3.17 pm

Dame Anne Begg (Aberdeen South) (Lab): It will be difficult to follow my two colleagues, who have explained the scourge of poverty in terms of the proportion of people living in poverty in Scotland and the shame that that brings on us as a nation. I congratulate my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) on securing this debate.

I shall confine my comments to a group of people who, by definition, find a much higher proportion of themselves living in poverty—namely, those who are disabled or have a disability. All the problems that, as we have already heard, face families living in poverty tend to be amplified if one of the members of those families happens to have a disability. We know that 21% of families who have one person with a disability living with them are living in poverty compared with 16% of the general population. That figure increases for children: 25% of children living in families with a disabled person live in poverty compared with 18% of children living in families with no one who is disabled.

The concern that I want to get over to the Minister, and to which I hope he will respond, is that those figures are bad enough, but the actions of this Government are about to make matters far worse. Despite the impression given in the tabloids by stories of benefit scroungers and people who have languished on incapacity benefit or disabled benefits for years, employment among disabled

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people had actually improved over the last 10 years of the Labour Government. The employment gap between those disabled and those non-disabled in 2002 was 36%. By 2010, by the time the Labour party lost power, that gap was down to 29% and all the indicators were that it was improving, so many disabled people were in work. However, it is still the case that anyone with a disability is far less likely to be in work than those who do not have a disability, and therefore dependent on benefits.

What happens to the benefits system? What changes will be made to save the £18 billion that the Government are trying to strip out of the welfare system? Those changes will impact even more directly on those who are the most vulnerable—those who have a disability. What is of concern is not just that individuals and their families will face reduced incomes but, as my right hon. Friend the Member for Stirling (Mrs McGuire) said, the reduction in the money that is available to be spent in those communities and the fact that the communities themselves will become even poorer than they are at the moment.

My hon. Friend the Member for Ayr, Carrick and Cumnock mentioned the report from Sheffield Hallam university, written by Christina Beatty and Steve Fothergill, called “Incapacity Benefit Reform: the local, regional and national impact”. That report makes incredibly interesting reading. It shows not only that there is a concentration of people with disabilities who are living on disability benefits, whether that is incapacity benefit, employment and support allowance or disability allowance, but that it correlates exactly to the areas of high unemployment and the areas of industrial decline. So it comes as no great surprise that, of the top 20 districts where the share of adults claiming incapacity benefit is the highest, three of them are in Scotland. Glasgow comes in at 12.3%, but is followed closely by Inverclyde and West Dunbartonshire. In the bottom 10 districts, of the areas with the least number of people on incapacity benefit not a single one is in Scotland and that in itself acts as a stark reminder that there are areas in Scotland, particularly west central Scotland, that have suffered not just the depression and lack of jobs caused by deindustrialisation but, resulting from that, an increase in the number of people who not only suffer ill health and disability but, as a consequence, are claiming benefit. Any cuts to those benefits will fall particularly heavily on those areas.

The figures in the work that Christina Beatty and Steve Fothergill have done are UK-wide, so we must assume that 10% of those people live in Scotland. Those figures show that, as a result of Government changes already announced, in Scotland alone, 97,000 fewer people will be claiming incapacity benefit. Even more worryingly, 58,000 will be removed from benefits all together. How will that happen? The last Labour Government had already introduced changes to reform incapacity benefit and to move people on to the employment and support allowance. The new Government have speeded up that move and have also cut down on the amount of money to be spent. That is where a great deal of the savings will come from.

Dr Whiteford: The hon. Lady’s constituency, like my own, was part of the pilot scheme that trialled the new work capability assessment. My view is that it has not been working and instead has been causing great anxiety and distress to disabled people. More importantly, the

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successful appeal rate is out of all proportion to any system that is working. Something like 70% of appeals are proving successful, where people have support from advocacy agencies. That system should go back to the drawing board, but I am also concerned that the burden will start falling even more so on unpaid carers and other family members for people who have been taken out of the system. Does the hon. Lady share my concerns on that?

Dame Anne Begg: Those concerns are shared by all of us. It has been very difficult to get robust figures about the numbers who are being migrated from incapacity benefit on to employment and support allowance, and how many of them will fall out of the benefits system all together or find themselves on jobseeker’s allowance as an alternative. The early indication from the pilot that took place in both Aberdeen and Burnley would suggest that about 30% of those on incapacity benefit will move to JSA. That one single move is immediately a loss of £20, or slightly more, a week for that family. We do not know whether those figures are robust but we do know that, for new claimants, it is far less than that. Part of the reason why the tabloid press has managed to create the impression that there are lots of people languishing on incapacity benefit or disability benefit who do not deserve it is that they conflate the proportions who are new claimants getting the benefit with those already on the benefit but who have been migrated across. Potentially, 30% will be losing £20 or more a week.

We also know that the Welfare Reform Bill proposes to limit contributory employment and support allowance to one year. In areas such as mine and the one represented by the hon. Member for Banff and Buchan (Dr Whiteford), where it is more likely that people will live in a household with some income, because unemployment is relatively low, so a partner, husband or wife might be working, those people will lose benefits altogether because they will not qualify for the income-related benefit that would replace it. That is why 58,000 are likely to fall out of the benefits system completely. These are people who have paid into the system all their lives. They thought that, when things turned difficult for them, when something happened and they were not able to work anymore, the welfare state would be there for them and national insurance would work as the name suggests—as an insurance that they would get that contributory benefit. This Government have decided that that is not good enough and that this group will qualify only for employment and support allowance for a year. In a year, someone might have managed only to get a diagnosis. They might have only just started their cancer treatment, they might still be getting worse but not be bad enough to be in the support group, with a degenerative neurological condition that has just been diagnosed. After a year, their money will stop if they are in the work-related activity group of ESA.

Mr Reid: How long does the hon. Lady think that people in that category should continue to receive ESA?

Dame Anne Begg: Until they retire, which is what the position is at the moment. If they are in the support group, they will keep it for ever.

The hon. Gentleman’s intervention has given me the opportunity to raise something that he can discuss with his colleagues in the Department for Work and Pensions.

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The way that the national insurance system works is that if someone has not made a NI contribution for the previous two years, then they do not get the contributory benefit. I tabled a written question to ask what happened if someone had been in the work-related activity group for two years and then got worse, particularly if they had a degenerative illness, and found themselves in the support group. They would not have the national insurance contribution to go back on to the contributory element. Would they be able to get the ESA? The reply from the Minister was unequivocal—yes, they would be able to go back on to contributory ESA if they had moved from the WRAG to the support group after two years.

However, in correspondence with an official, some doubt has been cast on whether that is indeed the case. It is not clear from the Welfare Reform Bill, and it is certainly not clear from the debates around the Bill, whether someone who has been on WRAG for two years will get their contributory ESA back again should they get worse. This is very important for people with conditions such as multiple Sclerosis and Parkinson’s. If someone has a really bad episode and goes straight into the support group, they will be able to keep their contributory ESA for the rest of their working life, whereas, if they have a slowly progressing disease and go into WRAG for a couple of years, but then end up just as ill and disabled as the other person, they do not get it back. It seems unfair and arbitrary. The Government must get this right and be clear about it, or large numbers of people, potentially those with some of the most profound disabilities and ill health, will be disadvantaged simply because they fall the wrong side of the line when they go for their work capability assessment.

Mrs McGuire: Is that not why it is faintly ridiculous, at this point in the legislative cycle, when the Welfare Reform Bill has completed its passage through the House of Commons and has completed most of its stages in the House of Lords, that we do not yet know what the regulations will say on something that could have a massive impact on the lives, not just of disabled people but of the poorest people in communities in Scotland?

Dame Anne Begg: My right hon. Friend is absolutely right. One of my concerns as Chair of the Select Committee is, when there is parliamentary scrutiny of those regulations, to make sure that there are no unintended consequences. I hope that this is an unintended consequence on the Government’s part—I do not think that they would be so hard-hearted to be that unfair, and I hope that the Minister will acknowledge that they realise that, in some areas, they have simply got it wrong, because they are trying to take money away from people who have paid into the system all their life.

I am conscious of the time, so I will not say a great deal more. We will move from disability living allowance to the new personal independence payment, and the Government say that they are going to cut 20% from that budget. I could go on at length about that but, in summary, all those things taken together will mean that the income of the poorest people in our communities—those who have the hardest time because of ill health or disability—will be drastically cut. They will bear the brunt of many cuts in Government spending. They are the ones least able to cope, and it will be their

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communities—if the money had come into their hands, at least they would spend it in local shops—who suffer. Those shops and facilities will close, and those areas, which already suffer the highest incidence of poverty, will be hit particularly badly. The Opposition think that that is unfair. It is unjust, and I urge the Government to look again.

Several hon. Members rose

John Robertson (in the Chair): Before I call the next speaker, may I tell hon. Members that the debate will end at 4.12 pm? I shall call the first Front-Bench speaker at 3.52 pm at the latest.

3.32 pm

Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab): I congratulate my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) both on obtaining such an important debate on St Andrew’s day and on her excellent speech.

