I would be grateful if the Minister could say more about the statutory responsibilities of the Department for Education and the discussions she may have had with the Department of Health. We need to strengthen

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the tools available to parents and other advocates for these children. My constituents certainly believe that they pay their taxes to ensure that the education system we provide gives every child the education they need to reach their full potential.

One of my final points relates to costs. Where we have not been able to get a school place for some of the children in my constituency, we have actually funded placements for them, and I should like to place on record my thanks to a number of London livery companies and local Rotarians for providing funds to allow that to happen. In just one year, the girl I mentioned at the start, who was four years behind her expected reading age, has caught up. She is a bright girl, and having been given the proper, full-time dyslexia teaching that she needed, she is now doing really well.

An argument that is often thrown back at us is that providing all the top-notch SEN provision that children need costs too much and that the state cannot possibly afford it, but that is a bit of a myth. The placement that we have funded for the child I mentioned cost less than the provision that the local authority would have had to put in place in the school that it chose for her. It is possible to do these things, and they will often save the state money not only initially, but, as has been mentioned, in the long term, given all the problems and issues that people have if they do not get the help that they need.

Mrs Hodgson: The hon. Lady is making some important points, and she makes a good point about spending money wisely. Research has been done—I do not have it in front of me, but that is not necessary to make my point—showing that an hour with a specialist dyslexia teacher is worth more than 50 hours with a well-meaning teaching assistant who is not able to give the specific support that a child needs. I might have the ratio wrong, but it is in that realm.

Penny Mordaunt: That is absolutely right.

To carry on using the example of the girl I mentioned—I have said this to the Minister before—the problem was not so much that the local authority could not be bothered to find her a suitable place as that the restrictions on how it could use its funding meant that it could not fund some of the obvious solutions. Will the Minister therefore say something about how she might reform the rules governing how local authorities and schools can spend particular pots of money, to ensure that we use that money in the best and most sensible way to meet people’s educational needs, whether they have dyslexia, a pragmatic language disorder or autism? We must ensure that we get every child who needs this provision the help that they need.

3.13 pm

The Minister of State, Department for Education (Sarah Teather): It is a pleasure to serve under your chairmanship again, Mr Weir. It is a Wednesday afternoon; I am here in a debate that you are chairing; and I am very pleased to see you.

I congratulate the hon. Member for Luton North (Kelvin Hopkins) on securing the debate. It was good to see other Members come into the Chamber, although a

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bit late, because I was anxious that we would not have so many Members contributing. This issue interests Members right across the House, and I am aware of the hon. Gentleman’s involvement in the all-party group, whose input and advice I have very much welcomed.

I listened with interest to the rather technical debate between the hon. Members for Washington and Sunderland West (Mrs Hodgson) and for Blackley and Broughton (Graham Stringer). None us is a qualified educational psychologist, and it has certainly been an awfully long time since I did any neurophysiology. The Government take their advice from the best and latest scientific advice available. The Rose report tried to get away from the debate about the exact nature and cause of the difficulties that people face—something that was often distracting for many students—and instead tried to focus on solving the individual child’s problems, whatever they might be, as they present in the classroom. With that in mind, I will not get involved in the detail of that debate, because it might be better if it took place somewhere else between expert educational psychologists. Instead, I will deal rather more with service provision.

Dyslexia affects a significant number of pupils. From the school census, we know that 78,000 pupils receive support for a specific learning difficulty, including dyslexia and dyspraxia. They receive that support through school action plus or a statement of SEN educational needs. About 11% of all pupils receive such support. Many others will be supported as part of a personalised approach to teaching in the classroom, as a number of hon. Members mentioned. That will perhaps involve additional help from teachers or teaching assistants.

Dyslexia primarily affects the skills involved in accurate and fluent word spelling and reading, and it can occur across the range of pupils’ intellectual abilities. We know from parents and pupils that they are often frustrated with the assumptions made about what they can achieve, and the Opposition spokesperson, the hon. Member for Washington and Sunderland West, referred to the case of her son. Sometimes that can lead to incredible frustration and a stymieing of aspiration in individual students.

For far too long, there has been a real attainment gap between students with dyslexia and their peers. The proportion of pupils with a specific learning difficulty gaining the expected qualifications has more than doubled since 2006, but the gap remains far too large. In 2010, fewer than one in six such pupils, or just under 15%, achieved five GCSEs at grades A* to C, including English and maths, compared with more than half of pupils as whole. The Government are determined to see that change and to improve overall outcomes for pupils with SEN or a disability. Support for pupils with SEN is provided within a statutory framework that has, unfortunately, remained largely unchanged for three decades.

One of the first things that I did when I became a Minister was to begin a review of special educational needs. In March this year, I published our Green Paper, “Support and aspiration: A new approach to special educational needs and disability”, which sets out plans fundamentally to reform the special educational needs system. It was a response to a set of core problems that undermined the achievement of too many children and young people, and those problems have been mentioned by a number of hon. Members, including the hon. Member for Portsmouth North (Penny Mordaunt). The

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problems include parents having to battle through a confusing and adversarial system to get the support their child needs; SEN statements not joining provision up, with education, health and care often ending up being provided disparately, and families having to go between the three different providers to negotiate their own package of support; children falling between the gaps in services or having to undergo multiple assessments; and paperwork and bureaucracy adding to delays, rather than providing the support that is needed.

Kelvin Hopkins: The Minister is talking about delays. A number of members of my family have been schoolteachers, and getting statements has often been an enormous difficulty. Sometimes, it has taken up to a year before a child who clearly needed to be statemented actually was statemented. The suspicion is that local authorities are trying to delay things to save money. I hope the Minister will take that into account.

Sarah Teather: One thing that we suggested in the Green Paper was speeding up the process, but this is also a question of trying to make clear what the thresholds should be, and I will say a little more about that later.

The other thing that informed the Government’s work on the Green Paper was Ofsted’s report, which showed that too many children are being over-identified as having SEN. In other words, the wrong children are often labelled as having SEN, and we need to ensure that we put in place the right support for children at the right time.

