are struggling to pay. St Helen's citizens advice bureau had regular meetings with the head of finance and the bailiffs to discuss tactics and to raise issues from clients' experiences. It developed a protocol to assist residents, particularly those entering employment who found that all their creditors immediately descended on them, causing quite a number to leave work, feeling that they were better off on benefits, despite their increased income, because their debts had come back to haunt them.

Kate Green (Stretford and Urmston) (Lab): Does my hon. Friend not agree that debt problems often come with clusters of other problems, including some related to employment and welfare benefits, as she suggested? Is it not therefore regrettable that neither legal aid funding, which we have previously been able to look to, nor-now-funding for debt advice will be available to support people with a multiplicity of difficulties?

Yvonne Fovargue: I completely agree. The idea that there were clusters of problems was identified at least 10 years ago. The legal aid cluster of social welfare law was developed so that the person could be addressed as a whole and not just seen as a set of individual problems.

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A national telephone advice system could not help with our current problem of debt. Local knowledge, particularly about bailiffs, is vital. That was evidenced on Saturday in an article in The Times, which highlighted the different practices of bailiffs employed by neighbouring local authorities. The cuts cannot, however, be taken in isolation, as my hon. Friend pointed out. The consultation paper on legal aid proposes to remove debt from scope for all cases except those with an

That flies in the face of all the research demonstrating that early and timely intervention is crucial and actually saves the public purse money. For every £1 of expenditure on debt advice, the state potentially saves £2.98. Indeed the figure could be higher, particularly for the NHS.

Last Thursday in the Chamber, I mentioned a project that had been funded by my local primary care trust, which I managed until last May. It measured stress levels on a recognised NHS scale before and after the debt advice process. In the first nine months of the project, the PCT estimated that three suicides had been prevented. The project was a finalist for a national NHS innovation award due to its low cost and good outcomes for clients and the NHS.

Local authorities are also cutting the amount of money available for advice. The CAB in England and Wales faces an expected cut of 10% in 2011-12. If that is factored in with cuts to the financial inclusion fund and the proposed changes in legal aid from 2012, local bureaux can expect, on average, a 45% cut in funding.

Mr Dave Watts (St Helens North) (Lab): With the cuts that we are seeing right across the spectrum, whether in local government or, in my case, the PCT, which part funds some of the posts in CABs in my area, does my hon. Friend agree that the only way to resolve the matter is for the Government to make a direct grant to citizens advice bureaux so that they can handle the massive increase in demand caused by the cuts imposed by the Tories and the Liberal Democrats?

Yvonne Fovargue: I have long been a supporter of a statutory duty to fund advice services, and I still believe that it is the only way in which the absolute importance of advice can be highlighted to local government and other funders. The cut to debt advice funding and the proposed cuts to local authorities and legal aid will be felt most significantly in urban areas, which have the greatest numbers of clients. To whom are those people expected to turn for advice on their debts?

The Government have announced their intention to establish a national money advice service to deliver free financial advice and an annual financial health check to provide people with a holistic overview of their finances.

Mr Mark Williams (Ceredigion) (LD): I am grateful to the hon. Lady for giving way and I congratulate her on securing the debate. I think that she will agree that it would be wrong to characterise the issue as simply an urban issue. Rural areas in west Wales, such as my constituency, are served by only two citizens advice bureaux. She is right to highlight the cuts that such bureaux will suffer; those cuts will make access to the existing services even more difficult for people.

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Yvonne Fovargue: I thank the hon. Gentleman for that intervention. I agree. There are already "advice deserts" and people in rural areas already have difficulty getting access to face-to-face advice. They have to travel long distances to get it. These cuts will only make that situation worse.

I welcome any expansion of financial education but I would like the Minister to answer two questions. First, where will people who are identified as being in debt by the financial health check offered by the national money advice service go, as the number of local debt advisers will be dramatically reduced-to nil in many cases?

Mr Chuka Umunna (Streatham) (Lab): I congratulate my hon. Friend on securing this debate. Merton and Lambeth citizens advice bureau operates in my constituency. We have one caseworker, who we are to lose as a result of what the Government are doing. That caseworker has dealt with more than 400 debt advice queries. I asked what the effects of their loss would be and Merton and Lambeth CAB was very clear: without that debt adviser there will be nowhere else for people to go. Does my hon. Friend agree that that situation will be repeated up and down the country?

Yvonne Fovargue: I thank my hon. Friend for that intervention. I completely agree. I will come to the issue of where people are likely to go in the future.

Mrs Jenny Chapman (Darlington) (Lab): I am very grateful to my hon. Friend for giving way and I too congratulate her on securing this debate. On the issue of where people will go for their debt advice, I suspect that they will have somewhere to go, which will be into the arms of fee-charging providers who advertise their services and, according to the Office of Fair Trading, mercilessly use every opportunity to recruit people inappropriately to use their services.

Yvonne Fovargue: I thank my hon. Friend for that intervention; I will come to the issue of fee-paying debt management companies shortly.

As I was saying, I have a second question for the Minister. Does he expect financial education to eradicate the need for debt advice in the future? It is my experience that most people fall into debt due to unplanned events, for example bereavement, illness or the loss of a job. People do not plan to get into debt, and borrowing is only debt when people cannot afford to pay the money back. At such stressful times in people's lives as dealing with a bereavement or an illness, timely advice is vital. Indeed, one of the most distressing cases that I have dealt with personally was that of a family who had a child with a severe disability. They received all the disability and carers' benefits, and they had taken out loans to adapt their home and car to enable their daughter to be cared for at home rather than in residential care. However, she died suddenly and unexpectedly, and they were left on vastly reduced benefits and facing a high level of debt.

Where are those people to go in the future? Like my hon. Friend the Member for Darlington (Mrs Chapman), I fear that they will be thrust into the clutches of the fee-charging debt management companies, the same companies that the OFT found flouted debt management guidelines by misrepresenting their services as free when
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they are not free. The OFT also reported that many front-line advisers working for those companies lacked competence and provided poor advice based on inadequate information. Unfortunately, urgent action was not taken to address the problem and the issue is now being considered as part of the consumer credit and personal insolvency review. Unless action on the regulation of debt management schemes is fast-tracked, it is very unlikely that the necessary protections will be in place until autumn 2011 at the earliest, if they are put in place at all.

Vulnerable people should not be put into the position of paying unregulated and often incompetent providers to deal with the fact that they do not have enough money to pay their bills. The situation is becoming more urgent daily, with more and more advice agencies closing their door to new debt clients, so I urge the Minister to consider extending the financial inclusion fund programme until the review of advice services is complete, or to provide sufficient alternative funding for free face-to-face debt advice to continue in local agencies. Not to do either of those things will have a great cost-both in human terms and for the state.

9.44 am

Lorely Burt (Solihull) (LD): I congratulate the hon. Member for Makerfield (Yvonne Fovargue) on securing this very important debate. To some extent, it follows on from the Opposition-day debate that we had in the main Chamber last week.

Obviously, everyone in this room wants to see the same thing. We want to see a fair and open system of financial support for people who get themselves into financial difficulty. I know personally that the National Association of Citizens Advice Bureaux is a wonderful organisation. It took on the role of providing specialist debt management advice and it has done a really good job. So I share the hon. Lady's concern regarding the financial inclusion fund.

Local authority cuts will mean that the citizens advice bureaux will not have as much support as they have had. That is having a drastic effect in my own region, the west midlands, where all five bureaux are destined to be closed. I hope very much that the Minister will be able to intervene in some way to ensure that that vital service for the Birmingham area is maintained. In Solihull, we have faced cuts to our citizens advice bureaux before and we have managed to survive them.

Ian Austin (Dudley North) (Lab): I am grateful to the hon. Lady for giving way, but I must say that it is not good enough for Liberal Democrat MPs to come along to these debates and complain about what this Government are doing while they are supporting them. What has she said to Ministers? Has she threatened not to support the Government's proposals? Has she told them that if these cuts go ahead she will not vote for something else that they are proposing? What have she and her colleagues done to try to prevent these cuts from happening?

Lorely Burt: I am glad that the hon. Gentleman made that intervention, because his Government caused cuts to be made to citizens advice bureaux. It is how the Government manage that is important. He asks what I have done and I will tell him. I have worked quite considerably on the issue of debt. In fact, I advise the
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Government and I am putting in my help and advice, as much as I can, to Government. That is what Governments do and that is what responsible coalition Governments do. We can make our points independently as Liberal Democrats, but we support what the Government are doing because of the financial situation that the hon. Gentleman's Government left us in and everyone has to bear a share of the pain.

Several hon. Members rose-

Lorely Burt: I would rather move on than talk about things other than the subject that we are here to discuss today, which is citizens advice bureaux and debt management.

Chris Ruane: Deeds, not words.

Lorely Burt: Despite the heckling from a sedentary position, I will continue.

In 2009-10, citizens advice bureaux experienced a 23% rise in demand for their services. Of the queries that they dealt with, 150,000 were about quite complex debt problems, as outlined by the hon. Member for Makerfield. It is estimated that the loss of the financial inclusion fund reduces the debt advice capacity of citizens advice bureaux by 40% to 50%. So I am looking forward to hearing from the Minister today about what steps are being taken, particularly in relation to the national money advice service and how that service will help people and make up the shortfall.

Kate Green: Will the hon. Lady give way on that point?

Lorely Burt: If the hon. Lady will forgive me, I will not give way.

So how will the citizens advice bureaux replace that loss of support, because as I said we have faced such losses before? In relation to Birmingham, I am hopeful that the Minister will have some good news.

I also wanted to pick up on what the hon. Member for Makerfield said about debt management companies. I am absolutely delighted-as I am sure she is-that the licences of a number of debt management companies were withdrawn by the OFT. I think that 42 companies in all had their licences withdrawn. Those companies can lead to a spiral of debt. Some debt management companies operate free of charge to the recipient. They do that because they are able to be paid by the creditors. It is much better if those who stand to gain pay, rather than those who stand to lose.

The spiral of debt that comes with companies that charge up front is clear. Two months' repayments are made up front, the company promises to get creditors off people's backs, but often that does not happen and six months later the company says, "We're very sorry, but we can't do anything for you now. We think you should file for bankruptcy." They then charge for bankruptcy, and the spiral continues.

Mr Umunna: In many respects, is not the hon. Lady seeking to face two ways at once? She makes these welcome comments on unscrupulous lenders, but she failed to vote in favour of the motion that was tabled by my hon. Friend the Member for Walthamstow (Stella
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Creasy) last Thursday. She says that she agrees with my hon. Friend the Member for Makerfield (Yvonne Fovargue), yet she refuses to vote against the measures to abolish the financial inclusion fund. The money will run out in March, so will she vote against the Budget if it does not reinstate the funding?

Lorely Burt: I was deeply disappointed by last week's debate. In her last sentence, the hon. Member for Walthamstow (Stella Creasy) accused the coalition Government of being in the pocket of loan sharks. If any hon. Members imagine that we will vote for being castigated in that way, I am afraid that they have another thing coming. [Interruption.]

Mrs Linda Riordan (in the Chair): Order.

Lorely Burt: I am seeking to be helpful, and am not facing two ways at once.

Tim Farron: My hon. Friend is generous to let me butt in. Perhaps I could help Opposition Members. They spent 13 years in power towing the line and voting for things such as cuts in CAB funding-as they did in South Lakeland-and they do not seem to understand that it is entirely possible to be within a Government and at times be a critical friend instead of constantly being told what to think.

Lorely Burt: I am extremely grateful to my hon. Friend. [Interruption.]

Mrs Linda Riordan (in the Chair): Order. Can we listen to the hon. Lady and let her speak?

Lorely Burt: Thank you, Mrs Riordan, I am grateful.