My hon. Friend challenged us to speak up for the poorest and most vulnerable, and we already have enough evidence to show that poverty in Scotland is rising. It is therefore appropriate to address that very serious matter. We have seen increasing youth unemployment and, right up to yesterday, reckless cuts to incapacity benefits, disability living allowances, winter fuel payments and the rest. Earlier this month, The Guardian reported that 500,000 people will be forced off incapacity benefit. Scotland will be one of the worst-hit areas. Child poverty, youth unemployment and fuel poverty have all increased, and are set to rise further. As I said, yesterday was no help.

A Government who promised

“not to balance the books on the backs of the poorest”

have barely responded to that pledge. They admitted yesterday that it will take another two years, with all the pain but without any gain. Youth unemployment, which is a scar over Scotland, stands at a quite remarkable figure of 1.02 million—the highest ever recorded. There will be a lost generation of young people, just as in the ’80s and Mrs Thatcher’s time, which will lead to broken homes, broken relationships, dashed hopes and broken dreams.

I would not for one second, particularly as I am asking all my colleagues to reflect on what youth unemployment means, condone the riots that took place in England. Indeed, I am pleased that they did not extend to Scotland. However, it would be naive in the extreme to continue with those figures and statistics—the reality in Scotland—and not expect young people to articulate their views. We were first warned about that as long ago as the war, when Sir William Beveridge wrote:

“If full employment is not won and kept, no liberties are secure, for to many they will not seem worth while.”

We can barely say that we were not warned.

Since 2010, JSA claimants rose in most deprived areas of my constituency—I underline that—from 26.3% to 28.1%, against a UK average of 3.9%. We are asking what the response is. What is the coalition prepared to do? The whole picture is quite unacceptable, and certainly in my constituency. I will meet local officials from the

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Department for Work and Pensions on Friday to examine in detail what is happening to people in my constituency who are unemployed.

Unemployment, I think Opposition Members agree, is not just a statistic. Save the Children said that

“children living in low income households are nearly three times more likely to suffer mental health problems than the affluent.”

The link between life expectancy and income is well documented. These are real people with real lives that are about to be wrecked unless we rescue them in time. In my constituency, there are high numbers for unemployment and for people suffering from anxiety and depression, and—this is consistent with what my hon. Friend the Member for Aberdeen South (Dame Anne Begg) so eloquently said—those people often find that those things go together. That increases the number of DLA claimants. I therefore challenge the heart of the Government’s economic policy. Taking people out of poverty is a sensible thing to do. It is a moral responsibility, but it is also economically correct. How long are we prepared to go on paying people to be unemployed—3 million of them—and, as we did in Mrs Thatcher’s time, ask those who pay taxes to make that contribution? Taking people out of poverty is one of the biggest challenges that we face, particularly in Scotland.

Recently, my colleagues have raised the issue of fuel poverty again and again. Three thousand people in the UK die from fuel poverty every year, which is more than the number of Britons killed on the roads. In Scotland, there are nearly 1 million homes in fuel poverty. What have the Government done, and what should we urge them to do? Their policies have led to increases in fuel prices, and they have cut winter fuel payments and even cut the tariff for solar energy—hardly an approach to make Scotland a greener country.

Mr Alan Reid: The right hon. Gentleman referred to the cut in the solar energy tariff. If the Government had not made that change, it would have meant far higher electricity bills for everyone, so his argument is inconsistent.

Mr Clarke: I wish I had more time to develop an argument that I think the hon. Gentleman heard when I was fortunate enough to secure a debate on energy in the House a year or two ago. Indeed, on the subject of energy, that leads me very nicely to the next point that I wish to make. How long are we in Scotland and in Britain prepared to wait for six companies—for all the world, they look like a cartel to me, and I do not see the regulation that we expect from the regulators—to act? How long are we prepared to put up with this? Even last week, people were told by Ministers, “Well, what you do is change to another company.” We all know what happens then: if we change to another company, they put up their prices, too, and they do so again and again, which is wholly unacceptable.

Mr Reid: Will the right hon. Gentleman give way?

Mr Clarke: No, because of time and others may wish to speak.

Mr Reid: I was going to agree with him.

Mr Clarke: My purpose is to make conversions, Mr. Robertson, and I have been able to do so.

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In common with my hon. Friend for Aberdeen South, I would like to discuss disability because many of the people we are thinking about, many of those who have made representations to us and, indeed, many of those who are unable to make representations are those who might be considered either disabled or the family or friends of disabled people. Contact a Family told us that 52% of families with a disabled child are at risk of experiencing poverty. That is no surprise when we know that it costs three times as much to bring up a disabled child than a child without disability. The income of families with a disabled child averages £15,000, which is 25.5% below the UK mean. Barnado’s told us recently that only 16% of mothers of disabled children are able to work compared with 60% of mothers generally.

I am glad that my right hon. Friend for Stirling (Mrs McGuire) is present, because she brought the issue of the mobility component to the attention of the House. Yesterday, I was happy to see that after battle, including debates in this place, the Government announced that they were retreating on their intention to take the mobility component of DLA from people who live in residential homes. The original proposal was an outrage that should never have been considered and it caused a great deal of unhappiness among a large number of people and their families. That was unacceptable. As my right hon. Friend has said, however, the announcement was not made in this House, where it should have been, but in The Times.

For all the reasons that my right hon. and hon. Friends have given, I strongly support the attempt by my hon. Friend the Member for Ayr, Carrick and Cumnock to focus on the issue of poverty. It is St. Andrew’s day and we are concerned about Scotland. It can be, and will be, a great Scotland. Of late, I have been fortunate to invite new companies into my constituency, and I welcome that and those entrepreneurs’ enthusiasm. However, they are entitled to more encouragement than they are getting, but so far the Government have not shown any lead on that. Today, I believe we are speaking for Scotland, and I believe that Scotland is listening.

John Robertson (in the Chair): Before I call Mrs McGuire, I call her attention to the fact that the Front-Bench contributions will begin at 3.52 pm.

3.43 pm

Mrs Anne McGuire (Stirling) (Lab): I conscious of that, and I would not like to fall out with you, Mr Robertson. This is the first time that I have been in this interesting power position with you, and I will make sure that I obey your orders.

I would also like to add my congratulations to my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) for initiating this debate in Westminster Hall. I only want to make a short contribution.

The emphasis today has been on welfare issues, to which I will return if I have the time, but I want us to recognise what poverty means for many people, particularly children. A group launch by anti-poverty campaigners in Glasgow clearly identified the fact that children and young people who are growing up in poverty suffer from a range of disadvantages that other children do not experience. They were far less likely to be involved in leisure activities than other children because their families could not pay for them. They were three times

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less likely to play a musical instrument— something that is about enhancing people’s lifestyle, but children in poverty do not have the same access to that advantage. It is interesting to note that, given the emphasis on football in Glasgow, the group also highlighted the fact that young people from better-off households were four times more likely to be involved in a football club than those children from poorer households. That sort of hidden poverty, which we do not always emphasise in debates such as this one, is the real price that many families are now paying.

The hon. Member for Argyll and Bute (Mr. Reid) asked us, “What would you do?” I would actually like to flip that coin back to him and say that it is not just what we would do, but what they have done that is making the significant difference to people in Scotland, for example the decision to reduce the Sure Start maternity grant to the first child only. That grant was of great benefit to many poorer families. The Government have also frozen child benefit and other benefits, even those in-work benefits, have been uprated according to the consumer prices index rather than according to the retail prices index. They have also removed discretionary tax credits, such as the baby element, which means the loss of £545 a year per family. According to the House of Commons figures, a baby born into a low-income family from April 2011 will be about £1,500 worse off compared with a sibling born into the same family before April 2010. That is the sum lost from a family where every penny counts.

Frankly, those supporting the coalition Government have to accept that it is not a question of what we would do, but what they have done. They need to answer whether they have made life better or worse for the poorest members of our society. As I look around my constituency and I look at others areas of Scotland, I think we must make the judgment that the coalition Government have made life worse for many of the poorest people in our communities. If there is anything that we need to give testimony to that, surely it must be the fact that there are now more people in cities in Scotland relying on handouts and food parcels than ever before. I never thought that I would see families having to rely on emergency food rations from organisations that were set up specifically for that purpose. What sort of civilised society are we that allows a family to be so poor that it cannot feed its own children? That is my condemnation of the way in which the Government operate.

I want to put a question particularly to those Lib Dem members of the coalition who I know are good people. They need to look back at their own history and see exactly where they came from. Go back and look at some of the great developments of the 19th( )century, such as those made by the Frys, the Rowntrees and the Cadburys. They took those actions because they recognised the link between poverty and lack of aspiration, between unemployment and people being unable to live a decent life. Over the Christmas recess, I hope that some of those Lib Dems will have time to reflect on what they are doing to collude in a situation that is making life much worse for many people in Scotland.

Mr Reid: I am grateful to the right hon. Lady for giving way. The economic situation is grim, and none of us wants to see people living in poverty. I came along to this debate because I wanted to hear what suggestions

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Labour Members had for doing things differently. So far, I have not heard any, and I would be grateful if the right hon. Lady could actually tell us what Labour would do differently if it were in power.