At the heart of the Government’s vision for the reforms is a desire to support better life outcomes for young people, to increase parents’ confidence in the system and to transfer powers to the front line and local communities, as we are trying to do across all areas of policy. To achieve those changes, we are introducing a new approach to identifying SEN to challenge the culture of low expectations. There will be a new, single early-years setting and school-based category of SEN.

I heard the concerns of the hon. Member for Washington and Sunderland West, who was worried that it might lead to some young people not getting the support they need, but I should stress that, of course, school action at the moment brings with it no extra funds. School action plus money is provided to schools on the basis of other proxy indicators, rather than the number of children actually in the relevant category in previous years, so it should make no difference to the resources that are allocated. However, it will make it easier for schools to decide how to deal with the young people that they focus on. Many of them say that the existing categories are somewhat bureaucratic. Ofsted has made the point that some children are labelled as having special education needs when really they are just falling behind. That is a rather different debate from the one about specific learning difficulties.

Mrs Hodgson: We are looking for reassurance that when the reason for children falling behind is an underlying special educational need, rather than there being no specific reason, they will still be identified by some marker. They might not need the education, health and care plan, and all that it brings, but the marker would have been school action or school action plus. Will there still be some mechanism to identify those children?

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I suppose the reason for giving the relevant marker to children who fall behind might be to try to find out whether there is an underlying reason.

Sarah Teather: When Ofsted reported, a rather heated debate took place between teaching unions and Ofsted, and it shed a lot of heat but not light. Many accusations were thrown from both sides about motives. I do not think that teachers label a child as having special educational needs to get round league tables or for similar reasons. It is human nature, when a problem is seen, to label it. Unfortunately, that labelling was often not followed by action. It is all very well to label a child, but it is purposeless to do so if no action follows. The child then carries a label with them, irrespective of whether it is helpful, and does not get the support needed to enable them to progress. We are trying to get away from the focus on labelling, and instead to adopt an approach in which those concerned look at the child in front of them, and ask what they need. Some of that approach, to be fair, is about good teaching practice, which will deal with many needs.

Kelvin Hopkins: The hon. Lady is right about dealing with individual children. Boys need more pressure and rigour in school, when they are young, than girls do. Girls tend to be more conscientious and are now succeeding in education. In every field and at every level they now beat boys. I agree that we need to consider teaching quality as well, so that youngsters do not fall behind because they are more interested in playing on the computer, or doing something not to do with their studies. Rigour in education is right for all youngsters. However, we also need to take account of those with specific difficulties.

Sarah Teather: All sorts of young people fall behind. The fact that so many young people born in the summer are in the school action category is particularly good evidence that we do not at the moment necessarily label the right children. Other children who may have specific needs go through school without being identified. That is not good enough, because such children do not get the support they need.

The Green Paper made some radical proposals to change the system. As several Members, including the hon. Member for Portsmouth North, said, we have just finished a consultation and will respond to it in the new year. The rest of what I say now on the matter will pick up on what we have already said, rather than announcing what we will do. Hon. Members will have to wait a few weeks, until we have finished crunching through the detail of the consultation. We had an enormous number of responses from parents, charities and teachers. That is very helpful detail and we need to work through it.

As I said during my introduction, many pupils with dyslexia receive most of their support in the classroom through high-quality, personalised teaching. We know from the independent review led by Sir Jim Rose that the early identification of problems and the right teaching support are critical to helping dyslexic pupils achieve. Alongside the special educational needs reforms we are also working with schools to support teachers to identify and respond to pupils with dyslexia. Difficulty with phonics and the ability to identify and manipulate the

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sound of words is central to the challenges that dyslexic pupils face. It is also a critical element for all children learning to read.

We are introducing a new phonics screening check for children in year 1, which should pick up children struggling with early literacy because of dyslexia. I think that the hon. Member for Washington and Sunderland West slightly misunderstood some things about the statement at the weekend by my colleague the schools Minister. When he highlighted the fact that inadequate numbers of young people were passing the screening test at the relevant stage, he was trying to make the point that phonics, as a system for teaching reading, had not properly embedded in teaching at the earliest stages of schooling. He was not labelling half of children as failing. He was recognising how much further we need to go to embed the practice clearly in the way teachers teach the youngest children to read, from the beginning. We know that phonics is particularly helpful for identifying difficulties in children who have dyslexia.

Graham Stringer: The Minister has been speaking an enormous amount of sense, recognising that teaching children to read is one of the most important things that the state does. I think she has recognised that Jim Rose recommended in his report that systematic phonics should be at the heart of good Government strategy for teaching children to read. When the Select Committee on Science and Technology considered the scientific basis for the Government’s policy, we found from the written and oral evidence that there was still, in the wave 3 reading recovery programme, a continuing practice of word memorisation and the use of whole language theory. That does exactly the opposite of what the Minister has been saying about recognising phonics and the transferability of the sound and the letter. Has she had a look at what is happening in wave 3 reading recovery?

Sarah Teather: I certainly looked at the reading recovery programme, Every Child a Reader, most of which is based around phonics. There are some other, more flexible, practices. We must recognise that although the evidence suggests that systematic phonics is absolutely the most effective way to teach children to read, some children for various reasons will not respond to that system, and it is important to have some flexibility at the margins to pick up the children who have fallen through the net. However, almost all the programme is still based around systematic phonics.

Kelvin Hopkins: I agree with the Minister and my hon. Friend about phonics for those who do not have the disabilities in question. Two generations of teachers have almost been forbidden phonics in schools. Even in the past year I have come across a teacher working in London who was forbidden to make any reference to phonics in school. We still have a serious problem.

Sarah Teather: To support the teaching of systematic synthetic phonics we are making £3,000 of match funding available to all schools with key stage 1 pupils, for phonics materials and training. I hope that that sort of systematic, structured approach to teaching phonics

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will help, because we know that it supports pupils’ approach to learning to read, particularly for those who are dyslexic.

I want to make some wider comments about support for teachers and work force development, which goes to the heart of our programme on SEN. It begins with the new standards for qualified teacher status, which include a continued focus on meeting the needs of all children, including those with special educational needs or who are disabled. Similarly, as part of the national scholarship programme for teachers, we have a clear focus on supporting teachers to improve and extend their knowledge and expertise when working with pupils with special educational needs and disability, including specific impairments.