I am disappointed with Opposition Members. I am sure that there must have been moments, in the 13 years during which they built up the biggest structural deficit in the G8, when it occurred to them that perhaps their Government were not going in exactly the right direction. We are a united coalition Government-[Laughter.] Opposition Members may laugh, but we are seeking to work together to help people in bad financial situations, situations that have been hugely exacerbated by the actions over 13 years of Members who are now in opposition.

In conclusion, I very much welcome the national money advice service. I ask the Minister: how will it help, and how will the Government help CABs to manage the shortfall caused by local authority cuts, and the cut in the financial inclusion fund?

9.54 am

Catherine McKinnell (Newcastle upon Tyne North) (Lab): I congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this very important debate. I am extremely concerned about the ending of the financial inclusion funding, as is my local CAB, which has asked me to put forward some of its sincere concerns about the proposals.

There was a record number of insolvencies in England and Wales in 2010, which was an increase of 0.7% on the previous year. The 2010 figures have not yet been
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broken down by constituency, but in 2009 my constituency of Newcastle upon Tyne North had the highest rate of personal insolvencies in England and Wales, closely followed by North Tyneside, Newcastle upon Tyne Central and Newcastle upon Tyne East, in that order. Furthermore, the top 11 constituencies for personal insolvencies all fall within the north-east of England. I want to convey to the Minister that those are not just figures; they are real people with real lives. We all know that debt can expose vulnerable people to the threat of homelessness, to bailiffs seizing their possessions, and to the loss of essential services and even their liberty. Therefore, having access to free, confidential and trustworthy debt advice is absolutely fundamental.

As my hon. Friend the Member for Makerfield set out in detail, the financial inclusion fund was established in 2004 by the previous Labour Government to support fact-to-face debt advice services, in areas of deprivation where there had been difficulty in accessing debt advice. At Newcastle citizens advice bureau there are eight full and part-time debt advice workers whose work has been supported by the financial inclusion fund, and in 2010 they supported more than 1,000 local people in relation to £14.3 million of personal debt. I was shocked by those figures. In the last quarter of that year alone, the service saw more than 300 clients, which was the highest number in the history of the project in Newcastle; the appalling weather at that time did not prevent people from getting to their CAB for help. However, as a result of the coalition's decision to end the financial inclusion fund, there is huge uncertainty about what will replace it. On 4 February, the CAB stopped offering advice supported by the financial inclusion fund.

Paul Blomfield (Sheffield Central) (Lab): There are many similarities between the city of Newcastle and the city of Sheffield, which I represent. We have 12 specialist face-to-face debt advisers supported through the financial inclusion fund, and they process similarly staggering amounts of debt casework. During 2009-10, which is the last full year for which information is available, they dealt with £25.6 million of debt. Crucially, they prevented the loss of homes for 110 clients, through negotiation with lenders and landlords, or through interventions in county courts, and successfully negotiated 655 payment plans. Does my hon. Friend agree that the withdrawal of the financial inclusion fund, which will mean that all those posts in Sheffield will disappear and all that help will go, is a particularly callous decision at a time when debt is rising as a result of this Government's policies?

Catherine McKinnell: I strongly agree; that is precisely the point that I want to make today. With no news of any funding beyond March, the service in Newcastle is winding down, and so are bureaux right across Tyne and Wear. The situation is deeply worrying because of the personal insolvency figures and also because people, particularly in places such as the north-east where more than 50% of the population is employed in the public sector, will find themselves in even more worrying financial circumstances.

Ian Austin: Areas such as my hon. Friend's constituency and mine, which have been hardest hit by the recession and are taking the longest to recover, will be most affected by the cut. In the west midlands, 62 staff are employed as a result of the financial inclusion fund,
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including five at the CAB in Dudley, and the staff there told me that it is hard-pressed families, the most vulnerable and people with learning difficulties who have got themselves into debt, who rely most heavily on the services. They also told me that their clients will have absolutely nowhere to go if the funding provided by the financial inclusion fund is withdrawn.

Catherine McKinnell: I thank my hon. Friend for reiterating the point that I am trying to make, which is that the cut is ill thought through and ill-timed for places facing an uncertain financial future. Unemployment in the north-east is rising, youth unemployment is at a record high and one in three young people in my constituency are out of work, compared with one in five nationally. At the same time, public sector workers face redundancy, the VAT rise and increasing fuel and energy prices. People will only get into more financial difficulty. It is shocking that at a time when increased demand on personal debt advice services is inevitable, funding for those services should be cut. It is also of concern that we are likely to lose highly skilled and trained staff who have built up a wealth of knowledge and expertise in helping people. Eight staff members in Newcastle are being made redundant, which is deeply worrying and shocking.

As I am sure the Minister is aware, in February 2010, the National Audit Office concluded that the face-to-face debt advice funded by the financial inclusion fund delivered good value for money. Indeed, the NAO found that the financial inclusion fund project was helping more people at slightly less cost per person than originally planned, and that the advice given was well regarded by those receiving it. That has certainly been the case in Newcastle, where 90% of clients who filled out a feedback form said that they would recommend the citizens advice bureau debt advice service to somebody with debt.

I recently saw at first hand the excellent advice services provided by the CAB during a special advice service day at a local community centre in the west end of Newcastle, the area that suffers the highest levels of deprivation and personal bankruptcy. The CAB brought together a series of advice services under one roof and took them out into the communities suffering the most. It was an impressive and productive day, and I know that it helped an awful lot of people in my constituency.

Justin Tomlinson (North Swindon) (Con): I support that point. I did a similar joint exercise with the citizens advice bureau in my constituency, which trained my staff and me so that we, who are in some cases the first point of contact, could address the issues and work in conjunction with the CAB. I fully support that action.

Catherine McKinnell: I agree. I too have been working closely with the CAB and taking its advice. The difficulty is that the office is losing eight staff members and will struggle to provide the same level of service. The suggestion that such expertise and advice can be delivered by a Member of Parliament comes from cloud cuckoo land.

The advice service day exemplified the importance of the CAB's services and the fact that it can reach out to people. The CAB knows that people will not use telephone
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or online advice services. They need face-to-face, personal advice, because they cannot manage the paperwork and the complexity involved in dealing with debt issues.

For all those reasons, I have written to the Chancellor to urge him to rethink his decision or, if it is suggested that a fund continue, to ensure that face-to-face debt advice through the CAB continues to be properly funded. I believe, as I have said, that the problems in places such as Newcastle will only get worse; they must be seriously addressed.

10.3 am

Andrew Percy (Brigg and Goole) (Con): I pay tribute to the hon. Member for Makerfield (Yvonne Fovargue), who made her arguments in a consensual, sensible and detailed way, avoiding unnecessary party politicking. I congratulate her on securing this incredibly important debate. It is sad that a debate about debt has become a little too polarised at certain points, and that silly comments have been bandied back and forth. That does not help the people struggling with debts whom we should be here to protect. As important and emotive as the subject might be, reasonableness is key to making progress at all times.

On whether personal debt levels are rising, I must confess that I am not aware whether they are at the moment-I have seen suggestions in both directions-but we do know that personal debt levels have risen substantially over the past 10 years. I am not making a political point; I think that it is due to how society has changed. Debt is much more a part of our lives these days, which perhaps demonstrates why it is so important to have appropriate measures in place to protect people who cannot manage their debt. Managing debt is undoubtedly a reality of life now, and we as elected politicians must ensure that there are processes, procedures and services in place to protect people with debt.

I will comment specifically on the role of the financial inclusion fund in my constituency. I see that my friend the hon. Member for Scunthorpe (Nic Dakin) plans to speak, so I will leave it to him to deal in more detail with Scunthorpe citizens advice bureau, which serves a large part of my constituency. However, I will discuss East Yorkshire CAB, which provides services across Hull and the East Riding, including through a centre in Goole.

East Yorkshire CAB helped 13,600 clients in 2009-10, and it tells me that more than half of those cases involved debt management issues. During that period, it assisted with about £14.5 million in debt, which gives the scale of the problem that we face in this country. As other Members have said, CAB advises face to face, which is key. I note the comments of the hon. Member for Newcastle upon Tyne North (Catherine McKinnell). Like my hon. Friend Member for North Swindon (Justin Tomlinson), she and her staff have been trained in debt management. That is certainly something that I plan to do with my staff. People come to us with a range of complex issues, and the more we can skill up our staff, the better.

Mr Andy Slaughter (Hammersmith) (Lab): I have been going to a lot of law centres and citizens advice bureaux recently while considering legal aid cuts. The Mary Ward Legal Centre, which manages a big contract
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in London, is losing 57 debt advisers due to FIF cuts. Does the hon. Gentleman believe that it is realistic to think that training my three staff members and two caseworkers can replace the 500 expert staff across the country who are being cut? It is insulting people's intelligence to say so.

Andrew Percy: That is an absurd comment. It is not in the slightest what I was suggesting. I simply said that those of us in positions of responsibility should do whatever we can to help in the circumstances.

Several hon. Members rose-

Andrew Percy: Hon. Members should listen to what I have to say before jumping up and down. All that I am saying is that training our staff to assist people who come to us with a complex range of issues is important, and that part of that training might involve directing people to the most appropriate services.

Mr Slaughter: They will not be there any more.

Andrew Percy: Well, if the hon. Gentleman does not want to do that for his constituents, that is his choice. I certainly intend to do it for mine.

Ian Austin: Of course all Members of Parliament ensure that our staff can provide advice to constituents, but surely the best way to help the most vulnerable people who rely on those services is to ensure that those services are not cut. Government Members have come here to go on about how serious the problems are and how valuable the services are that CAB provide, so why are they queuing up to walk through the Lobby to support a Budget that will remove that assistance?

Andrew Percy: That proves again that Labour Members cannot understand what they did to this country. The reality of the situation is that whoever might have been in Government now-

Ian Austin: Will the hon. Gentleman give way?

Andrew Percy: No, let me finish. If the hon. Gentleman is going to make a point, he should at least have the courtesy to listen to the response. He was part of a Government that ran up massive debts that the coalition Government must repay. Tough decisions have been made, but even when we are not necessarily happy with some of those decisions, our job as coalition Members is to come here and make it clear what we think our constituents deserve. In saying what I have, that is exactly what I have tried to do. I am trying to support exactly the point that Opposition Members have been making, which is that we need face-to-face debt advice.

Mr Watts: The hon. Gentleman must have come across the same sort of cases that I have as an MP, in which people have been given bad advice. My worry about training someone for one day, or even one week, is that it will not provide the level of skills required to advise people in the best possible way. Bad advice is worse than no advice at all.

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Andrew Percy: I think we are getting bogged down by this. Training our staff and ourselves so that we can guide people in the correct direction for debt advice is probably more important now than ever, and that is the exact point that I was trying to make.

Justin Tomlinson: Will my hon. Friend give way?

Andrew Percy: We seem to be getting bogged down, but I will give way one more time before making some progress.

Justin Tomlinson: I thank my hon. Friend for giving way. In the spirit of trying to work together and helping Opposition Members, we need to be clear that this strengthens the argument for citizens advice bureaux. Help on the telephone and online cannot help provide training to other people who assist the most vulnerable. That supports the argument.

Andrew Percy: I thank my hon. Friend for that intervention. Perhaps Opposition Members will now reflect upon what some of us on this side of the Chamber are trying to do.

I shall move away from the help and assistance that I am trying to ensure that my staff are able to give people who contact me, and on to some of my concerns. The move away from a face-to-face debt advice service to a telephone or internet-based service has already been commented upon. I have bitter personal experience of debts. A few years ago, I tried to access assistance on some debts and, as much as I do not like to air my washing in public, it was incredibly difficult to access the correct advice on where to go with particular problems. I accrued debts through funding my postgraduate studies, as is the case with many people-in no way am I alone in that. [Interruption.] It was postgraduate education, which has had fees for a considerable number of years and is not affected by any current changes. It was incredibly difficult to access advice on where to go. As the hon. Member for Newcastle upon Tyne North has said, it is not always easy to interact properly with someone in a telephone conversation, and it is difficult to talk about one's personal financial situation. Talking with somebody over the telephone is no substitute whatsoever for talking with someone face to face.