Mrs McGuire: Let me explain what we did differently. We did things differently over 13 years when child poverty decreased from 27% to 20%. We made it a legal obligation on Government that they should reduce child poverty. I will tell the hon. Gentleman what we would not have done. We would not have sacrificed the poor as the Government are now sacrificing them. I know that the hon. Gentleman is a good person, and he must ask himself that question during the Christmas recess when he might have wanted to think of other things. We have seen a deterioration in the standards in which the poorest in Scotland have to live their lives – 850,000 people, and rising, are living in fuel poverty, according to Consumer Focus. Finally, may I say in this debate that poverty is not just about money, although money is important? Poverty creates an environment where, if children cannot eat a breakfast in the morning, they cannot go to school and learn; where they are excluded from the company of their peers, because they cannot afford to enjoy that company; and where they cannot go to a school dance or participate in sport. Worst of all, it creates an environment where many of them suffer not only from financial, educational and health poverty, but from a poverty of ambition. Frankly, that is dangerously close to the legacy that this Government are going to give hundreds of thousands of children in Scotland, unless they start to reflect on what they are doing and deal with it quickly.

3.50 pm

Mr William Bain (Glasgow North East) (Lab): It is a pleasure to serve under your chairmanship for the first time, Mr Robertson, and to reply from the Opposition Front Bench to this important debate.

I pay tribute to my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) for securing this debate and for speaking with such passion and commitment about the effects that material inequality, lack of money, lack of resources and lack of opportunity have on the quality of life of her constituents and many thousands of people across Scotland. She referred in her speech to a historical figure—Nye Bevan, of course. Today, it might be fitting to recall the words of another historical figure, former US President Franklin Roosevelt, who once said:

“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have little.”

That is what the Government are failing to do in its policies today.

I also pay tribute to the contribution from my hon. Friend the Member for Glasgow North (Ann McKechin), who spoke movingly about the impact that housing benefit changes and lack of money are having in driving up levels of food poverty in Glasgow, and also to my hon. Friend the Member for Aberdeen South (Dame Anne Begg) and my right hon. Friends the Members for Coatbridge, Chryston and Bellshill (Mr Clarke) and for Stirling (Mrs McGuire), who spoke with great passion and eloquence about the effects of deindustrialisation

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in Scotland and the damaging effects of the Government’s reforms of disability, housing and sickness benefits. My right hon. Friend the Member for Stirling impressed the House this afternoon with her historical sweep and with the notion that she very ably tied between equality and liberty—the fact that they go together and that one simply does not exist without the other.

I recently had the privilege of attending a briefing arranged by the Resolution Foundation, which is hosting the Commission on Living Standards. The presentation gave some staggering statistics from the foundation’s ongoing work. There is an increasing dislocation between growth and living standards. In the past three decades, for every £1 of growth generated in our economy, just 12p is going into wages in the lower half of the income scale, which is a fall of a quarter. Those trends have been exacerbated by the squeeze on jobs and the squeeze through increased taxes and lower tax credits that have been in the Chancellor’s Budgets so far and, sadly, in the autumn statement yesterday.

From that event, there also emerged three themes that are necessary to drive an increase in living standards and reductions in poverty in coming years: full employment, the importance of income transfers—including the tax credits system—and rising wages. The foundation has estimated that the squeeze on living standards that is being imposed by this Government—the steepest since the 1920s—means that to make good the gap, the level of the minimum wage would have to rise to £6.29 per hour by 2015. That is the extent of the squeeze that is impacting on people in this country today. The words of the US economist Lane Kenworthy are very important, reflecting that income transfers—the tax credits system—have been critical in this country and across the western world to seeing an improvement of the living standards of those in the lower half of the income distribution scale.

I also want to endorse some of the findings of UNICEF Scotland’s recent report, which points out the damaging effects of failing to tackle asset-based inequality. The Government have scrapped the child trust fund and introduced an inadequate replacement in the form of junior ISAs, and we will see damaging effects for young people in their failing to build up that nest egg of savings that would help them go to college or university, to start a job and to pay for the necessary expenses for a good start in life.

The key to tackling poverty and to seeing a fairer distribution of wealth in our society is to increase levels of good jobs in our economy and to aim for full employment. Yesterday, the Office for Budget Responsibility downgraded its forecasts for levels of employment throughout this Parliament. It revealed that 710,000 public sector workers will be thrown on to the dole queues in this Parliament. Overall, unemployment will surge by a further 500,000, destroying the lives of people who are claiming benefits when they could be providing services and paying taxes instead.

Scotland will suffer hugely through the absurd economic theories that underpin such devastating choices. As a result of the Chancellor’s failure to change course on public spending and to introduce a proper plan for jobs and growth, Scotland is likely to suffer from rising unemployment, lower growth and the biggest attack on the living standards of ordinary people since the 1940s. The Chancellor said yesterday that he would like to

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tackle the causes of poverty, but he has slashed support for hard-pressed Scots families who are burdened by big rises in child care costs.

This week, the Social Market Foundation stated, in its report entitled “The Parent Trap”, that average families face an increase in child care costs of more than £600, a rise of up to 62%, which is more than the cost of a family Christmas for average families in Scotland. Yesterday, the Government failed to cut VAT to boost consumer confidence and failed to increase demand amid slumping growth.

Sandra Osborne: My hon. Friend is answering some of the questions of the hon. Member for Argyll and Bute (Mr Reid), who seemed to think that the Labour party had no alternative proposals to put forward. I am pleased to hear my hon. Friend telling the House about what we would do if we had the opportunity.

Mr Bain: My hon. Friend is entirely right. Yesterday, the OBR’s figures revealed that if we had followed the public spending plans of my right hon. Friend the Member for Edinburgh South West (Mr Darling), borrowing would be £37 billion less. There is an alternative—based around growth and job creation—that would not have visited the damaging effects of increased poverty and inequality which this Government are waging on the people of Scotland.

Mr Reid: None of us wants to see poverty or inequality, but the only solutions that the hon. Gentleman has brought forward are to cut taxes and to increase public spending. Please will he tell us where the money would come from to do all that, without getting the country even deeper into debt and the mess that his Government left behind?

Mr Bain: Thankfully, there are more enlightened Governments in Europe. For example, the newly elected Socialist-led Government of Denmark, who have introduced a stimulus package, have seen bond rates lower that those of the United Kingdom and have entirely defeated the arguments of the right-wing parties in Denmark, which predicted that bond rates would rise if a Socialist-led Government introduced such a stimulus package. The reality does not bear out the hon. Gentleman’s point.

Mr Reid: The hon. Gentleman still has not answered the question of where the money would come from without the country being put deeper into debt.

Mr Bain: It is very clear that this Government are borrowing to cut, not borrowing to grow. The entire theory that the Chancellor has drawn on from some of the extremes of right-wing economics in America in the 1980s and 1990s—essentially, that Governments should shrink and shrivel the public sector and that the private sector will take up all the slack—has simply been destroyed by what the OBR published yesterday. That theory does not work, and it is causing increased poverty and inequality in our country. The hon. Member for Argyll and Bute (Mr Reid) should disown it today.

With both Governments—the one here and the one in Edinburgh—simply not having done enough about youth unemployment, we have a rate of youth unemployment

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across the UK of 20%, but it is even higher in Scotland, at 21.3%. Nothing speaks more to this Government’s failure of ambition to cut child poverty than yesterday’s cruel grab by the Chancellor on the promised uplift on child tax credits and working tax credits. For the coalition parties to slash the tax credits of low and middle-income mums and children in Scotland at a time when the real value of wages declining by 3.5% this year, as revealed by the Office for National Statistics last week—is an act of brutal contempt for the plight that the poorest are facing, with spending cuts that are too far, and too fast for ordinary families to bear.

In 2009-10, 153,000 families in work in Scotland received working tax credit and child tax credit, and this helped 250,000 children in Scotland. People in Scotland cannot see how it will be fair to snatch £1.2 billion in tax credits from low and middle earners while the Government have raised the bank balance sheet levy by a paltry £300 million in the same autumn statement. They will wonder how the Prime Minister can ever again have the brass neck to claim that we are all in this together. Scottish families will lose the extra £110 per child that they were promised in the Budget this year and expected to receive next year. Freezing the working tax credit will cut working families’ income by an additional £100.

As the Resolution Foundation established yesterday, more than three quarters of the burden in new cuts in tax credits is faced by people in the lower half of the income scale, with those in the top 10% simply meeting 3% of that burden. Total tax credit cuts next year will amount to £2.9 billion, a tenth of the entire tax credit expenditure. This afternoon the Institute for Fiscal Studies has given its verdict on the Chancellor’s squeeze on the living standards of ordinary people: average incomes will fall by 7.4% between 2009 and 2030. Based on the OBR’s own figures, it has calculated that families face a slump in the value of their household disposable income of 3% this year compared with a predicted 1.1% at the time of the March Budget, a fall of 1.1% next year compared with a predicted rise of 0.7% in March. Most damning of all is the finding by the IFS that the distributional effects of the changes announced by the Chancellor yesterday will punish those in the lowest two income deciles. Unbelievably, those in the wealthiest 10% are among the few gainers. Unsurprisingly, it is families with children who take the biggest hit. As Paul Johnson of the IFS said on BBC Radio 4’s “World at One”, this afternoon,

“failure to index some elements of tax credits…will leave some poorer families worse off, and will lead to an increase in measured child poverty…The Government have no chance at all of reducing child poverty.”