It is anticipated that around 50% of those scholarships will be available to support SEND. We have provided funding for up to 9,000 special educational needs co-ordinators to complete the mandatory higher level SENCO award by the end of 2011-12. The Teaching Schools network, which will allow schools to support each other and drive up the quality of teaching, will help to improve the quality of support for pupils with special educational needs or a disability. Of the first 121 designated schools, 113 have been judged as outstanding for the quality of learning and progress of pupils with special educational needs. The new Teaching Schools initiative has real potential to radically improve the quality of peer-to-peer mentoring and support for teachers in relation to SEN.

Penny Mordaunt: On support, one of the other problems that I encountered in Portsmouth was that, where a child had not got a school place and the parents were trying to do their best to teach them at home, they received no support, because if they admitted to the local authority that they were teaching the child at home, they were instantly crossed off the waiting list for a school place. I would be interested to know whether the Minister has any views about how such training and support could be extended to provide parents whose children are at home waiting for a school place with the support and help that they need to ensure that they are not missing out.

Sarah Teather: I cannot comment on a specific case, but perhaps if the hon. Lady drops me a note about the matter, I will have a look at it. In the Green Paper, we indicated that local authorities need to provide support to families who are home schooling a child. They are often doing so because they have been unable to get the support that they need in mainstream settings or perhaps because their local special school did not provide them with the support that they wanted.

I want to say something about Achievement for All because it goes to the heart of some of the issues that we have been discussing about the need for someone to look at the child in front of them and have high aspirations, rather than necessarily think about the labels. The Achievement for All programme has been running in around 450 schools for the past two years, and the evaluation has demonstrated some dramatic results. Under the programme, children made greater progress in English and mathematics than other children with SEND across the country, and they also often exceeded the progress of children without SEND, so there has been a really dramatic improvement.

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The independent evaluation, which was carried out by the university of Manchester, demonstrated that pupil attendance significantly improved. That picks up some of the other points that we were discussing a moment ago about additional needs sometimes being confused with SEN. Often the issue is just about getting young people to attend school. For children taking part in the Achievement for All programme, there was an average increase in attendance of just over 10%. The evaluation also found significant improvements in behaviour, including less bullying, stronger relationships between schools and parents and a greater awareness and focus on SEND.

Some of the points that the hon. Member for Portsmouth North discussed in relation to her Bill—parental engagement and the need to communicate better with parents—go partly at the heart of this. One of the key facets of the Achievement for All programme is parental engagement and enabling teachers to feel confident about having a conversation with parents about the progress of their child. The Government are investing £14 million to roll out the programme across the country, so that more children can benefit. The programme is being delivered by a newly formed charity, Achievement for All 3As, chaired by Brian Lamb and supported by PricewaterhouseCoopers. Schools can now see for themselves the evidence that the programme works, and we want more schools to come forward and sign up.

The evaluation highlighted some important lessons in how to improve the outcomes for pupils with SEND. Perhaps most crucially, there needs to be strong leadership from the head teacher and senior leadership team, rather than simply relying on a SENCO to provide leadership within a school, although that is important. Achievement for All 3As is currently engaged with 41 local authorities and 598 schools. We hope and estimate that, overall, 1,000 schools will have signed up to the programme by April next year.

I want to turn to some of the specific concerns, particularly on the Joint Council for Qualifications guidance, expressed by hon. Members. I understand that there has been significant concern following recent coverage about apparent changes to the availability of reasonable adjustments for dyslexic pupils. It is, of course, absolutely vital for the fairness of an exam system that reasonable adjustments are made where needed. We have therefore been in touch with the JCQ about the changes, and it maintains that there has been no change to the circumstances in which a student is entitled to extra time for an exam. What has changed is the type of evidence that is acceptable to demonstrate that such extra time is needed.

The most recent edition of the relevant guidance confirms that a school or college must consider and maintain on record the evidence that the student has been assessed as having a below-average standardised score in an assessment of processing, reading or writing speed. I emphasise that the previous guidance similarly required evidence of low standardised scores using assessments of processing speed, reading or writing. I am afraid that we are picking up differences in practice, not differences in the guidance. Such difficulties have always been the basis on which extra time can be awarded to dyslexic pupils, and difficulties in phonological awareness—understanding and decoding the sounds of words and verbal processing—were two of the characteristics of dyslexia identified by Sir Jim Rose.

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I understand that Dyslexia Action has written directly to the JCQ to set out its concerns. It is right that the JCQ and Ofqual, as the independent body overseeing the examinations system, should respond to those and determine whether any further clarification of the arrangements is required. I understand that they will be meeting with dyslexia charities and experts in the new year to explore those differences further. Ofqual has assured me that pupils already granted extra time will remain entitled to it on the basis of their existing assessment. I hope that hon. Members will be reassured on that point.

Mrs Hodgson: On a point of clarity about the difference between the old and the new criteria, is it the case that, under the old criteria, students had to have a low score and that now it has to be below average? I am not sure whether I heard the Minister correctly.

Sarah Teather: There is no change in the criteria; there is a change in the evidence that has to be provided. What we are picking up on is how schools interpreted the previous guidance, not necessarily the actual guidance that was being provided. That raises some issues about how schools were interpreting the guidance and the freedom that they thought that it gave them. In fact, the guidance is the same, but slightly more rigorous evidence is being asked for to demonstrate that schools have met the guidance, and they are being asked to hold that on record. The best thing is for Ofqual and the JCQ to meet dyslexia charities in the new year, as they will do, along with other experts in the area. They should make those points to the JCQ and Ofqual at that stage.

The hon. Lady spoke briefly about the changes to spelling, punctuation and grammar in some GCSEs that were announced this afternoon. Hon. Members may be aware that that was likely to happen and that we would be restoring marks for spelling, punctuation and grammar in some key subjects that have extended pieces of writing. During Ofqual’s consultation on the proposals, it heard concerns from dyslexia organisations about the potential impact on pupils with special educational needs, particularly dyslexia. I understand that it will be considering that as it decides how to roll out and implement the proposal.