In support of the point made by the hon. Member for Makerfield, when searching for debt advice, particularly online, it is unclear who provides it at a profit to themselves and who does not. If a company calls itself a national debt or advice helpline, the natural assumption is to conclude that it is a charity, when in fact, as others have commented, it is out to make profits from people's debts.

Mrs Chapman: Will the hon. Gentleman give way?

Andrew Percy: I will give way, because I know that the hon. Lady will make a reasonable and sensible point.

Mrs Chapman: I am grateful to the hon. Gentleman for giving way. Would he support a scheme similar to that in Scotland in which debt management advice is more carefully regulated and caps are used to regulate provision?

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Andrew Percy: We had an interesting debate about debt in the main Chamber last week. I was sorry that we could not get to the point where everybody was in agreement, even though I think that everyone was-the procedures and processes of this strange place meant that we ended up with a Division that we should not have had. We should certainly be looking at the way in which we manage people who want to put us into debt.

The issue has three parts. First, we need to deal with the companies that make money out of debt. They will always exist and, as I have said, that is part of life. Secondly, we need to deal with the sort of debt advice available to people who get themselves in trouble. Thirdly, we have to look at the provision for ensuring that people do not get into such a position in the first place. That is why the all-party parliamentary group on financial education for young people, which is chaired by my hon. Friend the Member for North Swindon, is so important. Only yesterday, I was at Goole high school and spoke to its deputy head about the delivery of financial education in schools and how he thinks we could roll it out nationally. That is certainly something in which I plan to play a big role in the all-party group, which he was so key in establishing.

In conclusion, it is not hypocrisy for us to say that people involved in citizens advice bureaux-

Ian Austin: It is.

Andrew Percy: I must say that, sometimes, the debate in this place is worse than when I taught year 1 last year-the children gave more sensible responses. I have tried to make an important point on behalf of my constituents and have ended up being heckled in a childish way on an issue that is so important to people outside this place.

The reason that I have taken part in this debate is to say that the work that my local debt advisers have been doing through the financial inclusion fund is incredibly important. I know that the Minister shares my huge concern about the issue, so how exactly will the system that we propose to implement work, and what is his response to the comments made by Members on both sides of the Chamber about the face-to-face element? We need to know more.

As I said at the beginning-I will end where I began-this is such an important issue. Managing debt is a part of life now and, unfortunately, people get themselves into debt simply by making bad choices, which we have all made in our lives. We have to make sure that the support available to them is appropriate. I end with that plea. I am less concerned about the mechanism and more concerned about what is actually delivered to my constituents. In my view, that requires some sort of face-to-face interaction, whoever that interaction is with.

10.16 am

Nic Dakin (Scunthorpe) (Lab): I apologise, Mrs Riordan, that I will have to leave before the debate's conclusion in order to attend a Public Bill Committee. I am pleased to follow my neighbour, the hon. Member for Brigg and Goole (Andrew Percy), and I welcome the concerns expressed by Members on both sides of the Chamber. Our analyses may differ, but that does not alter the fact that we share a common concern. The reason why we
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are taking part in this debate and why it is so well attended is to get answers from the Minister to the points so ably made by my hon. Friend the Member for Makerfield (Yvonne Fovargue), whom I congratulate on securing this timely and important debate.

We are in a time of falling growth, rising unemployment and rising prices fuelled by the VAT increase. That may well mean that, notwithstanding the past, more families and people are more likely to get into financial difficulties in the future. They are, therefore, in danger of becoming prey to organisations that take advantage of the financially vulnerable, putting desperate people into a state of greater desperation.

My hon. Friend the Member for Walthamstow (Stella Creasy) has done much already in this Parliament to raise awareness of the need to control the actions of loan sharks. We also need to ensure that accessible, independent debt advice remains available for people so that they can square up their affairs and remain healthy and effective in society. Statistics nationally show that demand for debt advice is already on the increase. Last year, Citizens Advice assisted 580,000 people with £2.4 million-worth of debt problems, which is an increase of 23% on the previous year. In addition, 1.4 million people-one in every 33 UK adults-received advice from charities such as National Debtline.

The financial inclusion fund was deliberately located in areas such as Scunthorpe to meet the needs of communities that had difficulty accessing debt advice. The vision was to create a step change in the availability of face-to-face debt advice services, and Members on both sides of the Chamber who have spoken so far have insisted upon the importance of those services in addressing the issues. Every year, the FIF debt advice services have directly helped more than 100,000 people nationally to resolve their debt problems. Audits and evaluations show that the services have been effective and well targeted at people who need such advice.

The situation in relation to the provision of independent debt advice in my Scunthorpe county constituency is particularly concerning, and I fear that it is typical of many other parts of the country. Some 200 people a year are currently being supported by FIF debt advice, and many of them have problems or communication needs that require face-to-face support for it to be effective.

An additional problem in the Scunthorpe area is that there is currently no legal service contract for debt advice, which exacerbates the problem for all advice agencies. The previous contract allowed for 400 new matter starts, or cases, per annum. The local firm of solicitors who provide this service tell me that all their clients were referred to them from other agencies, such as the CAB and North Lincolnshire Homes, which do not have the capacity to provide that advice themselves. To its credit, that solicitor's practice is providing advice on a pro bono basis, but that is clearly not sustainable.

Kate Green: Does my hon. Friend agree that a significant concern about solicitors providing debt and other forms of advice as part of a package is that the legal aid changes will narrow access to advice, so that it is given only when a family home is at risk? As we know, creditors like to negotiate the whole package of debt together, including mortgage debt and other personal
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debt. However, that will no longer be possible because we have no single funding stream through which all debt advice can be provided.

Nic Dakin: My hon. Friend is completely right. Early intervention in providing debt advice saves money, saves homes and saves lives. There is a real danger that the legal aid changes will exacerbate an already difficult problem. I hope that a new contract will be agreed in the Scunthorpe area, but when the contracts expire in 2014, no further debt advice of that sort will be provided locally.

Mr Slaughter: All welfare debt legal aid will be taken out of scope if the Green Paper's proposals go ahead. The financial inclusion fund provided a complementary service and was of a highly technical nature. Advice was provided on consumer credit, insolvency, mortgage arrears and other matters of that kind. The double-whammy of these cuts and the local authority cuts will be absolutely fatal to advice centres across the country. The type of advice provided shows that it is ludicrous for Government Members to say that the matter can in some way be picked up by amateurs. We are talking about highly technical issues that are for professional people to advise on.

Nic Dakin: I thank my hon. Friend. I think all hon. Members agree that these are specialist advice services with specialist staff. One of the points my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) made was about the danger of losing specialist expertise. That is another consequence I am sure nobody wants to see. In Scunthorpe, the part-time debt adviser at Crosby community association was withdrawn in December. The area is now losing the FIF debt advice, and the debt advice provided through legal aid is not in place. North Lincolnshire credit union does not provide debt advice, so the local situation is bleak.

As my hon. Friends have pointed out, there is a direct correlation between debt advice and ill health. My hon. Friend the Member for Makerfield mentioned the case study of John. Grant Thornton's recent study, "Psychology of Debt," demonstrated that one in two adults with debts have a mental health problem and one in four people with a mental health problem is also in debt. It is therefore clear that the time spent helping people to address their debt problems can help their overall health and well-being. Money spent by the Government on debt advice is likely to save money being spent on the health service. Research by Friends Provident found that the provision of free debt advice allowed creditors to recover in one year £1 billion more than they would otherwise have done.

Mr Watts: Will my hon. Friend give way?

Nic Dakin: I am about to finish.

Independent free debt advice is good for the individual, good for the public and private sectors and good for UK plc as a whole. I hope that the Minister will take this opportunity to spell out the Government's plans to ensure that independent debt advice remains available
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and accessible to all those who need it. It is crucial that the Government do not abandon people with debt problems at this time.

Several hon. Members rose-

Mrs Linda Riordan (in the Chair): Order. There are two more Members who wish to speak. If they both keep their comments to five or six minutes, I shall be able to call them both.

10.23 am

Chris White (Warwick and Leamington) (Con): I add my thanks to those given to the hon. Member for Makerfield (Yvonne Fovargue) for initiating a debate on an issue of massive concern for my constituents. As Members of Parliament, we often have to deal with constituents who, for one reason or another, have fallen into debt and are going through a difficult and distressing time. They need support and advice that is tailored to them directly because that can make the difference between getting back on track or falling off the rails completely.

I am sure that I speak for everyone in the Chamber when I say that one of the most important resources that we call on in our working lives is the local citizens advice bureau. I particularly call on the CAB in Warwick and Leamington, and I thank those who work for the CAB for their contribution to our local communities. Since becoming a Member of Parliament, I have been continually impressed by the work of my local citizens advice bureau, especially its professionalism and dedication. Through the CAB's work, individuals are able to get the support that they need, and consequently overcome the difficult situations in which they find themselves.

Last year, Warwickshire citizens advice bureaux helped nearly 26,000 individual clients and resolved more than 92,000 problems. Nearly 300 local people gave up their time to help Warwickshire CAB and they generated unpaid work worth nearly £1 million. At my local CAB for Warwick district, 5,000 local people were helped with around 22,000 problems. Around 80% of CAB work is taken up with debt, benefit, housing and employment issues. We simply cannot afford to lose that service. Reductions in funding will damage citizens advice bureaux across the country, particularly in south Warwickshire. Such cuts threaten to create an advice desert for those who have problems with debt and social welfare law. Thousands of individuals could be without the help of organisations such as the CAB, and they will be prevented from receiving the vital help that they need.

It is not as if citizens advice bureaux do not provide value for money. In Warwick district CAB, over the past year, just one money adviser dealt with 217 new clients who owed a total of more than £3 million-an average of more than £20,000 per client. The CAB has saved tens of millions of pounds in the long term and it has brought considerable benefit to local communities across the country by helping people to move forward with their lives and access the support that they need. There is a clear case for maintaining spending on such things, and it makes no financial sense to push problems from one place to another. People's problems will not go away merely because we stop funding help for them. Such problems will get worse, until the point when the
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state has to intervene in more expensive and intrusive ways. We are talking about a short-term saving at long-term expense.

Angela Smith (Penistone and Stocksbridge) (Lab): I am hugely enjoying the hon. Gentleman's speech. Does he agree that it is imperative that we do not lose the highly skilled and trained staff who are employed by the financial inclusion fund, because that too would be a short-term financial gain at the expense of a long-term loss to the service?

Chris White: I am trying to impress upon the Minister that these services need to continue and that they are important to our communities. It is important to make that case today. Again, I thank the hon. Member for Makerfield for initiating a debate that gives us the opportunity to raise the profile of our CABs and the important work they do.

Organisations and institutions will still be required to channel their support. The CAB is an example of an organisation that is able to turn the desire of local people to help those in trouble into practical action. Warwick district CAB is assisted by more than 50 volunteers, who are able to make a huge difference to their local community. That capacity will diminish and the opportunity for individuals to help will be reduced if there are not enough full-time staff on hand to train, organise and manage volunteers. The loss of full-time staff will therefore have serious consequences that cannot simply be picked up by extra volunteers. If we reduce the funding given to such important organisations, it sends the wrong message at a time when we are looking to galvanise people into doing more for their local community and spend more of their time helping worthwhile causes. I appreciate why the Government are looking to reduce spending, but I do not believe that the calculus of cost has been accurately measured in this case.