What a damning finding on what the Chancellor did yesterday.

In terms of public services, on which the poorest rely most heavily, the IFS has today discovered that the Government are planning a huge assault on public service spending, a 16.2% real-terms cut over the next seven years, far beyond the previous record of 7% real-terms cuts in the 1970s. The Chancellor’s promise not to balance the books on the backs of the poorest lies in tatters this afternoon. His own Treasury figures show that the poorest fifth of the population are amongst the biggest losers from the tax and benefits measures in his Budgets and autumn statements, and inequality is on the rise. He could not even bring himself to admit in

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his statement yesterday that his own figures show that child poverty will rise across the UK by a further 100,000 in the next tax year as a result of his cruel cuts in tax credits and housing benefits.

This Government have made their choice: slumping growth, rising poverty and higher unemployment are the prices worth paying for a failed economic theory that is letting Britain down and offering nothing but despair for the jobless millions. Now, Scotland can see them as they truly are—the downgraded Chancellor of a deflationary and uncaring Government.

4.4 pm

The Parliamentary Under-Secretary of State for Scotland (David Mundell): Thank you, Mr. Robertson. I welcome the opportunity to appear under your chairmanship, and it is particularly appropriate that you are in the Chair for this debate on St. Andrew’s day. I pay tribute to the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) for instigating this debate. She and other hon. Members who have contributed to the debate are correct to say that there should be more discussion and debate of these issues in relation to Scotland, and that there should be more discussion and debate in this Parliament in respect of the reserved issues for which this Government are responsible in Scotland. Scotland has two Governments, both of which play a significant role and both of which should be held to account.

I also agree that the two Governments should work more closely together on many of the issues that have been touched on today. Sadly, for reasons also touched on by many hon. Members, principally the obsession of the SNP Government in Edinburgh with independence and constitutional issues, it has not always been possible to have the dialogue that would serve the people of Scotland best—on substantive matters in relation to policy objectives and outcomes, rather than the debate constantly being about who did what.

We have had a number of detailed contributions to the debate, particularly by the hon. Member for Glasgow North (Ann McKechin), and the hon. Member for Aberdeen South (Dame Anne Begg), who chairs the Select Committee. I give them a firm commitment that I will take away the points that they have made, and raise them with Department for Work and Pensions colleagues and I will write back to them on their specific points. While we might not be in agreement on the policy prescription, or whether the policies of the Government of which they were a part delivered much of what the hon. Member for Ayr, Carrick and Cumnock set out, I am in agreement with them that the issues that they raised are important and significant.

As ever, I commend the right hon. Member for Stirling (Mrs McGuire) for the passion in her contribution. Again, the issues that she raised are worthy of much

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more significant debate, especially in relation to the concerns about the impact of hidden poverty, which is not just a financial issue. There would be agreement across the House on that. I listened to the points made by the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke). I do not necessarily agree with what he had to say, but I sense his passion on the issue, and he has a long track record of fighting the cause of the poor, and that is to be commended. My hon. Friend the Member for Argyll and Bute (Mr Reid) did not make a speech, although it felt as if he did. It will not surprise you to learn, Mr. Robertson, that I agree with most of the points that he made in his interventions. I am sure that, over the Christmas period, when he reflects on such matters, as he was asked to do by the right hon. Member for Stirling, he will reflect on the many achievements of the coalition Government in taking forward their agenda. When he intervened on the hon. Member for Glasgow North East (Mr Bain)—I welcome him to the first real exchange that we have had since he took his position—my hon. Friend the Member for Argyll and Bute make the most significant point, which is how the various aspirations that were expressed during the debate would be paid for. We did not hear anything about that. We heard again about Labour’s five-point plan. As far as I am aware, that is a £20 billion black hole for which no funding has been identified.

Sandra Osborne: Does the Minister agree that a far more effective way of solving the youth unemployment problem would be a £2 billion tax on bank bonuses, which would fund 100,000 jobs for young people?

David Mundell: The hon. Lady knows that the Government have moved forward with a bank levy, which has raised more than the tax on bonuses that her Government set out. It is populist to say, “tax the bankers,” but that does not set out where the money would come from that would create the funding she suggests.

I hope the hon. Lady will join me in welcoming yesterday’s announcement on the youth contract—a significant step forward in tackling what everyone accepts is the serious problem of youth unemployment. Of course, it was not acknowledged in today’s debate that youth unemployment rose under the previous Labour Government. Youth unemployment is a serious issue, on which we should be trying to work on a cross-party basis. That is why I was pleased to be part of a seminar in Ayrshire with the hon. Member for Central Ayrshire (Mr. Donohoe), bringing together the UK Government and the Scottish Government to look at the underlying problems of youth unemployment. That is why I am pleased that my right hon. Friends the Secretary of State for Scotland and the Secretary of State for Work and Pensions will host a national meeting in Scotland with John Swinney to focus on youth unemployment in Scotland.

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Working Tax Credits

4.12 pm

Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op): It is a pleasure to have been able to secure a debate on which I have been trying to be successful in the ballot for some time. It is a pleasure to serve under your chairmanship, Mr. Robertson, and to welcome the Minister to her relatively new job. I warmly congratulate her on it. She is surely further proof that all the best parliamentary careers begin in the Whips Office.

I am pleased to see a number of other hon. Members present. Several changes have been announced to working tax credit, not least those yesterday in the autumn statement. I will try to accommodate any colleagues who might wish to highlight their concerns or those of their constituents. For my part, in the time available, I want to discuss the changes to working tax credit that were announced in the spending review in October 2010. Specifically, from April 2012, the total weekly hours that a couple with children need to work in order to qualify for working tax credit will go up from 16 to 24, with one partner needing to work at least 16 hours a week. At present, couples whose annual income is less than about £17,700 a year qualify for tax credit if at least one of the couple works 16 hours a week. I want to talk about what these changes will mean for working families, how many of those families will be affected and what it will mean for couples where one partner has caring responsibilities.

Ann Coffey (Stockport) (Lab): I congratulate my hon. Friend on getting this important debate. We are all sorry that it is not longer.

My hon. Friend might be interested to know that I recently sent out a survey to find out about the child care arrangements of parents in my constituency. Interestingly, a number of grandparents replied; they all made the similar point that, without the free child care that they provided, parents would be facing mounting debts because of the squeeze on their family incomes and long-term financial problems. Does he agree that the Government have not properly thought through the cumulative affect of their policies on families?

Jonathan Reynolds: I agree with my hon. Friend. If we had had one of the longer slots for debate, perhaps we could have discussed in more detail the interaction between working tax credit, child tax credit and the child care allowance. The interconnection between them is crucial. I shall ask the Minister near the end of the debate what transitional arrangements could be considered for some of those who are most badly affected by the changes.

Working tax credit has played an important part in recent development of the welfare state. When working tax credit was introduced in 2003, it balanced the goal of eradicating child poverty with promoting work. It currently offers around £4,000 for families on lower incomes and aims to ensure that families will always be better off in work. Until it was introduced, too many families had complained that going out to work might leave them less well off financially. Working tax credit was introduced to ensure that work always paid. It did

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so much more. Encouraging people back into work concerns more than just the contents of their pay packet. Work is about skills.

Bill Esterson (Sefton Central) (Lab): My hon. Friend has done well to secure this debate. He is talking about the difficulties of getting into work. This is particularly true for part-time staff. The change in the threshold from 16 to 24 hours is of great concern to people in my constituency, particularly those in the retail sector, where shifts will not be available because of the dire economic situation we face. Those people are among the 200,000 families who potentially will lose up to £4,000. This measure could force families back on to benefit and out of work. Surely this is not the right way to proceed.

Jonathan Reynolds: I agree with my hon. Friend. It is specifically the impact on people working in, for instance, the retail sector that has prompted me to apply for this debate. I am sure that my hon. Friend and I agree that we do not want to see anything that makes it potentially less attractive for people to go out to work.

Couples and single parents who currently work for at least 16 hours a week are eligible for working tax credit. According to the Government’s proposals, from April couples will have to work an extra eight hours in order to qualify. Failure to secure additional work will exempt claimants from the credit completely. The reality is that about 280,000 families in receipt of working tax credit currently work less than 24 hours a week. Under the proposals, they could lose up to £4,000 a year.

Stephen Timms (East Ham) (Lab): This is a very important point. Will my hon. Friend confirm that they will lose not only their working tax credit, as he said, but their child care tax credits if they use child care, as many will? They could lose another couple of thousand pounds there.

Jonathan Reynolds: Absolutely. They stand to lose even more when child care is taken into consideration. There is an internal tension between the Government’s stated ambition on universal credit and these actions. It would be interesting to hear the Minister’s views on how those two aspects interplay.

Mr Andrew Smith (Oxford East) (Lab): I join the chorus of congratulations extended to my hon. Friend. I hope that he gets time to make some points between interventions.