However, during the consultation, there was also widespread support for ensuring accuracy within the qualifications. People expect those with high grades in GCSEs to be able to write accurately. The need to include an assessment of accuracy in spelling, punctuation and grammar is key to restoring confidence in GCSEs as rigorous and valued qualifications. Ofqual has set the level at 5% of total marks for the GCSE, so that the assessment of subject knowledge is not affected disproportionately. There will be the possibility of partial marks. It is not an all-or-nothing assessment and students will be able to achieve some or all of the marks depending on the extent of accuracy and how well they have conveyed meaning. In practice, there will be no blanket effect on the grades achieved by individuals, and the credibility of the exam and the grades achieved will be increased for all. Such changes, alongside some of the reforms to special educational needs provision, will give a real incentive to teach all pupils those core skills and prevent pupils with special educational needs from being sidelined or aspirations being lowered.

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Kelvin Hopkins: I recently chaired a meeting of the all-party parliamentary group for social science and policy, at which we considered and had academic presentations on social mobility. A major factor in poor social mobility is the gulf in the use of language and education. Is the Minister saying that for the great mass of pupils, we will ensure that the standard at which they are able to use the language formally will be targeted and improved, or just that we will have a race to the top where the middle class will again have the advantage?

Sarah Teather: I agreed with the hon. Gentleman’s first point. The second point seemed to bear no resemblance to the first. To raise aspirations for all is a good thing. To say that it is possible to achieve, regardless of background, is really important. To believe in social mobility and have it at the heart of educational policy, we have to have high aspirations for every child.

Kelvin Hopkins: To clarify, if one just gives marks for punctuation, grammar and syntax, certain people from certain backgrounds will have an even greater advantage over people from other backgrounds. The gulf in our society will widen unless extra effort is put in to ensure that everyone has a rigorous education in these methods.

Sarah Teather: I really do not accept that point at all. It is simply not good enough to say that, because someone is from a certain background, they will not be able to learn how to spell or use language correctly. That is exactly at the heart of what we are trying to break. I have to say that, as an employer, I meet lots of graduates who do not have dyslexia who have not learnt how to use accurate punctuation and spelling. Unfortunately, it is a continuous frustration, and I sometimes wonder whether I am the best-paid proofreader in the country, given the amount of time I spend correcting grammar and punctuation in the documents that leave the Department—I probably should not say that in Hansard .

Kelvin Hopkins: I agree entirely. The Minister’s experience and mine are the same, but those who had the rigorous experience that I had at school have an advantage over those who did not, even though they might have been equal in ability in every other way. I appreciate that we

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are off the subject of dyslexia now. We are running out of time; but it is important to say that, if we are to have a society that is less divided, we must ensure that we provide education for those who do not have natural advantages.

Sarah Teather: If we are to have a society that is less divided, we must ensure that all children, regardless of their background, are given the same benefits of that sound education. Putting those marks, even 5%, back into qualifications will create an incentive to ensure that all children have that grounding. That is really important.

Mrs Hodgson: To return to the subject of dyslexia and the dispensation that will be given for children with dyslexia, the additional 5% can make the difference between an A and an A* for a very bright, dyslexic pupil.

Sarah Teather: Ofqual will consider and take into account the concerns of dyslexic charities when it decides on implementation. The issue of reasonable adjustments continues to remain.

I should like to conclude now. I thought that we would not have many speakers. In fact, I seem to have prattled on for so long—[ Interruption. ] Are there 17 minutes left? I thought that we finished at 3.45 pm. I have been racing to the end and thought that I only had two minutes. In fact, we have loads of time. I might still conclude anyway, or I will not have any voice left.

I am very grateful to hon. Members for their contributions. I hope that I have been able to allay some concerns. Dyslexia charities will no doubt make the points that they made to the hon. Members who came to this debate to Ofqual and JCQ in the new year, but I want to leave hon. Members with the assurance that we are absolutely committed to reforming the support for children with special educational needs and disability. We will say much more in the new year, in response to the consultation. I am grateful to all hon. Members for their constructive input on this matter.

3.44 pm

Sitting suspended.

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4 pm

Jessica Morden (Newport East) (Lab): Although I am happy to have secured this debate, I am extremely unhappy that I felt compelled to apply for it. I had hoped that justice would have been done by now, and that Farepak customers and agents would have received at least some of their money back. However, five years from Farepak’s collapse, customers have not received a penny of the compensation due to them, and have not seen justice done. Those responsible have not been held to account. To add insult to injury, on the fifth anniversary of Farepak’s collapse, we have learned that not only has none of the £5.53 million compensation been paid, but the administrators, BDO, have admitted that the cost to date of winding up the company comes in at £8.2 million, which is far more than the compensation owed.

Tony Cunningham (Workington) (Lab): Is it worth reminding people that the company knew when it took money from people that it was not able to provide the goods and services required, and that the people it defrauded could least afford to lose that money?

Jessica Morden: I thank my hon. Friend for his intervention. He makes an incredibly valid point. The people involved had modest incomes, and could least afford to lose that money. They ended up paying twice for Christmas, or borrowing money. The whole matter was a scandal, and we are still no clearer about when it will be resolved. Farepak victims were ripped off twice: once when the company collapsed, and secondly by an establishment that has not protected them.

The history of Farepak’s collapse is well documented, and has been the subject of debates in the House, often initiated by Anne Snelgrove, the former Member for Swindon South, whom I applaud for her unstinting work in standing up for Farepak customers and employees. As this is only a half-hour debate, I will not rehearse the history, except to say that Farepak went bust on 13 October 2006, and the result was that the Christmas savings of around 120,000 people, in total about £38 million, were apparently lost. The money seemed to have been siphoned off to help to combat the debts of the parent company, European Home Retail but as my hon. Friend said, Farepak continued to collect money even when it knew that it had problems.

My inspiration for the debate is my constituent Deborah Harvey, who was a Farepak agent. The word tenacious does not come anywhere near doing her justice. Deb was an agent in Alway in Newport, and encouraged eight friends to spread the cost of Christmas by saving with Farepak with her. Like many agents, she was not motivated by self-interest; she was driven by wanting to see justice for the friends who saved with her because they knew her. They are owed a total of £2,100, and if they ever recoup any money, they will probably receive just £315.