Duncan Hames (Chippenham) (LD): My hon. Friend will be aware that only today the Government have announced that a one-off revenue of £800 million will be generated through changes in taxation on the banks. The interest alone that the Government will save on their own debt financing as a result of that move is enough to continue funding the financial inclusion fund in perpetuity.

Chris White: My hon. Friend makes a very interesting point, which I am sure other people will pick up.

When we were campaigning during the last election, we made a promise to protect the front line. It does not get much more front line than the CAB. I urge Ministers to think again and look elsewhere for reductions in public spending. They should engage with the local legal profession, voluntary and community groups and other stakeholders to see whether other long-term savings can be made in an area of justice that will not impact heavily on our front-line services.

10.30 am

Helen Goodman (Bishop Auckland) (Lab): It is a pleasure to see you in the Chair this morning, Mrs Riordan. I congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this important and timely debate.

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A few months ago, I spent a morning in the court-which, incidentally, is also to be closed by the Government-in Bishop Auckland with a CAB adviser who was helping people who were in court because their rents or mortgages were not paid, and they were under threat of losing their homes. That morning I saw how vital the service provided by the CAB is to people at the critical moment when their homes are at risk. I was, therefore, absolutely appalled to discover that the Government are proposing to end the financial inclusion fund in March.

Last year, 1.5 million people were given advice on debt by citizens advice bureaux. Those services were concentrated on people who are most in need in deprived and low-income areas. In my constituency, there are three CABs. The Wear Valley CAB lost a grant of £95,000 in the FIF cuts, together with the legal aid cuts and the cuts that have been forced on the county council by the Secretary of State for Communities and Local Government. It will lose half its workers, which means that there will be no debt advice whatever in the whole of the Wear Valley district. The branch manager, Carol Shreeves, wrote to me in an e-mail:

Yvonne Fovargue: Does my hon. Friend agree that when there is an expansion of debt relief orders, requiring skilled advisers who have to take a complex examination to qualify to be an intermediary in the scheme, it is completely the wrong time to take funding away from skilled debt advisers? The CAB deals with 70% of debt relief orders, so there is no point in expanding the scheme and then leaving people with nowhere to go. There is no point in the expansion of the scheme.

Helen Goodman: My hon. Friend has made an extremely well-informed point and demonstrates to us all the complexity of this area and the significance of losing that kind of advice. Of course, the one group of people providing more advice are the loan sharks and the independent debt advisers, who are going round my constituency putting cards through letter boxes, saying, "Come to us". If people go to them, they will be directed to precisely the people who will put them into a worse situation.

At the same time that that is happening, the Government are cutting the growth fund, which is the money that the Labour Government put into support for credit unions-another place where people can get low-cost finance and have a chat with somebody about how to manage their money.

Ian Austin: This is not just about CABs or other advice agencies. The benefits advice shop in Dudley does really important work to get local people the help they need if they have been made redundant or face losing their home, and helps many pensioners receive the benefits to which they are entitled. Is my hon.
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Friend aware that it is under threat from the local authority as a direct result of the Government's cuts to local council spending? Does she agree that it is complete nonsense to cut such a service? It costs £300,000 to run but it brings in £2 million to local people, £1.5 million of which is spent in the local economy supporting local businesses.

Helen Goodman: My hon. Friend is absolutely right. Although Dudley is very different from Teesdale, which is another part of my constituency, the situation there is similar. The Teesdale CAB also lost its grant and will have to cut the jobs of two people. Last year, it dealt with 220 cases and a total of £2.7 million of indebtedness.

The third CAB in my constituency is in Sedgefield. It too lost its financial inclusion fund grant of £150,000. Last year, 41% of its work was debt-related. All the debt workers in the Spennymoor CAB will be made redundant in April. The CAB social policy officer in Sedgefield, Martin Jones, said:

I confirm that that is correct. On Friday, I learned that in just one part of my constituency, housing benefit cuts will mean that people will have to find another £1 million from their own pockets to pay their rents.

The Minister does not seem to understand that it is all very well to talk about the big society, but the vision of the big society is collapsing. In these communities, where incomes fall and businesses do not do very well due to the Government's irresponsible policies, CABs will not be able to raise alternative funds to replace Government grants. Furthermore, this is a policy of total financial lunacy. It costs £150 to give a family debt advice. It costs £15,000 to re-house a family. I shall be very interested to hear how the Minister can defend such a lunatic policy.

10.37 am

Nia Griffith (Llanelli) (Lab): It is a great pleasure to serve under your chairmanship, Mrs Riordan.

I begin by congratulating my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this debate on the very serious subject of debt advice, and on the important work that she herself has carried out to highlight the devastating effects that debt, and worrying about debt, can have on people's lives. I will not repeat the excellent comments made by hon. Members who have outlined the problem clearly.

The number of people seeking debt advice is increasing, and the statistics are alarming. In 2009-10, the CAB dealt with some 2 million debt issues. The main non fee-charging advice agencies offering debt advice are the CAB, National Debtline, Consumer Credit Counselling Service and Payplan. The CAB and National Debtline receive no money from the credit industry, whereas the CCCS and Payplan do. Of the four agencies, only the CAB offers an intensive, personal counselling service on debt.

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Citizens advice bureaux, as we know, are generally staffed by volunteers, most of whom are generalist advisers, with some paid specialist advisers. Specialist advisers deal with the most complex cases, but they also supervise volunteers who undertake simpler casework in the specialist's area of expertise. In the majority of cases, when a specialist adviser is made redundant, the bureau concerned generally no longer offers an advocacy service in that advice area. The bureau cannot expect volunteers to carry on without that back-up. The CAB is a highly professional organisation that recognises the considerable risks of people proffering advice that they are not qualified to give. Without the back-up of specialist advisers, they know that they have to limit the advice they can offer to clients.

In many cases that may mean that generalist advisers can only give the client access to information about the options and procedures that he or she might pursue. Providing information for a client to follow is a path used by bureaux when a client considers themselves sufficiently articulate, literate and confident to proceed on their own. However, most debt advice clients who approach the bureau for advice feel unable to communicate effectively with their creditors. They need the advocacy that specialist advisers provide.

Bureaux do not offer debt advice in isolation. The client also benefits from benefit, housing and employment advice. At the CAB they know that they are not just dealing with a debt problem; they are dealing with a human being. A person has their own unique set of circumstances: work circumstances such as losing their job or being put on reduced working hours, or retirement or giving up work to care for a family member; or personal circumstances such as relationship breakdown, dependent children and so on. People may not initially present as debt cases, but it may become apparent in talking through their other problems that they have an underlying debt problem.

Citizens advice bureaux have a highly trained network of volunteers who understand what they are and are not qualified to advise on. They know that if a client has complex debt problems that they are not qualified to advise on, they can arrange for them to see the appropriately qualified member of the team. CABs have led the way in using volunteers but making sure that they have proper training, and that they are backed up by qualified teams. In that way, they are able to make the most of their volunteers and to offer real value for money.

As Dame Elizabeth Hoodless, who is retiring after 36 years in charge of Community Service Volunteers, said:

She used the example of libraries and pointed out that people may want to help in a library but do not want to run it. The same is true of the CAB: volunteers are happy to come along and carry out clearly defined duties for which they have been trained, but they know that they can be more effective because they can call on a team of professionals when they recognise that a problem is beyond their competence. They certainly do not want to run the business.

We all appreciate the idea of a one-stop shop; we yearn to simplify matters, and we recognise that people
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often find themselves in a Catch-22 situation and have to deal with several different agencies. One of the vital features of CABs is their ability to deal with the whole range of problems that a client may have. That is why taking away any one of their streams of funding will have such a serious knock-on effect.

Let us look at the overall funding of the CABs. First, there is huge input from local councils, which provide some 43% of the total income of CABs. We all know that councils are facing severe difficulties in planning their budgets for the next few years and that in order to protect their statutory services, they will look at all options, including cuts to funding for CABs and similar organisations in their area.

Then there are the cuts in legal aid. A cut of one sixth of the legal aid budget will mean that some £350 million out of £2 billion will be cut. That, too, will have a serious effect on CABs because of the franchise work that some bureaux do. It is completely incomprehensible that legal aid will be available for debt work only when a person's home is at immediate risk. One does not need to be a specialist adviser to recognise that early intervention is far preferable, much cheaper and more effective.

Mr Slaughter: My hon. Friend is absolutely right. In my constituency, three of the four advice agencies have lost all their local government funding, and if the Green Paper goes through, they will lose 90% of their Legal Services Commission funding. Even services that the Government say they will protect will not be available because the advice centres will have closed, and areas such as my constituency will be advice deserts. There simply will not be any advice available to anyone in most parts of the country.

Nia Griffith: My hon. Friend vividly highlights a serious problem; that is exactly what will happen.

There will be cuts to advice on education, employment, family, housing, immigration and welfare benefits. Those cuts will have a direct impact on funding for CABs and their ability to provide a comprehensive service, but they will also have a direct impact on clients' debt problems. If clients are unable to fight for the welfare benefits or extra provision for a special needs child to which they are entitled, they may be faced with a worsening debt problem.

Given the cuts to legal aid and to CABs through the withdrawal of the financial inclusion fund and local government funding, CABs will struggle, and many will close. The Government's Office for Civil Society has a transition fund that will apparently provide grant funding to bridge any gap, at least in the short term, but it applies only to England, and it applies only to organisations with an income of between £50,000 and £10 million, which excludes some CABs. Can the Minister clarify whether any of the transition fund will be used for debt advice and, if so, how much?

What are the alternatives to organisations such as the CAB? How else can debt advice be delivered? Are the Government expecting the Consumer Credit Counselling Service and Payplan to deal with all the additional workload of clients who will no longer be able to go to a CAB? Those organisations receive funding from the credit industry, and although Payplan has considerably expanded its services in recent years, it is simply unrealistic to expect it to be able to expand quickly enough to deal
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with an additional 2 million cases a year. Moreover, it deals with debt; it does not deal with the full range of clients' problems, which are often inextricably linked to their debt problems.

We have to ask the Government what alternative they propose. Is it debt management companies? The record and practice of many such companies gives rise to serious concern. In September 2010, the Office of Fair Trading told 129 debt management firms that they faced losing their consumer credit licences unless immediate action was taken to comply with its debt management guidance. The OFT found misleading advertising; in particular, firms fail to disclose that a fee is retained by the business. In fact, firms misrepresent debt management services as being free when they are not. That is serious, as clients already have enough difficulties without being exploited still further.

Helen Goodman: Does my hon. Friend share my concern that meetings were sponsored at the Tory party conference by the very organisations that are perpetrating scams on our constituents?

Nia Griffith: I certainly share that very real concern, because not only is the advice not free, it is poor. The OFT found that front-line advisers working for debt management companies lack competence, and provide poor advice based on inadequate information. Not only is the client landed with having to pay a fee that is not made clear in the firm's advertising, they are then poorly advised. Receiving poor advice on debt management is a serious business; it can cost the client considerable amounts of money.

Furthermore, the OFT also reports that there is low industry awareness of the Financial Ombudsman Service rules for resolving consumer complaints. Even with all the work that CABs and similar providers are doing at present, we currently have a situation where 129 companies that are not fit for purpose are trading on people's debt problems.

What will happen to a CAB's clients when the funding for debt advice is withdrawn? Some may not seek debt advice at all, perhaps because they do not know where else to go, or perhaps because they realise that debt advice companies will charge them fees and they worry, rightly, about being exploited and getting into yet more difficulty. Many will be driven to seek advice from debt management companies.

Angela Smith: Does my hon. Friend agree that the Government's actions suggest that the concept of the big society is, indeed, a big sham, and that the real message coming from them is that if someone is struggling with debt, they are on their own?