Does my hon. Friend agree that this represents an incredible retreat from, and abandonment of, the historic pledge by the previous Government to eradicate child poverty within a generation? Will this not have the opposite effect, in terms of the welfare to work agenda—perversely forcing some people to go back on to benefit because of all the losses they will suffer, as hon. Members have said?

Jonathan Reynolds: Indeed. A family currently on £18,000 a year could lose £4,000, which is a huge loss. It will, as I understand it, push as many as half a million children back below the poverty line.

The Minister may say to me that the simple solution is for claimants to work an additional eight hours. For some people in receipt of working tax credit, the demands

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of caring, child care or limited health may make it difficult for them to work those additional hours. These changes make no allowance for that.

I was first alerted to the scope of this issue when I was contacted by a resident in my constituency who was hit by a car 11 years ago. He was previously employed as a printer and would routinely work 12-hour shifts a day for his family. He has not been able to work since the accident and needs some degree of care. His wife, as well as caring for her husband and their young daughter, works 17 hours a week in a before and after school club. She cannot increase her hours at the school because the club runs only for those 17 hours a week. With the caring responsibilities for her husband and daughter, she would struggle to find a second job with sufficiently flexible hours. The money they receive though working tax credit makes a real difference. Under the Government’s plan they would lose it.

I acknowledge that, rightly, the Government do not plan to increase the hours of work required by single parents, in recognition of the additional pressures they face. However, they also need to consider the impact that these changes will have on families where one member is disabled, or one member has a caring responsibility, or both. They should urgently consider whether additional exemptions should be applied. Indeed, I put a range of parliamentary questions over the past six months to the Exchequer Secretary, to try to ascertain how many of the 280,000 couples that this will affect have a partner with caring responsibilities or a disability, and to get a more detailed breakdown. However, the Government could not provide much of that information, and what they could provide was extremely limited.

As I have said, the promotion of work is at the heart of the working tax credit scheme. The principle of asking people to take on work to qualify for working tax credits is a positive one. But if the amount of work we require is unrealistic, it will hurt rather than help some of the most vulnerable people in our society.

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): I thank my hon. Friend for giving way and for securing this debate. I am sure he will be aware of this, but will he comment on the point made by the trade union USDAW that 78% of the couples it has surveyed who work between 16 and 24 hours say that there is no way in which they could increase their working hours, and that the retail sector is particularly squeezed at present, meaning that overtime that may have been guaranteed in the run-up to Christmas in previous years is no longer available ?

Jonathan Reynolds: Absolutely, and I am very grateful to USDAW for its support in giving me research and case studies relevant to this debate, because these proposed changes will particularly impact on the retail and service sectors, where there is a prevalence of part-time work. They are rightly concerned about the impact it will have on their members. I have seen their tax credits survey, which suggests that 79% of their members who receive working tax credit would not be able to secure additional hours from their employers before next April. Indeed, they have already talked to members who have repeatedly tried to secure extra hours from their employers, but

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been told that the work is not available. Where additional hours are available they are often late at night or very early in the morning. The lack of public transport means that members cannot take them.

An added complication is that there is often a mismatch in the retail sector between the hours staff are contracted to work and the hours they actually work. In recent years there has been a trend for retailers to cut the hours staff are contracted to work, with an expectation that they will work longer, additional hours at busy periods. That means that under the proposed changes couples actually working more than the 24 hours that makes them eligible for working tax credit might not get it because not all of their hours are contracted.

I put it to the Minister that that would be completely unconscionable, and I respectfully request that she address this point when she responds to me later in the debate.

I do not yet believe that the full impact of these changes has been considered or identified by the Government. The Government claim they are still committed to ending child poverty, but this is a measure that has the potential to push many families well below the poverty line. It is a regressive step that will concern many Members.

I would hope that the withdrawal of working tax credit from those who could not secure additional work would not prompt a return to the old idea that work will not pay. But that is the risk, and that would be the tragedy, not only for the employees concerned but for the parts of industries that rely on a flexible work force willing to work just a few hours a week.

In these tough economic times I would rather that the Government reviewed their plans, but I do not think that they will do that. Instead, may I implore them to do two things? I ask them, first, to exempt couples where one partner is either disabled or a carer from these changes; and, secondly, to increase awareness of the change among employers and employees, to ensure that they have the best chance of working together so that they can fulfil the requirements for eligibility for working tax credit payments. In addition, if these changes are to go ahead, will the Minister consider what help the Government can give to the most badly affected couples in terms of transitional arrangements?

This change will impact on the lives of many thousands of struggling families, many of whom are my constituents, and I am extremely grateful to be able to highlight this matter before the House this afternoon.

4.23 pm

The Economic Secretary to the Treasury (Miss Chloe Smith): First, may I congratulate the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) on securing this debate, and thank him for his kind words about my role at the beginning of his comments? He has asked me a number of specific questions, which I shall be happy to address. In addition, I would like briefly to set out the various reforms to tax credits. I will talk a little about child poverty and, of course, about work incentives, before addressing fully his main point about the 16 to 24 hours change.

Bill Esterson: In her reply, will the Minister deal with the central issue of fairness? Does she think that targeting the poorest families by cutting tax credits is a fair

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approach as a deficit reduction measure, or does she think that this is wrong, and that the Government should target the bankers?

Miss Smith: I will happily tackle that. In fact, the hon. Gentleman brings me straight to the main point with which I must preface my comments, which is that we are in a very difficult position, economically speaking. That cannot have escaped the attention of anybody sitting here, least of all the right hon. Member for East Ham (Stephen Timms), who I know is very alive to all such matters. However, the fact is that when faced with a very difficult economic situation, we have to make very difficult choices. We must be mindful of the fact that to leave the country struggling under an enormous debt burden does not help anybody; normal working households would not thank us for failing to deal with that situation. So that is one view of fairness to which I shall return throughout my speech.

Mr Andrew Smith: I am very grateful to the Minister for giving way. If we accept for a moment the premise of her argument—tough times, difficult choices—is it not all the more important to have the closest regard to fairness, the point that my hon. Friend the Member for Sefton Central (Bill Esterson) was making? How can it be fair to target these working people in the way the Government are doing?

Miss Smith: I am unsure from his comments whether the right hon. Gentleman accepts the premise that we are in difficult economic times. I do not know which parallel universe he is living in, but if he is in the same one as I am, he will know that, yes, of course we must do what we do as fairly as possible. He will also know that our bank levy is raising more every year than his party raised in one year, and with that I shall, I hope, lay that topic to rest, unless the hon. Lady would like to take it further.

Debbie Abrahams (Oldham East and Saddleworth) (Lab): Would the Minister confirm that 100,000 extra children will be pushed into poverty as a result of the reduction in working tax credit that was announced yesterday? Will she confirm that that was what the OBR says the additional number of children in poverty will be?

Miss Smith: I can confirm that that figure relates to the measures of child poverty as set out by the Child Poverty Act 2010 and by the current debate. No doubt, the hon. Member for Stockport (Ann Coffey) is already rubbing her fingers with glee about that. I will come on to that in my comments as well. I wish to introduce the idea that we need to move on to tackling the causes of poverty rather than the statistical method of counting poverty.

Mrs Sharon Hodgson (Washington and Sunderland West) (Lab): As we realised from the autumn statement yesterday, the Chancellor seems quite fond of giving with one hand and taking away with the other. We can see what has been taken away: up to £4,000 from these families. Is there anything that these families will get in return that would help to fulfil the Government’s promise that they would be the most family-friendly Government in history? From what we have heard today so far, there is not, but could the Minister enlighten us?

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Miss Smith: I thank the hon. Lady very much for her consideration in the sequencing of interventions and I will come on to exactly that point.

I will continue to speak briefly about the high level need for action which drove yesterday’s announcements. As hon. Members will know, the UK economy is recovering from the biggest financial crisis in generations. June 2010’s Budget set out the Government’s plans to reduce the deficit and rebuild the economy. However, since then—and this is the crucial point from yesterday’s analysis which accompanied the OBR’s figures, and both must be taken together in my view—the UK economy has been hit by a number of shocks. The OBR names three: first, higher than expected inflation, which the OBR calls an “external shock”; secondly, ongoing instability from the euro area crisis; and; thirdly, the full and permanent damage done by the 2008-09 financial crisis.

It is unwise not to recognise those three major factors. It is absolutely vital that we tackle our debts. It is absolutely vital that we react appropriately and wisely to the economic situation presented to us, and I think that households know that. No household would thank a Government who, instead of dealing responsibly with that situation, carried on spending, carried on borrowing and carried on racking up the debt to do so.

Debbie Abrahams: That still does not explain—to pick up a point one of my hon. Friends made—why the Government are choosing to punish honest, hard-working families instead of taxing bankers. It is about a four-times greater punishment in terms of taking away money from these families, compared to what the Government are taking away from bankers.

Miss Smith: Let me reiterate, first, the incontrovertible point that we are taking more from bankers every year than the Labour party did in one year of operation. Furthermore, I must point this out and, I hope, lay the matter to rest: the distributional allowances published alongside the autumn statement yesterday clearly indicated that it is the top 10% of the income band that is contributing.