Katy Clark (North Ayrshire and Arran) (Lab): My constituent, Jean McLardy, has given me a Farepak customer payment card that belonged to her mother, who has passed away. It looks identical to those of credit union savings schemes, and it is clear that the people who put money away every week thought it was in a savings club.

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Jessica Morden: I thank my hon. Friend for her intervention. She made her incredibly valuable point very well. She has done sterling work on the Farepak issue over the years, and I commend her for that.

My Farepak savers in Alway will probably receive a total of about £315. I acknowledge the organisers of the unfairpak website who keep the campaign going and are a source of information for Farepak victims in a sometimes unclear process.

Where are we, five years on? Have the directors of Farepak been brought to book? No. The Government, through the Insolvency Service, have finally applied to the courts to disqualify Sir Clive Thompson and eight other directors associated with the collapse of Farepak. Does the Minister not believe that the length of time that the directors have had to appeal while still holding office is incredible when innocent victims wait and wait? Perhaps he will tell us how long the Government expect the case to last? As a Farepak agent told me the other day, if she had stolen something, she would have to pay for what she had done wrong, and it would not take five years.

Tony Cunningham: Let us be honest. If someone broke into a house and stole such an amount of money, they would find themselves in prison. They would be jailed, never mind paying compensation, or justice. They would find themselves in prison, and that is where they should be.

Jessica Morden: I thank my hon. Friend for his intervention, which was well made. Many victims have called for Sir Clive Thompson to have his knighthood removed if he loses the case, and perhaps the Minister will also address that point.

A survey posted on Twitter and the Farepak victims committee Facebook page reveals what Farepak victims think: 95% of the respondents thought that the liquidators had taken too long, and should have finished by now; 79% did not think that there are enough regulations to protect consumers from anything like the Farepak collapse happening again and 95% thought that all Christmas savings schemes should be tightly regulated. Many Farepak customers are upset about how the administrators, BDO, have handled the liquidation process. BDO struck an agreement with some of the ex-directors of Farepak to pay a total of £4 million in compensation, which is about 15p per pound owed. Not only are Farepak victims angry, as they should be, at receiving only 15p in the pound, they find it deeply unfair that as part of the deal the directors accept no liability for Farepak going bust. Will the Minister say whether that is common practice?

I am aware that some agents and customers received some money back in 2009 under a court order. That was a repayment to customers who had made payments as the company collapsed and which Farepak tried to put into trust accounts. Customers received some compensation from a response fund just after the company went bust, but as yet no customer has received any money via the administrators. BDO will argue that the reason is that it is still chasing, and that it is standard practice for administrators not to pay out any dividend until all avenues have been exhausted. However, as widely reported in the news last month, BDO has so far cost in excess of £8.2 million, which includes, for example, £50,000 for

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public relations work. That is an eye-watering sum, especially when BDO has managed to obtain only £5.5 million back for the victims. So far, the process hardly seems fair.

I understand that there is a possibility that ex-customers could receive less than 15p in the pound. If the administrators fail to recoup any more money from ongoing operations, they will take their costs from the moneys already recouped. I accept that the ongoing actions, if successful, could result in ex-customers receiving more money, but either way the administrators will accrue more and more costs, making customers even more resentful.

Susan Elan Jones (Clwyd South) (Lab): I am grateful to my hon. Friend for securing this important debate. Does she agree that some of the practices that she describes are at best ethically questionable and, looking at them more strategically in terms of how victims have been affected, downright wrong?

Jessica Morden: I thank my hon. Friend for her intervention. I agree that the matter is downright wrong, and I hope that the Government will act.

I would like the Minister to say whether he believes that the insolvency process is fit for purpose in dealing with the aftermath of cases such as Farepak. Should there not be a limit on how much administrators can demand—perhaps a percentage of the total amount accrued? I have spoken to Farepak victims and agents, and the process is incomprehensible from the outside. Victims need to know what is going on, and why it is taking so long.

Mr Robert Buckland (South Swindon) (Con): I am pleased that the hon. Lady secured this debate and that she raised the point about transparency, because there are real concerns about creditors’ representation, and precisely what is going on with BDO. There is a dearth of information, and it is not good enough to rely on civil proceedings as a cloak to prevent victims from being told what is going on.

Jessica Morden: The hon. Gentleman is exactly right. Although my constituent has been incredibly tenacious, from her point of view it has been very difficult to get any information out of the administrators, apart from messages posted on the website.

The average amount of time taken for a liquidation process to finish is about two and a half years, so we can completely understand the sheer anger, frustration and, frankly, scepticism of the ex-customers of Farepak over the administrator BDO and its motives. Could this ever happen again? Following the collapse of Farepak, the Christmas Prepayment Association was set up. On the face of it, the guidelines issued by the CPA seem to remedy many of the issues that arose. However, the association has a major flaw: it is self-regulating. Conceivably, a Christmas hamper company could be set up tomorrow and not be required to follow the CPA guidelines. This is surely not acceptable, given what has happened.

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Mr Buckland: The hon. Lady has come to the fundamental point. Five years ago, a loophole was identified. Because of the nature of the business, unbeknown to all the clients and customers who took part in it, it is not in law a financial service. Why is that loophole still there five long years on?

Jessica Morden: I thank the hon. Gentleman for that intervention. He goes precisely to the crux of the issue: self-regulation is simply not acceptable. We need statutory guidance. We must compel companies to protect their customers’ money. Can the Minister assure us that the Government will do that? If not, can he explain the reasons why, especially as just today we have seen that banks are to be compelled to display prominent signs telling customers that their savings are protected up to £85,000. What should we do in this case?

Katy Clark: Does my hon. Friend agree that one of the problems highlighted is that the victims have been treated as unsecured creditors, so they are right at the bottom of the pile? The Office of Fair Trading report, which was published in December 2006 after Farepak collapsed, highlighted the problems with prepayments for funerals, holidays and mail order, but this case goes way beyond that. Has my hon. Friend had an opportunity to look at the scale of the problem?

Jessica Morden: My hon. Friend is exactly right. There are a whole range of prepayment schemes. She mentioned prepayment for funerals, which is a huge issue that I shall address later.