Nia Griffith: Indeed I do.

People may not go to debt management companies because they realise that the advice given could be substandard, and that they will be charged fees and could end up in more difficulty, but many will be driven to seek advice from such companies, many of which have been shown to be doing a poor job. We could see a mushrooming of similar companies, out to profit from the loss of CAB advisers, and many more clients being
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charged fees for poor advice. No responsible Government should push forward policies that will allow that to happen.

What are the Government proposing as an alternative to the excellent work that CABs do? Can the Minister tell us how the proposed national money advice service will improve on the debt advice service that is currently funded by the financial inclusion fund and delivered through organisations such as Citizens Advice? Can he explain how clients who are currently being helped by CABs will be better served by the national money advice service?

Debt advice is a specialist area, and it is time-consuming and labour-intensive. No matter what expertise and computer programmes a debt adviser has, every client will have slightly different circumstances. It takes time to work through the problems, and for the client and adviser to discuss what the possible solutions might be and, when appropriate, for the adviser to arrange advocacy. Can the Minister explain what will happen to clients if the national money advice service is not up and running before CABs have to make their debt advisers redundant?

One of the problems for any new service is getting known and reaching the people who really need help. Citizens Advice is a well-established organisation-it is an established brand with a good reputation-and many people know that they can go to it to seek advice. People from all walks of life know where their local CAB is. Can the Minister explain how people will know about the national money advice service, and where they will go to access it? Can he explain the rationale for destroying an established service?

Given the economic outlook, with many more workers likely to lose their jobs due to Government cuts and the knock-on effects in the private sector, why does the Minister want to destroy a competent, independent, local, user-friendly service such as Citizens Advice and leave people bereft? At the moment, it is offering people very much needed and valuable debt advice.

10.50 am

The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): I congratulate the hon. Member for Makerfield (Yvonne Fovargue) on bringing the subject to the attention of the House, and it is a pleasure to serve under your chairmanship, Mrs Riordan.

Many important questions have been asked in this debate. At the outset, let me commit the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), who is responsible for this area, to writing to Members who raised questions that I am unable to deal with giving specific answers. That is the least that Ministers can and should do in response to Westminster Hall debates.

Helen Goodman rose-

Mr Hayes: I will not give way straight away because I need to make progress. I have 10 minutes to deal with the debate. I will give way if I get the opportunity to do so.

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Ian Austin: You have the opportunity.

Mr Hayes: I am not usually terribly critical about Back Benchers making comments. The contribution of hon. Member for Bishop Auckland (Helen Goodman) was pretty intemperate, so she will understand my response being in the same vein.

I made a commitment that the Minister responsible will write to Members who have raised sensible questions, as the Opposition spokesman, the hon. Member for Llanelli (Nia Griffith), did, and will deal with them in a particular and specific way. I shall restrict my comments to some points of principle and detail, and make one or two further commitments.

Before I make the points of principle, let me add this: three points have emerged from the debate. First, debt is closely related to more general well-being, and that needs to underpin the Government's approach. Secondly, our approach should be co-ordinated and, thirdly, coherent. That has come across strongly from Members on both sides of the Chamber. We heard a speech from the hon. Member for Bishop Auckland, which I critiqued earlier, and speeches from my hon. Friends the Members for Solihull (Lorely Burt), for Warwick and Leamington (Chris White) and for Brigg and Goole (Andrew Percy) and from the hon. Members for Newcastle upon Tyne North (Catherine McKinnell) and for Scunthorpe (Nic Dakin). The hon. Member for Scunthorpe made one point particularly clearly when he rightly said that debt was related to well-being and mental health in a very broad sense. Other Members pointed out that we need a consistent and coherent approach.

I shall make six points of principle and then move on to some points of detail that inform the Government's position.

Mr Slaughter rose-

Mr Hayes: But I shall give way to the hon. Gentleman briefly before I come to my six exciting points.

Mr Slaughter: I appreciate the Minister's approach, but will he answer the central question? Face-to-face advisers cover up to £2 billion of debt every year and about 100,000 people are advised. Who will do that now that all those people will lose their jobs? Who will pick up the burden?

Mr Hayes: I said that in the second part of my speech I would try to come to the specific measures the Government will take. I hope I will have time to do so.

The first of the six points of principle is that we want to ensure that the debt management regime means that those who can repay debt do so and those who cannot pay get appropriate debt relief. Debtors and creditors should benefit from a system that is clearer about expectations and provides good advice in advance; I will come to how that advice might be provided later. The picture painted by a range of hon. Members of an entirely haphazard system is not the Government's intention and it would not help either responsible lenders or debtors. I understand that and it will inform what we do.

Secondly, we want to see empowered debtors accessing good quality preventive advice, as well as advice to deal with debt, to ensure that the most appropriate solutions
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are found for the debtor's particular difficulty. Thirdly, some stakeholders have called for a review of the whole lending and borrowing landscape-a point that has been echoed today. I think such a wholesale review is necessary, and the Government will go about that.

Fourthly, we are told that some debtors and, potentially, their advisers, are confused by the array of choice. We heard today about independent debt advisers. We are aware of the issue, and I take the point about the OFT's condemnation. Fifthly, it is important that we clarify the responsible options available to people rather than allowing a free-for-all in which the advice they receive is of varying quality.

Nia Griffith: What action is the OFT taking against the 129 companies?

Mr Hayes: I will deal with that specifically in the second part of my speech.

The OFT survey, as the hon. Lady said, points out that many players in the field are less than scrupulous, and that must be dealt with. Finally, we are looking for evidence on how the regime should work. We have called for evidence, and much has been received. I invite the hon. Member for Makerfield, who has expertise on this issue because she managed the CAB in St Helens, and others to play their part in the review.

On the specific measures, the House will know that the Department for Business, Innovation and Skills has been responsible for face-to-face debt advice on behalf of the Treasury for about five years. I am sure the House also knows that the financial inclusion fund, which provided funding for that project, was always due to close in March 2011. I understand the worry about the decline of face-to-face advice, which all contributions today seemed to reflect. Face-to-face advice must support online and telephone advice, and we will look at how to reinforce that.

Funding of £1 million has been confirmed for next year for the National Debtline, as has been acknowledged. We need further work on how to support some form of continued additional face-to-face guidance. I will ask the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton, to clarify as soon as possible, in a statement to the House, precisely how, when, why and whether that might happen.

Secondly, the Government are working with the Consumer Financial Education Body to provide better advice on debt. As hon. Members know, it will shortly be renamed the money advice service. It was set up to take over responsibility from the Financial Services Authority to promote understanding of the financial
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system and raise levels of financial capability across the UK. It is funded by a levy. We will launch the new service in spring. That preventive approach is critical to stop people getting into difficulties, with the results we heard about today.

The Government will also review the framework for financial services regulation. Two new regulators will replace the FSA: one focused on prudential issues with the Bank of England and the other on markets and consumer protection-the Consumer Protection and Markets Authority. We see this as an opportunity to improve how consumer credit is regulated and to create a simpler, more responsive regime.

As Members know, we have also launched our review of consumer credit and personal insolvency. It is taking an end-to-end view of consumer credit and personal insolvency, from the decision to borrow money through to how we support people in difficulty and help them to resolve their debts.

The feature that characterised most contributions to the debate was the CAB. As a constituency Member of Parliament, I am very aware of its work. I visited the CAB in Spalding to discuss these issues. Indeed, one of the many virtues of our system of parliamentary representation is that Ministers are also constituency MPs. I heard what was said today about the CAB and its importance in providing not only debt advice, but a holistic approach to advice that reflects the connection between debt, well-being and the wider range of challenges that many people face.

Duncan Hames: I welcome the announcements the Minister has made, but does he see that it is somewhat incongruous for a Government who are, rightly, concerned about getting their own debt under control to cease funding for voluntary sector support to people to get on top of their own debt?

Mr Hayes: Indeed. I think of John 8:7,

As the hon. Gentleman said, it is right that we should be consistent.

I shall make one further commitment on the CAB: as a result of representations received, and this debate, we commit to looking at what to do about the CAB on a cross-governmental basis. Ministers and Governments should be responsive to these debates and to arguments, which were sometimes well put, although at other times slightly partisan. They were no doubt put with a passion that reflects constituents' concerns. On that basis, there will be a cross-departmental examination of what to do about the CAB.

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Economic Regeneration (West Midlands)

11 am

Paul Uppal (Wolverhampton South West) (Con): I thank hon. Members for attending this debate. I have wanted to speak about the future of economic regeneration in the black country for some time. It is a pertinent matter that I am sure all hon. Members present deal with in their constituency case load. It is a topic high on everybody's list as we seek to promote economic growth in the black country constituencies that we represent.

Government plans for planning policy and economic growth contain a strong emphasis on local powers and decision making, and it is important to look at how such tools can be used to promote economic regeneration in our area. As hon. Members are aware, the black country has missed out on some capital regeneration projects that we have seen across the country. I want this debate to raise the profile of our region at national and parliamentary level, provide a forum for discussing how to encourage private and public investment in the black country, and look at how to assist local businesses and communities to get involved in future ideas for the region.

Within Wolverhampton, the proposed £300 million Summer Row development has recently collapsed. That is a huge disappointment for the city as it would have provided new shops, cafés and much-needed jobs for the area. With one of the highest numbers of vacant shops in the country, regeneration in the area is desperately needed. However, I want not to dwell on the past, but to learn the lessons from what has gone before and move forward. As councillors in Wolverhampton have said, we must signal a new dawn for the city and, to quote the city's motto, "Out of darkness, cometh light." I am pleased with the attitude of the council and the local business men and women of the city who are looking forward to what the future can bring for Wolverhampton.

Previous Government plans have sought to close the gap between the greater south-east and the rest of England. In truth, however, the economy is still as regionally unbalanced as before-perhaps even more so at the moment. It is important to focus on projects that are already under way in the region and look ahead to what future investment can be attracted to our area.

In Wolverhampton, the council is currently implementing two main regeneration projects-the Wolverhampton Interchange, and the i54 technology park. The Wolverhampton Interchange is a great proposal for the city, but only the first phase of the project has currently received funding and is under way. It seeks to create a new transport hub for Wolverhampton, while also revitalising the station and the entrance to the city that people see when they arrive by train. The plan includes a new hotel, offices and canalside bars. It provides a great opportunity for the city, creating not only jobs but an important first impression when people arrive. I have looked into the funding options available, and I hope that by working with fellow MPs and the council, we can see the whole project succeed. I am aware that retailers such as Debenhams are interested in locating to Wolverhampton, and it is important that any future retail developments are well managed and receive support.

The Government have outlined their plans for promoting economic growth and regeneration across the country. I want to pick up on some of the points raised by the
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Localism Bill and the White Paper on local growth from the Department for Business, Innovation and Skills, which provide important tools and guidance for driving regeneration in the black country.

Mr Pat McFadden (Wolverhampton South East) (Lab): Before the hon. Gentleman moves on from his list of important projects, I am sure that he will not miss out Bilston urban village, which is based in the part of the city that I represent. It is crucial for providing future homes, bringing former industrial land back into use, and providing new leisure facilities for people in Bilston.

Paul Uppal: I will refer later to Bilston, and I echo the right hon. Gentleman's sentiments completely. There has been very good work there.

For regeneration of the black country it is important to give power to local authorities. I also want to talk about business rates and reforming the apprenticeship system. The important focus of the Localism Bill and the White Paper on local growth is the emphasis on giving power to local authorities and communities. That provides an important opportunity for the black country to lose some of the burden of nationally driven goals and targets, and allows instead for a tailored approach that reflects the needs of the region. The open source planning system will ensure that local governments can create sustainable and attractive places to live. I have no doubt that reforming the planning system is important to creating the confidence to invest.