Let me turn briefly to a summary of what was announced yesterday and previously. The Chancellor said that we will uprate the disability elements of tax credits in line with prices, and increase the child element of the child tax credit by £135 in line with inflation too. We will not, however, uprate the other elements of the working tax credit this coming year. Hon. Members have highlighted the fact that, given the size of the uprating this year, we will no longer go ahead with the planned additional £110 rise in the child element over and above inflation.

I must make a further comment, which is that of course the Government believe that the welfare system must remain fair and affordable while protecting the most vulnerable. We must also note within the figures I have just given that by April 2012 the child tax credit will have increased by £390 since last May, and that is of course per child.

A number of reforms to tax credits were announced in the June Budget and the spending review. The point is that the previous Government spent more than £150 billion on tax credits since 2003. This was unsustainable in many ways, and I will give an example before moving

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on. Under the previous system tax credits were available to families earning up to £58,000. If households had an increase in income of up to £25,000 in the year then they could have earned up to £83,000 and still benefited from tax credits. Taking on board the principles raised by hon. Members, that means to me that we had to act in a situation that appeared to be very unfair, in that people in the top income decile were eligible for tax credits. That is unjustifiable, unfair and very unsustainable in the current economic climate.

Stephen Timms: I know that the Minister was a member of the Welfare Reform Bill Committee, and so is very familiar with the advantages of universal credit set out to the Committee, which include it being available to people working just two, three or four hours a week. The Secretary of State for Work and Pensions frequently draws attention to that advantage, yet with this measure her Department is moving in the opposition direction by limiting the availability of tax credits only to those working more than 24 hours as a household. That is the opposite of what her right hon. Friend is doing.

Miss Smith: Regrettably, I thought that the right hon. Gentleman wanted to respond to why higher earners would have received tax credits under the previous system, but I will come to his point in the bulk of my comments.

Jonathan Reynolds: May I bring the Minister back to the specific move from 16 to 24 hours? The figures I have from the Treasury estimate that this change will save £380 million a year. Yes, that is a substantial sum, but the context is one of a Government now borrowing £158 billion more over this Parliament than they said they would just a year ago. If a family’s income goes from £18,000 a year to £14,000, based on this change, will they not feel some angst at a statement that focuses only on higher earners having their tax credits taken away and the wider economic impact? To go from £18,000 to £14,000 is a very big change for a family in my constituency.

Miss Smith: Let me move on to the change that the hon. Gentleman highlighted, which is the move from 16 to 24 hours. As he explained, under the current system couples with children can claim working tax credit if one partner works 16 hours a week. The hon. Gentleman will know that at the moment lone parents must also work at least 16 hours to qualify for the working tax credit. As he said, however, under the 2010 spending review, from April next year couples with children will have to work 24 hours between them, with at least one partner working 16. In response to the interventions made, this change makes the system fairer by reducing that disparity between couples and lone parents. I would not like to stand here to defend why those two groups should be treated differently. I can see the hon. Member for Stalybridge and Hyde twitching but I must move on in order to tackle two of the points he specifically asked me to address.

There are exemptions where couples may have a limited capability to work. That means that couples with children will continue to qualify for working tax credit where one member works at least 16 hours a week and that person is eligible for the working tax credit

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disability element. In addition, there will be an exemption for some couples with children where only one member works at least 16 hours a week and the other adult does not work, for example where one adult is incapacitated. A couple with children will continue to qualify for working tax credit at 16 hours if one partner is in receipt of disability living allowance.

Moving on to how else we can increase support for lower and middle income earners and improve the rewards to work. On work incentives, which I said I would cover, universal credit has already been mentioned and it is in that area—

Cathy Jamieson: I thank the Minister for giving way. Before she moves on to work incentives, will she address the point about low-paid workers who would find it difficult to get that extra eight hours to stay on the working tax credits, and who will potentially see their incomes drop from £18,000 to £14,000 in a year? What consideration has the Minister given to transitional arrangements or help for that particular group?

Miss Smith: The point I was about to make was that the introduction of universal credit is where the Government anticipate making the most major transitional arrangements, and I note the hon. Lady’s points—and those of other Members in earlier interventions—in particular in relation to retail sector work, for example. Everybody appreciates that the economic climate is hard at the moment—the ideal world is not out there for everybody. I take her point.

Moving on very briefly to the work incentives provided by the universal credit, the phrase has already been used that work must always pay and be seen to do so. One of the key features of universal credit—the hon. Lady will know this—is that it will be paid in and out of work, and that the hours rule will disappear to smooth the transition into work and ensure that that it pays.

Stephen Timms: The Minister’s Department is making the hours rule worse now. It will be better in the future; why is she doing the opposite in her Department?

Miss Smith: We need to move in one direction in this economy, which is to tackle the deficit. I made that point very strongly up front. We must also look to major reforms such as the universal credit, and perhaps before that the Work programme in some cases. There are a number of examples that I look forward to the Government delivering. I have given some; let me give some more that will also answer the points made about what people might get in return.

The Government are investing a further £380 million by 2014-15 to extend the offer of 15 hours of free education and care a week for disadvantaged two-year-olds, which will cover an extra 130,000 children. That is only one element of what the Government will do to help working families. Support has been focused on those on out-of-work benefits—this is a key point that I have no doubt the right hon. Member for East Ham will appreciate. They need greater protection against rising prices than people on working tax credit who are, of course, not solely reliant on this income; they also have income from work, which is key. I do, though, take the points made regarding the difficulty of getting a job in the palm of one’s hand before asking for it.

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The Government, however, remains committed to making work pay. As the Chancellor made clear yesterday, the best way to help working people is by taking them out of tax altogether. In April 2012 we will make a £630 increase in the income tax personal allowance, taking it to £8,105. This is in addition to the £1,000 increase in April this year. Together, these increases will benefit 25 million individuals and take 1.1 million low-income individuals out of tax from April 2012.

As I started to articulate, there is then the reform to which I look forward. Universal credit will unify the complex current system of means-tested out-of-work benefits, tax credits and support for housing into one single payment. The award will be withdrawn at a single rate, with the aim of offering a smooth transition into work and encouraging progression into work.

For parents currently on working tax credit, and in the future, the Government continue to provide support for 70% of child care costs—I am conscious that hon. Members have mentioned child care today. That goes up to a weekly limit of £175 for families with one child and £300 for two or more children. Under the universal credit this support will be extended to those working fewer than 16 hours, which will allow 80,000 additional families to receive help with child care costs. That will give second earners and lone parents, typically women, a stronger incentive to work, and I am proud of all those measures.

I shall deal briefly with child poverty and the way in which the Government see it before concluding. Poverty is about more than income; it is about a lack of opportunity, aspiration and stability. We are keen to tackle its root causes, and ensure that children born in low-income families realise their full potential. I have suggested measures that will help, both in the short and long term, but policy in this area has been distorted by a preoccupation with counting the number of children below a certain

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line, rather than moving families over a real line, as opposed to an imaginary one.

Jonathan Reynolds: Surely, that is the purpose of working tax credits. As has been said, with universal credit, the Government are going in the opposite direction from the policy that the Minister is pursuing; it disincentives people who wish to go out to work, which goes against what she said about the wider impact and causes of poverty. Incentivising people to go into the workplace is the best solution, but this policy moves in completely the opposite direction.

Miss Smith: Indeed, we need to incentivise people to go into the workplace. However, we have less money than we thought, and we have less money than any previous Government cared to highlight. We have to prioritise who we spend that money on. I would rather give it to people who have no other source of work—in other words, those on out-of-work benefits, rather than those on in-work benefits. That is a sensible principle.

To conclude, the Government have had to take urgent action to tackle what is unsustainable in broader economic terms as well as an unsustainable Welfare Reform Bill. Spending on tax credits has increased from £18 billion in 2003-04 to an estimated £30 billion last year, which is unsustainable and unfair, given the examples that I have mentioned. If we look at the cumulative impact on households of tax, tax credits and benefit reforms introduced both yesterday and before, the top income decile sees the largest reduction in income, both in cash terms and as a percentage of net income. I will take no lectures from the Opposition on believing in more spending, more borrowing and more debt, spent unsustainably and spent unfairly across the income range. I do not think that any working household will thank them for that.

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Calculators in Schools

4.42 pm

Elizabeth Truss (South West Norfolk) (Con): I am pleased to have secured this debate on the use of calculators in school. The Library confirmed to me that there has not been a single debate on this subject in the past 10 years, and I suspect that it goes even further back than that. There may never have been a debate in Parliament about the use of calculators in school, but it is extremely important that the subject is given an airing before the curriculum review in 2013.

To make the position clear, I am not anti-calculator. In fact, I count myself a bit of a geek. I was a mainstay of my school computer club, and I was happy to spend time programming in BASIC, and whiled away many a contented teenage hour doing so. However, I believe that technology has to be used in the right way at the right time and at the right age. I do not believe in the micromanagement of teachers, or telling them what they ought to do in the classroom. On the subject of calculators, we must acknowledge that the Government have actively encouraged their use in school through directions in the national curriculum and calculator use in standard assessment tests. We are therefore not looking at a neutral landscape.