Farepak customers were on modest incomes, and in October 2006 their Christmas was destroyed. All their carefully saved money disappeared overnight. These are people who did the right thing. They planned how they were going to pay for Christmas, they worked hard all year round, they made their monthly payments and Christmas was going to be sorted. They are predominantly women managing household finances to provide for their families. They were doing what we ask people to do. When Farepak went bust, Christmas was ruined for many. They were on modest incomes and could not get money out of the bank to cover the loss.

The Government owe it to Farepak victims to do the right thing. Farepak is a special case and the Government should step in and help. We did it for Equitable Life victims; quite rightly, the Government are stepping in to the tune of £500 million for them this year. Farepak victims are owed around £38 million. In the same way as we did with the banks, we should send the right signal to savers on modest incomes that their money is safe in the event of bankruptcy.

Sir Alan Beith (Berwick-upon-Tweed) (LD): I commend the hon. Lady for securing the debate. It is important that people are very careful about putting their money in schemes of this kind after the experience of Farepak. Before putting in their money, they should look for firm guarantees such as the banks must now have. Money is precious when it is from a hard-earned small income.

Jessica Morden: I thank the right hon. Gentleman for that intervention. Obviously, that is where the CPA and self-regulation come in. Many of the Farepak victims

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that I have spoken to saved with friends because they trusted them. We must address the whole issue in the industry.

Despite all that has happened to her and her friends, the priority of my constituent, Mrs Deborah Harvey, is to ensure that the situation never happens again. On behalf of her and many others, I say to the Minister that Farepak victims want justice, adequate compensation, enhanced regulation for all firms engaged in prepayment schemes, and key figures in Farepak to be held accountable for what they did. That is how we shall ensure that decent people doing the right thing never again lose out in that way.

4.14 pm

The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): It is a great pleasure to be able to respond to this debate, Mr Weir, and I am grateful to the hon. Member for Newport East (Jessica Morden) for bringing the matter to our attention. It is a matter of profound concern to the people involved. I think I reflect the Government’s perspective in adding my view that this was completely unacceptable. Many vulnerable people were associated with it and it has taken far too long to sort out. The steps taken to try to resolve it were far slower than both the people detrimentally affected and any reasonable observer might have anticipated, so I am extremely sympathetic to the case that the hon. Lady has made and to the circumstances of the people who were so badly affected. It is understandable that questions of the kind that she has posed are raised when so many people are affected. The insolvency is particularly sad, coming around a savings scheme—a club, if you like—that was tied to Christmas, as we now approach Christmas some years later. This is a poignant subject, and the emotions evident in the contributions made so far reflect the character of the matter with which we are dealing.

Tony Cunningham: Does the Minister accept that what makes the situation even worse—it is bad enough that it is Christmas and so on—is that the agents who were taking the money week after week were taking it from friends? The responsibility and the guilt that they feel, because they have let down their friends, are enormous.

Mr Hayes: Yes, that is true. It is a good point. The hon. Gentleman made that point in an earlier intervention in a different form, and he is right. We think of the victims as the people whose money was contributed and lost, but the wider effect of the kind he described is also very sad, because people were acting in good faith, unaware of the likely consequences of the role that they played until it was too late to do anything about it. The hon. Gentleman is right to identify the communal effect that it had on communities that are often tight-knit and where trust matters. This is a poignant matter that understandably stimulates heartfelt sentiments. I will try to deal factually with the circumstances, but it is hard to do that in the context, about which we feel deeply.

The matter started before we came to office, but it is not a partisan matter. Governments need to express a view and take appropriate action. The case began under the previous Government and, of course, because it has not yet been satisfactorily drawn to a conclusion in

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terms of the money received by the people concerned, it continues under this Government. However, neither Government could have intervened in the conduct of a particular insolvency, as that remains subject, as hon. Members will know, to the overall supervision of the court. Nevertheless, I can give some background as to where the Government stand at the moment.

On the issue that was raised about the directors, concern was rightly expressed about their position and their living up to their responsibilities. They are the people who controlled the company. The investigation that took place was complex. As the hon. Member for Newport East mentioned, it resulted in an application by the Business Secretary, in the High Court of Justice on 26 January this year, for disqualification orders to be made against the directors. It was made in the public interest on the ground that the conduct of each director makes him or her unfit to be concerned in the management of a company. It is, of course, a legal application. None the less, the fact that we made it reflects the Government’s view that this is a matter of profound concern. The individuals must be held responsible. As a result, opportunities to serve in a similar or indeed any business capacity should be limited. To say more about that at this stage would probably be improper, but the message that I have broadcast makes clear my views and those of the Government.

Jessica Morden: Does the Minister have any idea how long the process will take, and will he address the issue of the knighthood if the person in question is found guilty?

Mr Hayes: That is a fair question, but since the matter is now part of a legal process it is difficult for me to give a definitive answer. It would not, however, be unreasonable for my hon. Friend the Member for Kingston and Surbiton (Mr Davey), who is the Minister responsible for such matters, to respond directly to the hon. Lady, and I will ask him to do just that. I am not the Minister responsible for this particular matter, although I am happy to act as a conduit to the person who is. On such occasions when I am standing in for a Minister, it is my habit to make it clear to them that they have a responsibility to hon. Members and to the Chamber. I am more than happy to pass on the fact that I would like my hon. Friend the Member for Kingston and Surbiton, in so far as he can, to answer that question.

Mr Buckland: In the spirit of that constructive approach, may I ask the Minister the question posited by the hon. Member for Workington (Tony Cunningham) about the criminal aspect of this case? Was a proper investigation ever carried out by the Serious Fraud Office or the Crown Prosecution Service into allegations of fraudulent trading? It certainly seems to me, and to many others, that that should have been looked into at the time. If it was not looked into, why was that?

Mr Hayes: I will try to deal in my remarks with some of the actions that were taken, and if I do not cover that point I will come back to my hon. Friend on the matter. I would like to make some progress to describe what actions have been taken, although I am mindful of that intervention and do not seek to avoid it. I will try to deal with it during my remarks, but if I cannot, I will subsequently reply to my hon. Friend directly.