Some people have expressed doubts over how localism will work in practice, such as how projects can be financed locally, and whether communities will have the will or the information to get involved in the planning process. On the first point, I think that the changes provide an important opportunity to encourage private investment into our region. I am confident that with the right co-ordination and guidance, we can see real involvement by communities, and investment by business in the future of the black country.

I have met many local people who are passionate about regenerating Wolverhampton into a more thriving city. Henry Carver, a local businessman, has recently launched the Wolverhampton business group that aims to bring together businesses in the city, and put forward policies on what it believes the city needs. I have also met with the Black Country Reinvestment Society, which provides loans to small businesses that have struggled to get finance from the banks. It is pleased with the success it has seen so far, and I have supported its application to access the regional growth fund so that it can support even more businesses in the city. I hope that with increased money in the regional growth fund, it will be successful in its bid. Recently, I also met representatives from Lloyds bank and the Royal Bank of Scotland in Wolverhampton. I am encouraged that in these difficult times, I have seen practical examples of things being pushed forward. We are all conscious, however, that lending is not as free-flowing as we would wish.

The right hon. Member for Wolverhampton South East (Mr McFadden) referred to Bilston. I visited a business in Bilston called Tile Choice, which has been through a tough time over the past few years and reduced its number of staff from 80 to 60. I met the managing director and was encouraged to see that the business was being built back up, and that it was looking forwards rather than backwards. That is important;
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we must change the mindset. We can get immersed in looking at what has gone before, but I was struck by the optimism of a business that seemed to be going places and was looking forward to how it could take on new members of staff.

The Government plan to provide further incentives for councils to attract investment and economic growth, and the proposed business increase bonus will provide an incentive to all councils to seek long-term sustainable growth in their business rate base. Local enterprise partnerships may create an important link between businesses, communities and local government, and help to achieve economic growth and regeneration plans for the region. Too often, regeneration projects have been slowed down by time-consuming and complex planning procedures. For example, UK Trade and Investment has stated that complexities in the planning system are among the top five issues that deter inward investment into the UK. The Government are to introduce a national planning policy framework that will place a priority on economic growth through simplifying planning procedure and reducing guidance. Furthermore, the Localism Bill seeks to include communities in planning decisions from an early stage.

All such measures seek to change attitudes and foster a pro-development approach that will remove barriers to development and allow communities to get involved in planning proposals so they do not feel that developments are forced on them. Providing local authorities with a general power of competence gives them the freedom to implement proposals that work specifically for their area. Neighbourhood plans also provide an important opportunity for residents to be involved in the future of their areas. I understand that both the British Chambers of Commerce and London First believe that those proposals could be used in town and city centres and business parks, allowing whole communities to be involved in creating local ideas for their local areas.

An important new proposal, which in hindsight might have helped with some of the difficulties with the Summer Row development, is that large-scale developers will have to consult people in the local community before submitting planning proposals. That could help to ensure that communities get the development that they want.

I shall now move to my second point. The local growth White Paper outlines plans to change the nationalised system of business rates. It hands over more power to local governments, allowing them flexibility in respect of funds and business rates. New proposals will allow local authorities to offer local discounts on business rates, provided that they are funded locally. The Government recognise that different areas have different needs and economic circumstances. That policy will allow councils to respond to the economic circumstances in their area.

I will, however, enter a caveat in respect of business rates. At one of my weekly surgeries recently, I was approached by a constituent-a gentleman who owns a retail unit in the centre of Wolverhampton. He spoke to me about his situation. He felt almost at his wits' end because of business rates. He felt driven almost to remove the roof from his shop because he felt that business rates had been particularly punitive. I ask my hon. Friend the Minister to pass on a message to the Government to be very conscious of that issue. It is very much about a mindset. The difficulty that we have with some of the investment angles for Wolverhampton is
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the perception that we are dealing with a problem. Having been in business for 20 years, I know that it is important to look at things as an opportunity rather than a problem. When it comes to business rates and the current system for empty properties, and industrial property in the black country and the wider west midlands, investors and business people are sometimes almost preoccupied with avoiding paying business rates, rather than looking at development, getting a tenant into a property and getting a thriving business going.

Let us turn to more optimistic things. In Wolverhampton, the council plans for a Wolverhampton technology corridor could benefit from the proposal under discussion. As the Municipal Journal notes, it could help new technology start-ups to access discounts. The i54 technology park has secured Moog, which is relocating to the park, and the council is in talks with the Indian aerospace industry about moving in. However, they need to address more businesses. The proposal under discussion could help to achieve that.

We are all aware that this is a time of economic austerity. In such times, regeneration may appear to be a difficult task. However, the local growth White Paper outlines approaches such as tax increment financing, which can assist councils to obtain the extra funds that they may need for regeneration projects. That approach allows councils to borrow against future additional uplift in their business rates base. Obviously, that will need to be managed to minimise risk, but it could provide the means for additional investment to go ahead. A point that I have previously made in the main Chamber is that in the US, where many of these business rate projects were piloted, they were often developer led. An article in Estates Gazette highlighted the fact that the Government might consider such an approach to financing: rather than the onus being put on local authorities and councils, perhaps the developer could move forward.

Linked to attracting new investment and businesses to our region is ensuring that we have the skilled work force to fill the new job vacancies created. The strategy for sustainable growth highlights the importance of skills in creating the conditions needed to reduce the deficit and to stimulate growth. Reforms to the apprenticeship programme, creating up to 75,000 new apprenticeship places, investing up to £250 million during the spending review period and increasing advanced level apprenticeships, will improve the skills of the potential work force and help to meet our target of having a world-class skills base. We need to ensure that training providers work with businesses to ensure that training meets the needs of employers and that businesses are helped to offer apprenticeship placements.

Recently, Professor John Bryson from the university of Birmingham has highlighted the fact that insufficient attention has been paid to equipping the work force with the skills required to take advantage of new high-tech, high-value engineering opportunities. There has been a lack of forward thinking. He estimates that 90,000 hard-to-fill manufacturing jobs will appear in the west midlands during the next five years. That is in line with research conducted by the region's councils, which found that two thirds of the workforce lack the technical skills required by employers. It underlines the importance of reforming the apprenticeship programme-creating more advanced level apprenticeships and ensuring that training matches the skills that the job market wants.

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Let me illustrate the point. I remember being on vacation a few years ago with my son. We were at an event and at one point all the children were invited on to the stage and asked what they wanted to do in the future. Some said "journalist". Most said that they wanted to be on TV. My son proffered the idea that he would like to be an engineer. I remember the look of incredulity on the faces of the parents in the audience, which illustrates the problem that we have in relation to engineering. I know from talking to lecturers at the university of Wolverhampton as well that there is huge demand from the engineering sector. We need to break down the perception that engineering is the sort of job where people have to roll up their sleeves and do difficult manual work. It is not. It is a very creative aspect of our economy at the moment and will offer great potential.

I shall return to the main point. Manufacturing is doing quite well at the moment. We have had encouraging figures in relation to manufacturing, and I would like to see the Government embed that for the future. Much of the discussion on this issue relates to the fact that sterling is quite low at the moment, but let us consider the German analogy. A few years ago, the Germans were in a similar situation. The question is how we can embed the progress that has been made, so that manufacturing becomes something that we can sing really loudly and proudly about, especially in the black country and in the west midlands in general.

Lorely Burt (Solihull) (LD): I am listening to my hon. Friend's speech with absolute fascination because it is a very good analysis of where we are at the moment. I am from the black country myself, hence my interest. On the importance of sterling and the manufacturing figures, which those who maintain the purchasing managers index say are the best since they started keeping records 19 years ago, does my hon. Friend agree that the figures relate also to extra demands, extra exports, more jobs being created and new orders coming in? It cannot just be down to sterling. It is because manufacturing is finally getting off its knees, and of course the black country is the home of manufacturing.

Paul Uppal: The hon. Lady makes an excellent point. She has pre-empted, as is always the case, something that I was going to come to. We in the UK are uniquely positioned in the global market to tap into the new emerging markets in India, China and south America. To go down to an even more specific level, the black country, with the significant community from the Indian sub-continent who have settled there, has a unique and wonderful opportunity to take that forward and expand on it. I wholeheartedly agree with the hon. Lady. There are great opportunities. It is not just a sterling issue.

I am confident that the Government are implementing plans that will put this country back on track financially. I know that the tools that they are providing for local growth will help the black country immensely. I sincerely hope that this debate will allow us to put a focus on the region that we all represent. I welcome everyone's views in the debate and their opinions on how we can kick-start the investment that our area so desperately needs.

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11.18 am

Mr Pat McFadden (Wolverhampton South East) (Lab): It is a pleasure to see you in the Chair, Mrs Riordan. I congratulate my constituency neighbour, the hon. Member for Wolverhampton South West (Paul Uppal), on securing the debate. My other neighbour, my hon. Friend the Member for West Bromwich West (Mr Bailey), the Chair of the Select Committee on Business, Innovation and Skills, said that he would have liked to be here, but he has Select Committee business.

This is an important debate because it is really about the hinge between the area's past and its future. Wolverhampton and the wider black country rightly are proud of the industrial heritage that they enjoy. They are proud of the great names that put their stamp on the area. In my constituency, those names include Stewarts and Lloyds, Sankey's, GKN, Rolls-Royce and Sunbeam. Those names ring through the years. Those names matter, and history matters, because it is from history that people draw identity and meaning. The question today, however, is what the black country will do for a living in the future. Where will people find jobs? How will they make a living? That matters very much in my constituency, which is, sadly, among the top 15 constituencies in the United Kingdom in terms of unemployment. In the time I have, I want to make a few points about that.

First, we should not pronounce manufacturing's death rites, as we are sometimes too ready to do. Many of the big names I mentioned a few moments ago have gone, as have the individual sites that used to employ thousands of people, but manufacturing still employs a greater proportion of people in the local economy than it does in the national economy. In my constituency, companies such as Nuclear Engineering Services, Mueller Europe, Fortress Interlocks, Bilston Engineering, Barnshaws and many others do an excellent job and provide valuable local employment. As the hon. Gentleman said, we also have an important aerospace cluster, with firms such as Goodrich, Timken and Moog. That is a potential growth area, which can be nurtured and built on.

What the Government do on manufacturing can help or hinder it. If we want to support an economy that makes things-I think that that desire is shared across the House-it is a mistake to abolish programmes such as grants for business investment. Over the past six years, those grants amounted to £400 million across the country, they secured about 10 times that amount in private sector investment and they protected or created about 80,000 jobs. There is good news in manufacturing at the moment, but that is a reason to support it, not to withdraw help.

I make the same point about the changes that the Government have announced to capital allowances. Just because this complex issue is not widely understood, that does not mean that it does not have an effect. The Government are keen to talk about the cut to corporation tax, but it is actually being paid for by cuts in the tax support to manufacturing industry. The Budget Red Book makes it clear that the £2.8 billion that will be taken from manufacturing is exactly the same as the amount that will be given in corporation tax cuts. In effect, there will be a shift, with the help being given to the whole economy, rather than directly to manufacturing. To put it another way, manufacturing will pay for a tax
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cut for the rest of the economy, which is not in the interests of the economy in my area or the companies that I mentioned.

The second point I want to make is that, when it comes to the area's regeneration, its future and investment, we should use the local population's diversity as a source of economic strength. Some years ago, I co-founded the Wolverhampton India project with other partners in the city, such as the city council, the university and Wolverhampton college. It was founded precisely to build on the fact that we have a large Indian population and to see what more we could do in the fields of trade, education and sport. We had fantastic support from the city's educational institutions and the Punjabi Wolves supporters club-a fine body of people, who have driven and created a ground-breaking friendship agreement between Wolverhampton Wanderers and Jagatjit Cotton and Textile Mills football club of Punjab. Such cultural and sporting links can help with future commerce and trade. The fact that the city has a large Indian population gives us a strong and living link to a country that is one of the economic giants of the 21st century. We should build on that for future trade and commerce, and the city is already trying to do that through aerospace work with the Bangalore area.