Finally, calculator usage is not the only reason for poor maths performance, and I do not seek to claim that it is. We need to look at teaching standards, the curriculum and pupil motivation, but we can say—and there is significant academic evidence for this—that calculator use too early has a negative impact on mathematical ability. Having observed eight-year-olds being taught multiplication on calculators in an English classroom before they have fully grasped and practised key mathematical operations, I am concerned that things are going on in our schools as a result of Government policy about which we need to be mindful and careful.

Most teachers would consider that consolidating skills at the age of seven or eight in division, multiplication and fractions, and introducing proper, formal methods that can be used for a lifetime, are important in preparing students for life. Many of my constituents report that too-easy access to calculators is available in local schools. Failure to secure good basics can result in problems later in school, and we have only to look at the PISA––programme for international student assessment—international league tables, in which Britain is in 28th place, to see that we have a problem.

It is not just a problem in maths. We know that good, early maths helps to develop both logical thinking and skills in abstraction, which are useful in all kinds of analytical subjects and jobs. My hon. Friend the Member for North Swindon (Justin Tomlinson) has been very effective in raising the issue of financial capability and how people can manage their bank accounts, mortgages and loans. To do so, they need a good understanding of arithmetic and mathematics. They need to be able to ready-reckon in their head the purchase they are making or the financial product they are buying. If we do not lay out those basics early on, as a country we will struggle.

This is part of a general problem that we have with technology, which has been highlighted by various IT and technology companies, and by Eric Schmidt of

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Google. Too often in our schools, technology is seen as a magic box that students use, rather than a tool: they need to understand how something operates, learn to programme it and think for themselves. We are in danger of getting into a sat-nav process whereby students are led through a series of steps, rather than understanding programming and how IT works. On the subject of learning to use IT in schools, I have yet to meet a teenager who is not an expert in using smart phones and making internet searches, but I have met quite a few who are not quite so hot on mental arithmetic. We need to rebalance the skills that we encourage students to learn.

What is in the national curriculum? For seven to 11-year-olds—key stage 2—there is a separate section in the national curriculum on calculator methods. That is an early age at which to teach such methods compared with other countries. The national curriculum is specific about how that ought to be taught—it is pretty dirigiste. Not only are calculator methods set out in the curriculum and encouraged as part of what older primary schoolchildren learn, but they are tested at 11. However, many questions in the test for 11-year-olds do not require a calculator to answer them. I have a sample question from the “calculator allowed” test in mathematics for 2010:

“These are some prices in a flower shop. Tulips: £1.20 for a bunch; roses: 40p each; daffodils, 55p for a bunch. How many roses can you buy for exactly £2?”

Most Members in the Chamber would be able to work that out without using a calculator. That kind of question should encourage thinking and mental arithmetic but, unfortunately, in the tests at the moment, students are asked to use calculator for basic sums.

According to the Trends in International Mathematics and Science Study 2007, calculator use by 10-year-olds in England is the highest of any country in the study. We are an outlier on the matter, and only 2% of 10-year-olds in primary schools in England do not use calculators. If we look at the top-performing countries in PISA 2009, which is generally reckoned to be the most objective international comparison, because all students sit the same test, which they do not do in other studies, we can see lower calculator use and stronger resistance to calculators by teachers in those schools. Zhangzhou, China is the top performer, but that was not covered in the TIMSS test, so I cannot comment on that, but Singapore was number two, and 98% of its 10-year-olds do not use calculators in school. Hong Kong was number three, where 50% of its pupils do not use calculators, and there are very strict limitations on those who do use them to prevent their use for basic computational work. Korea was number four and although its 10-year-olds were not included in the study, even their 14-year-olds had a low usage of calculators. China Taipei was number five.

In 2008, the Department for Children, Schools and Families did a comparative study that showed that teachers felt great caution about the use of calculators in schools. Similarly, the use of calculators in schools in Austria and Germany is very low. Generally speaking, international studies show that calculators get introduced at about the age of nine to 11, and for specific purposes. They are not used for those basic arithmetical operations that I described in the SATs test, but for those cases where only a calculator can be used.

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Traditionally, Anglophone and Scandinavian countries have higher calculator use—countries such as the US, Denmark, Australia, Sweden, New Zealand and Finland, but nowhere has such high usage as England. We really are the most keen on calculators. I would describe this country as in love with the calculator, and from a very early age. The use of calculators in other countries has prompted much academic debate, and critiques about it appear in the US, the UK and Scandinavia on both sides of the argument. There is a growing international debate about the use of technology and how we inculcate the basic skills that people need to think before they go on to use technology, rather than thinking of the calculator as a magic box that will solve the answer to every question.

The Massachusetts curriculum—it is the top-performing state in the US—places restrictions on calculator use and says that it cannot be used for basic arithmetic operations. Sweden has a non-calculator exam at the age of 18. Alberta, one of the top-performing Canadian provinces, has a strong focus on mental mathematics. A lot of the Anglophone and Scandinavian countries are now beginning to think about how excessive calculator use at an early age may have impacted on standards in maths and the ability to do maths.

We all know that the west is facing a strong challenge from the east, particularly in respect of human capital and skills and capabilities. All countries would be wise to consider why the east’s performance, particularly in subjects such as maths and science, is outstripping that of the western world. I urge the Minister of State, my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb), to consider the place of calculators in the curriculum. We should remove calculator methods from the teaching of children as young as seven and eight, because that is taking time away from getting a good grounding in the basics. If one speaks to teachers in high school, they will often say that students arriving at their schools are not prepared in the basics due to a lack of practice. My fear is that by having a strong section on calculator methods in the curriculum we are taking away time that could be used on preparing children in those basics.

We should also consider the provision of calculators in the SATs tests. I know that there are questions about the overall standards in the SATs. I also know that the Minister is considering them and that he is keen to see more formal methods applied in the curriculum so that pupils learn proper long multiplication and long division. We also need to consider other parts of the curriculum that may be taking up time from that valuable practice in getting the basics right.

Our record is not good. We are 28th in the world according to the PISA league tables, and an outlier according to the OECD in terms of the number of 16 to 18-year-olds studying maths, because, I believe, the start of their maths career was not very good. If we want to get better at maths in this country, we need to start to get those basics right, so we can get more people to do maths. The Chancellor announced yesterday that maths free schools would be an option at 16 to 18 years, but if we do not have the confidence in performing those basic mathematical operations, I fear that we will be unable to get students up to the level to perform later on.

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4.54 pm

Justin Tomlinson (North Swindon) (Con): I congratulate my hon. Friend the Member for South West Norfolk (Elizabeth Truss) on securing this excellent debate. I thank her for being kind enough to allow me to make some supportive comments.

As the chair of the all-party parliamentary group on financial education, I absolutely support this call about calculator use because the absolute cornerstone and bedrock to making the next generation of consumers savvy, quick-thinking and financially literate is having a good grasp of mental arithmetic. Without that, it will be impossible for us to deliver improved levels of financial education.

I also speak as a former employer. Time and time again in my business, we almost had to start again with mental arithmetic when we employed people. Mental arithmetic was important for my business, as it is for businesses right across the country. When I meet representatives of businesses of different sizes that frustration is borne out by experience.

Mathematical ability is also incredibly important for personal confidence. This week, I visited an excellent school, Sevenfields, in my constituency. It has transformed itself into an outstanding school, and the main driver behind that is confidence in subjects such as maths, driven by mental arithmetic. Old-fashioned that may be, but it is making a real difference in that school. It is also important to foster personal confidence in students to embrace mathematics. We have been struggling for too long to acquire the number of students who wish to take on maths and progress further. If people can conquer mental arithmetic, they then have the confidence to progress further in maths. In common with my hon. Friend, I am a bit of geek in this respect.

Confidence in maths drives forward the ability to acquire entrepreneurial skills. We see from the “Young Apprentice” TV programme that those young people with good mental arithmetic do particularly well in many of the tasks, particularly haggling. I recall from when I was running my business the number of times when I met suppliers who simply could not do mental arithmetic. They relied on a calculator, which they were embarrassed to use in front of me and which allowed me to run rings round them, and make reasonably good profit margins. That is a serious observation, because that was not just a one-off, but happened time and time again.

For the sake of driving up maths standards, improving confidence and supporting our ongoing financial education campaign, I urge the Minister to get behind this campaign to promote mental arithmetic skills.

4.57 pm

The Minister of State, Department for Education (Mr Nick Gibb): I begin by congratulating my hon. Friend the Member for South West Norfolk (Elizabeth Truss) on securing this interesting debate on a topic of great importance to us all. I take the point made by my hon. Friend the Member for North Swindon (Justin Tomlinson) about the importance of mathematics not just in providing progression to more sophisticated maths, but in day-to-day operation of haggling and securing a good deal. I know that what he said from his

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own business experience is absolutely right, and I am sure that that lack is more pervasive in our economy than people suspect.