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Nick Smith (Blaenau Gwent) (Lab): Will the Minister give way?

Mr Hayes: I will give way briefly, but I want to make some progress because I am short on time.

Nick Smith: It is great that the Minister has shown such sympathy for the victims of this injustice. Such schemes take place up and down the valleys in south Wales, and many members of my family have participated in them in the past. I would like to press the Minister on the matter of alleged fraud. Will he let us know what he is going to say on the matter sooner rather than later, so that we can quiz him further? People are very angry.

Mr Hayes: When I have made some progress, if I have not satisfactorily covered that matter I give a commitment that either I or the Minister responsible will respond properly and as far as we can within the legal constraints that I have set out. I am aware of the hon. Members who have participated in this debate, and of those who have a particular interest in the area. I am not avoiding the issue; it is a fair question and I will ensure that it gets a fair answer from the Government. I am not in the business of avoiding difficult subjects, particularly ones such as this that unite the whole House in its view of what is and is not appropriate.

In the short time that we have available for this important debate, let me make some progress so that I can deal with some of the points raised. I want to set out the steps that we have taken to avoid such things happening in the future. As the hon. Member for Newport East said, the main companies in the hamper industry, through the Christmas Prepayment Association, introduced new safeguards for consumers’ money in the form of independently controlled, ring-fenced trust accounts. I know that the hon. Lady is doubtful about the self-regulation of the industry, but however imperfect, those safeguards represent significant progress for an industry that has, quite frankly, faced something of a shake-out following the Farepak affair. Relatively few businesses are now involved in that industry, and their coming together in the way that I have described represents significant progress.

There are various other Christmas saving accounts, such as clubs run by supermarkets, large retailers, local shops, social clubs, pubs and workplaces, and risks are always associated with any business of that kind. They are bigger and certainly more widespread than the principal companies that most of us know about. Local schemes exist throughout the country, and have done so throughout my lifetime if not considerably before. I remember my mother being part of a small, local Christmas saving club when I was a child, and it is hard to regulate every such arrangement. None the less, the Office of Fair Trading has produced a leaflet entitled “Save Xmas”—I am sorry it is not “Save Christmas”—which is a quick guide to paying for Christmas. The leaflet lists various schemes and indicates whether there is any protection should they go bust. It is important that people who put their money into such schemes know where they stand at the outset, because that has not always been the case in the past.

The Money Advice Service provides advice on its website about what protection is offered for various ways of saving money, and in addition, the Office of Fair Trading’s consumer codes approval scheme, which

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aims to safeguard consumer interests and raise standards in markets, lists the protection of prepayments as one of its criteria. The OFT has approved 10 codes so far, and we are currently consulting on how consumer codes will operate in future, in light of proposals for institutional reform for those bodies that are currently responsible for consumer and competition policy. Those measures should help savers to avoid losing prepaid moneys in future.

On the issue of insolvency, it is clearly a matter of regret that more money is not available for distribution, and I understand the concerns mentioned by the hon. Member for Newport East, and others, about the expenses incurred in dealing with liquidation—I think she described the figure as “eye watering,” and I do not disagree. Farepak is clearly no ordinary insolvency because it is so complex. It was complex from the start and involved an exceptionally large number of customers and agents—more than 116,000—and the identities of many of those were initially unknown. Considerable work was therefore involved in identifying creditors and substantiating their claims.

The creditors’ committee, which represents those who have lost money, has received regular detailed reports on the progress of the liquidation and approved the actions of the liquidators. I understand that the liquidators have undertaken various investigations in order to increase asset realisations, including action that resulted in £4 million being recovered from the directors of the company. I also understand that the liquidators are currently working to bring proceedings against third parties, with the intention of increasing the pot of money available to creditors. Given the nature of such an action, the liquidators say that it is not possible to determine when moneys will be paid to creditors. As a result of this debate, however, I will make further inquiries, and ask the Minister responsible to report back to hon. Members about the anticipated time scale, in so far as he reasonably can.

The liquidators point out that the work they have undertaken over the years has resulted in the possible amount payable to creditors increasing from 5p to 15p in the pound. I accept that 15p may not be perceived as sufficient, but as the hon. Lady knows, it has substantially increased from the original estimate. The liquidators have also stressed that the creditors’ committee can, at any time, instruct them to stop their activities and pay creditors from the funds already secured. They have also indicated that due to the sheer number of creditors, the process of paying a dividend will be very expensive. They therefore want to ensure that as far as possible, all money that can be recovered is received before a payment to creditors is made. The aim is to get the amount returned per pound to the highest possible level before we start the process of paying the creditors. Otherwise, we will add to the administrative costs associated with the process, and the balance between what that costs and the benefit people receive will be even further out of kilter.

I do, however, believe that the figure of £8.2 million, in contrast with the current dividend prospect of £5.5 million, causes considerable concern. I know that the hon. Lady shares my concern about the level of fees, and she will know that the Government have considered the issue and what should be done in the future. I hope that what I have said today will provide some assurance

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that I, and other Ministers, believe that we cannot leave the situation as it is in terms of how such matters are handled.

In April 2010 new provisions came into force for insolvencies commencing after that date, giving creditors additional powers to obtain information about the fees and expenses charged by insolvency practitioners. The percentage of creditors required to bring a challenge in court was reduced from 25% to 10%, and the issue of fees charged by insolvency practitioners was considered by the OFT in a report published in June 2010.

Earlier this year, my hon. Friend the Member for Kingston and Surbiton, the Minister with responsibility for issues of insolvency, issued a consultation on a set of proposed reforms to the regulation of insolvency practitioners, including how practitioners deal with complaints. Our aim is to ensure transparency and accountability and to improve confidence in the insolvency process.

This has been a useful discussion on an important subject. I have had little time to sum up the debate, but I take this issue seriously, just as the Government take seriously the whole business of dealing with insolvency. We will take steps to ensure that the process is fair, reasonable and timely, and I will ask my hon. Friend the Member for Kingston and Surbiton to come back to Members on any specific points that I have not had the chance to cover, and make the position clear.