The third issue I want to raise is skills and equipping people for the future. We have made progress on skills. There has been a lot of investment in Wolverhampton university, as well as significant investment in Wolverhampton college, and we have some excellent schools. However, in too many cases, achievement in Wolverhampton and the black country is still lower than it should be, and opportunity is denied. Governments-of either colour-cannot make globalisation go away, but they should leave no stone unturned in equipping people for globalisation. That is why educational improvement is essential. Put bluntly, we need higher standards, better results and fewer excuses for underachievement.

In that light, it is a mistake to abolish education maintenance allowances when it is crucial in today's labour market that people can get the skills and qualifications they need. In Wolverhampton, the abolition of EMAs will affect 4,000 young people. It will affect 2,000 16 to 18-year-olds at Wolverhampton college. I recently met its students, who told me that that will make it harder for them to achieve the skills and qualifications they need. We should remember that many of these young people are not from families with a history of people going on to further and higher education and that they are sometimes the first generation to do that. The Government's role should be to help those young people, rather than to take away the support that is there.

Emma Reynolds (Wolverhampton North East) (Lab): Does my right hon. Friend agree that it is not only short-sighted and wrong to end the education maintenance allowance, but that the so-called evidence base that was used for the decision did not take into account the particular circumstances of students who go to further education colleges such as Wolverhampton college? Many of my constituents travel there and back every day. Leaving school and going on to a further education college is difficult, and the costs involved are significant, but the Government's decision has not taken that into account.

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Mr McFadden: My hon. Friend makes a good point. The Institute for Fiscal Studies said that the maintenance allowances paid for themselves, given the benefits of higher participation in further education in the future. Issues such as transport have an important impact when families are often making decisions in difficult financial situations. The question of skills and equipping people for the future is therefore absolutely central to the economic future of Wolverhampton and the wider black country.

I want to touch on a point that the hon. Member for Wolverhampton South West made about decision making and planning, because it is crucial. He mentioned the Summer Row development, which dragged on for years. The fact is that the economics never really stacked up in the recession in the way they did beforehand. It is sad that the project is not going ahead, but we at least have clarity now, and we can plan for the future. However, I have an important question for the Government. I do not really expect the Minister to go into this in much detail, but if I was a betting man, I would say that robust discussions were taking place between his Department-Business, Innovation and Skills-and the Department for Communities and Local Government. There is a legitimate desire for localism and for people to be more involved in local decision making, but the Minister and the hon. Gentleman will also know that major investors want clarity and speed. Sometimes those two things are in tension, which is why the Labour Government made planning changes towards the end of their period in office to try to speed up the granting of permission for major projects, which has been too slow. My question as regards the rhetoric and practice of more localism is whether that tension will lead to businesses becoming frustrated about future planning and decision making. The truth is that we cannot say for certain at the moment, but it would be wrong to deny that there is a danger, because there is.

Although projects have been cancelled-in addition to Summer Row there has been the announcement by Hilton Hotels-there are also projects going ahead. On Friday I had the pleasure of being at the opening of the new Bilston police station, a development of several million pounds at the heart of the town. The increased visibility of the police presence in the town is very welcome. Of course it is a pity and an irony that we are opening a new police station at the moment when the number of police in the West Midlands police force is set to be cut significantly; but the police station itself is of course welcome. I was also able to tour the partially built new Bilston leisure centre. That is also a multi-million pound project. It is part of the Bilston urban village project, which is so important to the future of my constituency. It will have a new swimming pool, a training pool, indoor sports courts and a gymnasium. It is a crucial investment, not just because of its construction, but for quality of life and the future health of the local people. After I went there I visited a private sector development along the black country route, where a new car auction will be opened. The owners told me that at least 15 new jobs will be created there. Although we have had bad news, therefore, developments are going ahead in the city and we must build on that fact.

We must do better in decision making. The supermarket wars that affected the constituency of the hon. Member for Wolverhampton South West and my own constituency
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dragged on far too long. The problem was that although the different supermarkets may have owned the land they were not the only owners of the interest in the matter. The people of Wolverhampton also had an interest, which was in major sites not lying fallow for years while landowners fought battles in court, and in not having such blight on major parts of the city.

The city council has produced new plans, including the plan for the Bilston corridor. I recently attended a meeting of the Metro business partnership, which represents businesses sited along the Metro line, between the city centre and Bilston. It was ably chaired by Anna-Maria McAuliffe of the McAuliffe construction group. The concern expressed by a number of businesses was about whether we get the right balance between allocation of land for housing and for future employment. I think that in a constituency that is in the top 15 for unemployment it is important to allow potential for business to locate, and for jobs to be created. We should not get that balance wrong.

As to the local enterprise partnership, we could go back over Government decisions but I do not propose to. They made their decision to abolish the regional development agency. I would not have made it, but it has been made, and the question is what to do in the future. I pay tribute to the business people from around the black country who have worked so hard to put the local enterprise partnership project together. As we were briefed by Mr Stewart Towe last week at a meeting with the black country chamber of commerce, those people have identified a serious agenda involving skills, planning and some of the issues that we have been discussing, including transport, on which they want to take action. However, they need resources to do that, and the regional growth fund is already heavily oversubscribed. I believe that the Government will have given a false prospectus to businesses in the black country and, indeed, elsewhere in the country if, having worked so hard to put the partnerships together, they do not get the resources to deliver. We shall watch closely to see whether their effort is matched by Government effort to provide those resources. If that does not happen, it is not only the business people who have worked so hard, but our constituents, who will feel very let down.

These have been tough times for the black country economy. It was hit hard by the recession. Although unemployment is high, the interventions made by the previous Labour Government had an effect in stopping recession turning into depression. The figures for unemployment, business failure and home repossession are all significantly lower for the recession we are coming out of than they were in the previous ones. Our challenge now is to take the strong history and identity that I mentioned at the beginning of my speech and bend it to a new purpose. Our opportunity is there. We have a strong aerospace cluster: let us use it to win more trade and business. The economy is shifting towards lower-carbon purposes. Let us use the excellence and creativity of the manufacturing tradition, so that we can take opportunities in the automotive field and other low-carbon fields. The creative industries are a growing percentage of the economy and they should also be supported and nurtured in the local economy, as should distribution industries and retail, and many more. We need the right skills and
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the right decision-making framework, nationally and locally, and we need the backing of Government to make it happen.

11.35 am

Emma Reynolds (Wolverhampton North East) (Lab): It is a pleasure to serve under your chairmanship, Mrs Riordan. I congratulate my parliamentary neighbour, the hon. Member for Wolverhampton South West (Paul Uppal), on securing this important debate. Each of the three Wolverhampton MPs agree, I think, that driving regeneration in our city is a priority. There has been recent frustration about the Summer Row project to which the hon. Member for Wolverhampton South West referred. If anything good can come out of bad news it will be the mood of co-operation in Wolverhampton-the sense that we need to pull together to make regeneration happen. I know that in last week's and previous council meetings there have often been heated debates, but councillors of each of the three parties understand how difficult it is to bring about regeneration. It might be easy to draw up the plans but it is hard to deliver, and lessons should be learned about the lack of progress on Summer Row, and other projects, which my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) mentioned. I pay tribute to my right hon. Friend in particular for his work as Business Minister in the Labour Government, and I want to echo some of his concerns, and the questions he put to the Minister today.

As a Member for the north of the city I shall, as the House might expect, concentrate my first remarks on the aerospace industry because there is an aerospace cluster in the north of the city. We have three major aerospace companies: Moog, Goodrich and HS Marston. We also have Timken in the south of the city. The hon. Member for Wolverhampton South West mentioned the i54 business park and the importance of that site in creating and sustaining jobs in the city. One of my first meetings as a Member of Parliament was with Moog, which was considering moving out of Wolverhampton, or to the i54 business park. We were determined to make sure it stayed in Wolverhampton so that we could retain the hundreds of jobs it supports. I thank Advantage West Midlands not only for working with Moog to ensure it stayed in Wolverhampton and moved on to the i54 site, but for getting the project off the ground. A lot of decontamination work was done on the site, thanks to the work of Advantage West Midlands. As my right hon. Friend the Member for Wolverhampton South East said, we understand that the decision to abolish the regional development agency has been made, but I should like the Minister to comment on how to retain some regional strategic vision for the west midlands, and the black country in particular. I think that the i54 is central to that. Will the Minister say how the Government will see that vision once Advantage West Midlands has been abolished?

I would also like to comment, as did my right hon. Friend the Member for Wolverhampton South East, on the work of the local enterprise partnerships. It is important that LEPs in the black country and elsewhere in the region work together. Like the i54 technology park, they have a strategic importance.

I have another question for the Minister about the i54. I know that consultation is taking place at the moment, but what will happen to the assets of Advantage West
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Midlands? Wolverhampton city council and South Staffordshire council have a stake in the i54 site, but most of it is owned by the RDA. I would prefer the state to retain ownership of that significant asset, as the cost of security there is substantial and I doubt whether a private sector company would want to take it on at the moment.

I turn now to exports and inward investment, which were mentioned by both of my parliamentary neighbours. I wish to speak specifically about exports. Last year, I went on a parliamentary visit to China. On my return, I was inspired to ask the manufacturing advisory service in the west midlands if it would organise a meeting for local businesses in Wolverhampton and more widely with the aim of helping them to export to China, as it is not always easy to export there. The meeting took place two weeks ago in Birmingham and there was a great turnout, with great demand from local businesses. Will the Minister say a little more about the Government's overall strategy on driving up such exports, and ensuring that local businesses have the necessary advice and are given it on a timely basis?

My right hon. Friend mentioned partnership work with India, which is incredibly important. I know that the leadership of the council-both the Labour leader, Roger Lawrence, and the chief executive-are determined to ensure that we exploit the cultural and trade links, referred to by my right hon. Friend, between our city and India and other emerging economies around the world. Will the Minister reassure this House that when the Government finally set out their growth strategy they will take account of the strengths and weaknesses of the regions? I agree with the hon. Member for Wolverhampton South West that many of the opportunities presented by globalisation have in the past gone to London and the south-east, and that we have not always been able to grasp them. The Government should take account of those strengths and weaknesses and of the needs of the regions, and particularly of the black country. As my right hon. Friend said, the black country is shaped by its history. We used to be the beating heart of the industrial revolution. Although we still have a large manufacturing base, we have lost jobs in that sector. There is much talk about rebalancing the economy, but will the Minister tell us how much work is going on to make it happen?

I declare an interest, in that the manufacturing advisory service is based in my constituency at the Wolverhampton business park. However, that is not the only reason why I would like MAS to have a continuing regional focus. Will the Minister tell us something of the Government's intentions? Various rumours are flying around about wanting to centralise MAS in London, but I would advise against that. Local businesses need advice that is tailored to their specific needs, and it should be delivered locally. I have received that message from several businesses in Wolverhampton, and I urge the Minister to take it on board.

I deal now with the regional growth fund. We know that that there is a substantial decrease in the money being made available. The RDAs used to receive in the region of £2 billion a year, and the regional growth fund is set at £1.4 billion over three years. If my maths is correct, that is a little over £500,000 a year, which is barely a fifth of what we had before. Like my right hon. Friend, I do not want the Government to give local
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business organisations a false prospectus about how much money they will receive from this pot. Will the Minister clarify the timing of decisions on bids for the regional growth fund? As expected, I support the bid from the black country local enterprise partnership, as well as that of the Black Country Reinvestment Society mentioned by the hon. Member for Wolverhampton South West. Will the Government give special consideration to those parts of the country whose needs are greatest and who were hit particularly hard?