My hon. Friend’s excellent opening speech reiterated many of the same points that she made in her article published in The Sunday Times last week entitled, “Cancel the calculators and make pupils think”. I broadly agree with her analysis, and in particular her astute observations on how calculators are overused in classrooms in England. I also agree with her suggestion that there is much that we can learn from the best-performing nations and regions around the world; her analysis of Britain’s position in international rankings when it comes to maths; and her conclusion that we need to look again at the way in which calculators are used in primary schools.

Getting mathematics teaching right at an early age is of prime importance, and securing the foundations of mathematical understanding early at primary school will help our pupils to gain mathematical fluency and achieve at GCSE level and beyond. The modern work force demands people with high levels of mathematical ability as employment opportunities become increasingly technological and the importance of the internet continues to grow. There is a growing demand for people with high-level maths skills to become the scientists and engineers of the future. There is an increasing need for people with intermediate maths skills in a whole range of disciplines. That is why the Secretary of State has said that it is the Government’s intention that within 10 years the vast majority of young people will study maths from the age of 16 to 19.

My hon. Friend for South West Norfolk is right that this country is an outlier in the number of students continuing to study maths beyond the age of 16. As my hon. Friend rightly pointed out, the UK is falling behind internationally. I make no apologies for reminding other hon. Members—it is my hon. Friend who I am reminding—that over the past 10 years the United Kingdom has dropped down the international league table of school performance, falling from eighth to 28th in maths. PISA results show that many countries are racing ahead of the UK in mathematical attainment. Pupils in Shanghai are working at a level in maths that is about two and a half years ahead of that of their peers in the UK. Pupils from Singapore and Hong Kong are regularly introduced to some mathematical concepts much earlier than their counterparts are in England.

Justin Tomlinson: I saw that happening on a visit to a Taiwanese school. The reason behind it was that the Taiwanese felt it was so essential to their economy to embrace new technologies. They thought that that was the way to improve mathematical and science skills, which was so important to them.

Mr Gibb: My hon. Friend makes his point very eloquently. The debate is not just about the individual’s success in life—there is much evidence that those with advanced mathematical skills secure better employment prospects and higher standards of living—but that as a country we need to get it right, which we have not yet done.

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As the Trends in International Mathematics and Science Study—or TIMSS—study of maths has shown, those pupils in Singapore and Hong Kong go on to outperform pupils in England in international league tables. As has been said, if we are to compete internationally, it is crucial that we equip our young people with such essential maths skills.

The foundation for more advanced mathematical and scientific study is built in primary school, where pupils can develop a love of, and a fascination with, mathematics. Unfortunately, far too many children leave primary school convinced that they “can’t do” maths. Provisional key stage 2 data for the 2011 test year shows that only 80% of pupils reached the expected level in maths, and an even lower proportion reached level 5. Without a solid grounding in arithmetic and early maths in primary school, children go on to struggle with basic mathematical skills throughout their school careers and their adult lives. We cannot allow children to fall behind at that early stage. It is vital that pupils are fluent and confident in calculation before they leave primary school. We cannot expect children to be able to cope with the demands of complicated quadratic equations if they do not have quick and accurate recall of multiplication tables. Indeed, it is not possible to do long division, without being fluent in them.

Elizabeth Truss: Does the Minister agree that understanding basic operations enables one to check calculations? For example, when purchasing an item or considering a mortgage, people can check whether their calculator is right, which provides a sense check. When people have those basic skills, they are equipped for all such difficult situations in later life.

Mr Gibb: I am sure that my hon. Friend is right. Being fluent in the multiplication tables right up to 12 times 12—there are, after all, 12 months in the year and there are 12 in a dozen, which are still frequently used quantities regardless of decimalisation—gives people an instinct for numbers. They can therefore instinctively spot where something is wrong—for example, that the dosage a nurse gives to a patient is out by a factor of five, 10 or 20—because they are used to numbers and do not have to look things up on a chart or use a machine to calculate whether a number is right. It is to provide that instinctive understanding that such basic calculations and repeated practice at primary school are so important.

I also agree with my hon. Friend that we should not hinder pupils’ understanding of calculation by allowing them to become dependent on calculators too early. Ofsted recently conducted a survey of 20 top-performing primary schools in maths in the country. The resulting report, entitled “Good Practice in Primary Mathematics: Evidence from 20 Successful Schools”, clearly shows the importance of pupils knowing their times tables properly to develop fluency in calculation. Most of the top-performing schools visited for that study introduced calculators only at the very upper end of primary school, and then only to check the answers for calculations carried out by hand. That is often a time when pupils are practising written methods for long multiplication and long division, and adding, multiplying, dividing and subtracting fractions. Finding the common denominator when trying to add one seventh and one

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eighth—56—is significantly harder and more boring if children do not know their multiplication tables by heart.

The international evidence is also clear. High-performing jurisdictions around the world, as my hon. Friend so eloquently said in her well-researched speech and article, would limit the use of calculators in the primary mathematics classroom. Guiding principles for the Massachusetts, Singapore and Hong Kong curricula state that calculators should not be used as a replacement for basic understanding and skills. Moreover, the 4th and 6th grade state assessments in Massachusetts, which are the equivalent of years 5 and 7 in this country, do not permit the use of a calculator. Elementary students learn how to perform basic arithmetical operations without using a calculator. Evidence from the most successful educational systems around the world suggests that calculators should be introduced only once pupils have a thorough grounding in number facts or number bonds, including knowing their multiplication tables by heart, and that calculators should be used only to support the teaching of mathematics where the aim is to focus on solving a problem rather than on the process of calculation.

It is crucial that pupils are fluent in using efficient written methods to perform calculations and do not reach for a calculator when faced with a simple addition or multiplication. The most efficient written methods, such as columnar addition and subtraction, allow a pupil to perform calculations quickly. Pupils should be taught them as soon as possible, and not spend years using intermediate methods, such as chunking.

We are currently reviewing the national curriculum to give teachers greater professional freedom over how they organise and teach their subject, and my hon. Friend’s analysis of the key stage 2 curriculum was very revealing. The review will be informed by best international practice, and will draw on other evidence about the knowledge children need to deepen their understanding at each stage of their education. Alongside the review, we are looking at how arithmetic is taught in school by engaging in an informal dialogue with maths professionals. Some key areas of consensus are emerging—namely, that there needs to be a renewed focus on quick recall of number facts, such as multiplication tables, and on the importance of consistent, efficient methods of calculation being taught throughout the school.

I believe that technology can be used to enhance teaching across all subjects. In his speech to the Royal Society earlier this year, my right hon. Friend the Secretary of State highlighted the wonderful work being done by, among others, the Li Ka Shing Foundation and the highly respected Stanford Research Institute International on a pilot programme to use interactive software to support the teaching of maths. He also highlighted how computer games developed by Marcus du Sautoy are enabling children to engage with complex mathematical problems that would hitherto have been thought too advanced for them to tackle at such an age.

Children will not be able to cope with the more advanced maths that they will encounter in secondary school unless they are fully fluent in the basics, and

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introducing calculators too early can risk the development of that fluency. Our focus on getting maths right in primary school also requires a focus on teaching quality, as my hon. Friend hinted at in her analysis of what matters in education. One of the most important characteristics of the best performing education systems around the world is that they recruit the best possible people into teaching and provide them with high-quality professional development. There is clear consensus in the maths community that teachers must have a deep understanding of maths to be fully effective.

Our White Paper “The Importance of Teaching” set out the Government’s commitment to provide additional support for the uptake of mathematics and the sciences. In June, the Secretary of State announced that the Government will invest £135 million over the spending review period to support that aim. Much of that will go towards improving the skills of existing teachers. We have followed the example of Finland by expanding Teach First and by providing extra support for top graduates in maths and science to enter teaching.

We have also made the following commitments in the initial teacher training strategy published earlier this month. From 2012-13, we will prioritise the allocation of places to courses with a maths and science specialism over generalist primary courses. That will encourage ITT providers—universities—to offer specialist, rather than generalist, courses. We will fund £43 million in bursaries for new primary teachers, some of which will go to trainees who are training on primary courses that include a specialism. We will offer schools the opportunity to train their own primary specialist teachers, and then employ them as teachers. For 2013-14, we expect to introduce additional financial incentives for trainees who take a maths, science or language specialism as part of their primary ITT course and have a good A-level in maths, a science subject or a language.

The Government have just announced £600 million to be spent on building an additional 100 new free schools by the end of the Parliament. These new schools will include specialist maths schools for pupils between 16 and 18, and their aim will be to produce the outstanding mathematicians of the future. We are funding two cohorts of teachers to undertake the maths specialist teacher programme, which aims to improve the practice and efficacy of primary mathematics teaching. We are also part-funding two further cohorts of the programme.

Evidence around the world clearly shows that high-performing nations ensure that children receive a first-class maths education when it is based on a solid foundation of essential principles of number and calculation. That is why we are making primary-level maths a priority: we are encouraging early mastery of multiplication tables and written calculation methods, limiting the use of calculators, and raising the quality of teaching. Giving children a solid understanding of basic mathematical skills will encourage higher achievement and greater enjoyment in maths, and give every child the best possible start to their school career.

Question put and agreed to .

5.11 pm

Sitting adjourned.