Mr McFadden: I endorse what my hon. Friend said about the Black Country Reinvestment Society. Every time we meet businesses, they question us about access to credit, difficulties with the banks, the terms of loans and all sorts of other conditions being changed-and sometimes refusals, which makes life harder for them. The society plays a crucial role in filling that market gap by lending to small businesses that cannot otherwise get credit. It helps them to survive, to grow and to employ. I am sure my hon. Friend will acknowledge that many in our region have supported the society's bid to the regional growth fund precisely because it fills that gap. Daily experience tells us that the banks are not filling it.

Emma Reynolds: I could not agree more. The Minister will doubtless take on board the strong message that he has received from the three Members for Wolverhampton about our support for the bid from the Black Country Reinvestment Society. As my right hon. Friend said, it is important that the Government fill that gap, to ensure that loans are available to enable local businesses to grow, and thus to employ more people. Frustration is felt across the House-this is not a party political point-that the banks are not lending to viable businesses that need money to be able to flourish. The Minister will have received that message loud and clear.

Some projects have been set back by various problems, the main one being planning. My right hon. Friend mentioned the fact that two supermarkets are wrangling with each other over sites in his constituency and in that of the hon. Member for Wolverhampton South West. As my right hon. Friend so eloquently said, it affects not only the two supermarkets but our constituents. We have seen those sites lying redundant for many years while the supermarkets fight it out in the courts. I hope that progress will be made, and that the Raglan street and the old Royal hospital sites can be developed. There is a great need and a demand for that.

Another site in my constituency that has gone through this process, with bids and projects falling through, is the Springfield brewery site near the railway station. It is another example of plans being frustrated. The hon. Gentleman mentioned phase 2 of the Wolverhampton interchange project. I would like to see the railway station completed, but the work has been put back. There are uncertainties about whether it will take place, but I hope we can get it back on track.

My right hon. Friend made the good point that there is a tension between the drive for localism and the demand of business, which we hear loud and clear, for clarity and speed in the planning process. I would like to hear the Minister's thinking on this. If we are to drive regeneration in Wolverhampton, it is essential that some of these planning problems are resolved, and that businesses have the certainty necessary to invest in Wolverhampton.
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We need to think about these things clearly. Is there a tension between the spirit and the provisions of the Localism Bill, and in some of the issues that we have outlined today?

11.50 am

Ian Austin (Dudley North) (Lab): It is great to see you in the Chair, Mrs Riordan, and to be taking part in this debate. I congratulate the hon. Member for Wolverhampton South West (Paul Uppal) on securing the debate, and the two Wolverhampton MPs on their brilliant contributions. My right hon. Friend the Member for Wolverhampton South East (Mr McFadden) was absolutely correct when he said that the central issue that faces us is how to restructure our economy to exploit the opportunities provided by the new industries to bring new jobs and prosperity to Wolverhampton and the wider black country, including to my own constituency.

My right hon. Friend listed a series of great 19th and 20th-century companies that have made a huge contribution to the British economy. I represent Dudley, which lit the spark that fired the industrial revolution. It was the first place to learn how to smelt cast iron using coke, without which the industrial revolution would never have taken place, changing not just Dudley and the black country but the whole of the world. The central question now is how we learn from those great innovators, who were thinking not just about the future but how they could bring in new industries and new jobs to change the region in which they lived and worked. We must do the same again in the 21st century.

Let me speak briefly about the particular issues that relate to Dudley and then about those that relate to the wider sub-region. I grew up in Dudley. I love it to bits and am really proud to represent it. Anyone who lived in Dudley in the '70s and '80s will know that our town centre has seen better days. We have been hit hard by three things: the growth of out-of-town shopping, the decline of traditional manufacturing on which the area's prosperity was based, and the loss of our university campus-it was originally a teacher training college.

Under the leadership of Bill Kirk, the council is at last introducing long-awaited redevelopment plans, but they need to be put into action urgently. Will the Minister tell me whether those plans will receive the same level of support in the future as was planned in the past? It is crucial that they do so that we can get new investment in the town centre, develop vacant sites and provide new car parking and new shopping. It is crucial that the world-renowned tourism attractions at Castle Hill, such as Dudley zoo and the world-class black country museum, receive the funding that they are bidding for from the regional growth fund so that we can attract new visitors and boost the town's economy.

I invite the Minister to visit Dudley. He will not regret it, because it is the greatest town in the country. He will see our fantastic facilities and our great plans for the town centre, which I hope he will support.

Dudley is the largest place in the country to have no university campus. The university was originally Dudley teacher training college. I grew up on the street that had the teaching training college at one end and the halls of
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residence at the other. As a child, I would see students with books under their arms walking up and down the road, and that must have persuaded me that staying on at school and going to college and university were the normal things to do. It is tragic that we no longer have that example in our area, because we need to get more young people staying on at college and going to university. Is the Minister prepared to treat Dudley as a special case?

Paul Uppal: I thank all hon. and right hon. Members for such a good debate. I am very heartened by the non-partisan attitude that has prevailed. It is obvious that we all have our own constituencies at heart here. I am also a trustee of the Sikh temple on Upper Villiers street in the constituency of the right hon. Member for Wolverhampton South East (Mr McFadden). It used to be the site of the original Sunbeam motor factories. Although cars are no longer produced there, love and happiness can still be found there on a Sunday-because of the more spiritual dimension that the temple has brought to Wolverhampton.

Let me return to the point about education and how we can tap into our young people's ambition and aspiration. Much of the heritage that has been fondly mentioned here today came from a buccaneering spirit: people often felt that they could beat the world. I am sure that that attitude still exists, but it is latent and needs to be inspired. Coming from a modest background and going to a state school, I am aware of the issue. It is about being exposed to an environment that makes us think we can do whatever we want to do. We need to spread that message and ensure that it reaches down not just to teenagers but to primary and secondary schools.

[Annette Brookein the Chair]

Ian Austin: The hon. Gentleman is absolutely correct. We have many great strengths in our region: hard work, ingenuity, adaptability and innovation. Those are the attributes on which we launched the industrial revolution and built Britain's economy. As my right hon. Friend said, although we have some world-beating companies, we do not have enough. The truth is-this is the central point that I want the Minister to consider-that our region has been hit harder than anywhere else in Britain during this recession. The recovery is more fragile. We will take longer to emerge from the recession and to attract new industries and new jobs unless we take action now. Such structural problems are not the result of mistakes made over the past few years. In 1971, the combined economies of the midlands and the north were greater in size that those of London and south-east. By 1976, the economy of the west midlands had fallen behind and we have not matched the national average of output and productivity on a per capita basis for more than 30 years. We have been falling further and further behind.

Our region is the only place in the country where private sector investment has declined over the past 20 years. That is as a result of major structural challenges in relation to transport, trade, innovation, reputation and skills. The central issue is that of skills. It absolutely underpins the challenges that we face and how we need to address them. As my right hon. Friend said, we have made major improvements in this area over the past 10 years or so. For example, in 2005 employer investment
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in training and retraining in the west midlands was the lowest in England. By 2007, it was the fourth highest. In 2005, we had the highest proportion of vacancies owing to skill shortages, but by 2007 we had completely turned that around so that we had the lowest. We had the best performing apprenticeship programme in the country and the best Train to Gain service.

We need to boost the number of graduates working in the regional economy. We have 70,000 fewer graduates working in the west midlands than in other parts of the country. Much of that is about the structural make-up of our economy. Our region has a larger proportion of small and medium-sized enterprises than elsewhere. A struggling owner/manager of a small business who is trying to keep their head above water is not likely to be thinking about how to build links with universities, employ graduates and invest in new technologies and all the rest of it, as the major companies are able to do, so we need to address that point in particular.

Despite our region attracting some of the world-beating aerospace and engineering companies that my hon. Friend the Member for Wolverhampton North East (Emma Reynolds) and my right hon. Friend the Member for Wolverhampton South East have both listed, the central issue of skills is the reason why we have not been able to attract the new industries in ways that other regions have. For example, Britain is a world leader in the manufacture of pharmaceuticals, but all the jobs in that sector went to the south-east because we did not have the skills that the pharmaceutical companies were looking for. Similarly, during the computer revolution in Britain we did not manage to attract the number of jobs that the Thames valley did because we were unable to persuade the computer companies investing in Britain that we had the skills they were looking for.

During the next few years, there will be major opportunities in the low-carbon sector, in advanced manufacturing, in health care and biomedical sciences, and in digital media, which will provide hundreds of thousands of well-paid, highly skilled jobs, and it is absolutely crucial that we have a new industrial revolution to bring those jobs to the black country. That is why the whole of our sub-region should decide collectively that we will set for our communities the ambition of achieving the biggest rise in educational standards anywhere in the country. If we do that and get colleges and universities working together to equip people with the skills they will need for the advanced manufacturing revolution and the new low-carbon industries that will emerge, as well as getting the councils working together on these issues, I am absolutely convinced that we can build a stronger economy for the future.

There are just a few final points that I want to raise with the Minister. First, I have to tell him that, for an area such as the black country, increases in tuition fees present very serious challenges to the aim of getting more young people to stay on at college and go to university. Also, the abolition of the education maintenance allowance is a disaster for the communities that the Members here today represent. I visited students at Dudley college and I found that four out of five students at the college receive EMA. Many of them are very worried about whether they will be able to stay on at college if they lose it. They are not using it for going out or for luxuries. Those who are studying construction or public services have to buy uniforms and equipment
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with it. They and other students use it for their transport, to buy their lunch and for their books. It is the funding that is enabling them to stay on at college, and I plead with the Minister to make an area such as ours a real priority for the support that will be available for students so that they are able to continue their studies.

Will the Minister reflect on the points that I have made about the structural challenges that the black country faces and consider how he can make an area such as ours a priority when it comes to allocating funds from the regional growth fund? If we do not restructure and breathe new life into the economy in an area such as the black country, there is no way we will be able to get the economy of the country as a whole moving forward in a way that I am sure the Government want.

12.2 pm

Ian Lucas (Wrexham) (Lab): It is a pleasure to appear before you again, Mrs Brooke, and it has been a pleasure to listen to the debate.

I commend the hon. Member for Wolverhampton South West (Paul Uppal) for initiating this debate on behalf of his constituency and, of course, the wider region. I hope that I get all the geographical directions and references correct in my contribution. I also commend all the right hon. and hon. Members who have spoken eloquently on behalf of their constituents today. It is extremely valuable to have the opportunity in Adjournment debates to focus on particular areas. Although that is very valuable for me, it is even more valuable for the Minister, because he can focus on that particular area of the country and the particular issues relating to it not only in the contribution that he will make to today's debate but in his preparation for it.

The contribution that debates such as this make cannot be undervalued, especially when we have had such excellent speeches today from all parts of the House. As the hon. Member for Wolverhampton South West said, it has been a non-partisan debate because all of us want Wolverhampton and the black country to succeed. Although we have different road maps to achieve that aim I am sure that all of us can make positive contributions towards achieving it.

One issue is that we are, of course, in difficult economic times. We have just come through the worst recession since 1929 and a huge banking crisis. There are difficult times at present with very difficult growth figures. In that context, finding the right policies to allow Wolverhampton and the black country to develop and prosper is extremely difficult, and there are different routes that can be taken.

Concerns have been expressed about the possible conflicts that exist in legislation such as the Localism Bill. In an area such as Wolverhampton, it seems to me-although I of course defer to the local knowledge of the area of all right hon. and hon. Members who have spoken today-that getting the balance right between the interests of business and the interests of residents will be extremely difficult. We all have planning issues that arise in our area that are difficult for us to make calls on, because there are different and conflicting ideas about them.

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