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Alcohol Taxation

4.30 pm

Dr Sarah Wollaston (Totnes) (Con): I have watched many of my former patients die as a result of alcohol; there is nothing like witnessing the end of the journey to focus one’s attention on the need to prevent people from becoming harmful drinkers in the first place. We are witnessing an unprecedented rise in hospital admissions and deaths from alcohol-related liver disease. Alcohol is directly responsible for more than 6,500 deaths and more than 1 million hospital admissions a year. It is the single largest cause of mortality in young people, accounting for one in four deaths among 15 to 24-year-olds—far more than die as a result of knife crime. There are now 1.6 million dependent drinkers in England alone.

However, the point about alcohol is that it does not just affect the drinkers themselves; it has a devastating effect on their families, especially children, and on entire communities. There are 705,000 children living with a parent who is a dependent drinker. Parental alcohol abuse is a factor in half of child protection cases.

The full costs are hard to quantify, but the bill runs to at least £20 billion a year.

Mr Kevin Barron (Rother Valley) (Lab): The hon. Lady will know that I chaired the Select Committee on Health in the previous Parliament. We conducted an inquiry into alcohol, and it was the first time in many decades that a Select Committee had done that. We took evidence that the cost to the NHS could be as high as £55 billion a year. The situation is similar to that with tobacco: in the end, no one really knows the cost of the use of these products.

Dr Wollaston: I thank the right hon. Gentleman for that intervention. He is absolutely right. The study to which he refers took into account the reduced quality of life years associated with alcohol, which are extremely difficult to quantify.

In three years’ time, the Government will be judged not just on the economy, but on other tangible markers, such as violent crime, the prison population, health inequalities—even markers such as teenage pregnancy. It is hard to think of a social marker that is not affected by alcohol.

However, there are other compelling reasons for taking action. At a time of squeezed police budgets and when the NHS needs to find efficiency savings of £20 billion, we should not be pouring that money down the drain because of the problems that this country has with alcohol. About half the offenders in some prisons are jailed for an offence in which alcohol played a significant role. The relationship between crime and alcohol is not linear, but the positive association between violent crime and alcohol is compelling. There is a wealth of evidence to link alcohol price increases and reduced rates of homicide, rape, robbery, assault, motor vehicle theft and domestic violence.

Brandon Lewis (Great Yarmouth) (Con): I congratulate my hon. Friend on securing this important debate. In terms of alcohol price increases having the effect that she has just outlined, does she agree that one easy, fast

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and effective route that the Government could take to stop underpriced and low-priced alcohol being sold would be to go ahead with duty stamping on beer and wine to ensure that alcohol is sold at the right price and, equally, to save the Government up to £1 billion a year of revenue that is currently lost through the tax being avoided?

Dr Wollaston: That is one of the options. I would like to outline an alternative, but I certainly thank my hon. Friend for that intervention.

Numerous studies around the world have shown public health benefits as a result of price increases and taxation policies, so is it not time for some evidence-based politics? The trouble is that there is no single, simple solution. We know that there are other factors in addition to price: availability, our drinking culture and marketing. Those are all key factors, but today’s debate is about taxation, so I will focus entirely on price, not because the others do not matter, but because they are not within the remit of the Treasury.

It is worth pointing out that most health experts feel that changing pricing is the most effective way of achieving results. I draw the attention of my hon. Friend the Minister to the letter in today’s edition of The Daily Telegraph signed by 19 organisations. I know that the Treasury is aware of the costs to our economy of dependent drinkers and binge drinking, so I will not ask my hon. Friend to respond in detail on those points. As disposable incomes have fallen, so too has the overall consumption of alcohol, but that comes on the back of decades of steady increases. Alcohol remains about 44% more affordable than it was in 1980.

In 2010, a total of 48.4 billion units of alcohol were sold in the UK. Of those, 31.8 billion units—about two thirds; the great and increasing majority—were sold by the off-trade. The widening gap between the price of on-licence and off-licence alcohol is becoming far more significant and is fuelling the rise in home drinking. Harms are not going down as we might expect as a result of the small fall in overall consumption, because of the low-price deals that are still very widely available in supermarkets, garages and convenience stores pretty much around the clock.

Guy Opperman (Hexham) (Con): I congratulate my hon. Friend on obtaining the debate. The north-east has one of the worst rates of liver disease: we have seen an increase of 400% since 2002. I accept entirely the point that she makes about robust regulation in terms of minimum pricing, but does she accept that the local supermarkets in our individual constituencies can make a specific difference on the pricing and availability of alcohol and the way in which it is presented to our constituents?

Dr Wollaston: I absolutely agree. Most of the alcohol-related carnage is caused by young binge drinkers and by heavy or dependent drinkers, so the issue is not only about the availability of alcohol in outlets throughout the country. The harm is not going down, because those groups are the ones that are most attracted by the low-price deals.

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Andrew Griffiths (Burton) (Con): I congratulate my hon. Friend on securing this important debate. I declare an interest as chairman of the all-party beer group. I agree with her about the need for the Government to take action. Does she agree with me on this point? Twenty years ago, the price in a supermarket and the price in a pub were much the same at about 75p a pint. Today, a pint costs £3.10, £3.20 or £3.30 in a pub, whereas in a supermarket it remains at about 70p or 80p. That has encouraged people to drink more and more at home and discouraged them from drinking in a safe, supervised environment such as the community pub that is at the heart of many of our towns and villages.

Dr Wollaston: I thank my hon. Friend: he makes an excellent point about the decline in rural pubs and why any action that the Minister takes has to take into account the impact on rural pubs and, of course, town pubs.

Jason McCartney (Colne Valley) (Con): I congratulate my hon. Friend on securing the debate. I have to declare an interest. I worked behind the bar in one of my local pubs on a recent Friday evening, celebrating British beer week. I am also a member of the all-party beer group. I echo the comments made by my hon. Friend the Member for Burton (Andrew Griffiths). In a pub, we have a safe environment; we have a landlord who is licensed. That encourages responsible drinking. The pub I worked in—the Wills O’Nats in Meltham—was a family environment. Young people were there, drinking soft drinks until early in the evening. Does my hon. Friend agree that any taxation put in place by the Government should not just be about revenue streams, but should encourage responsible drinking in the community pub environment?

Dr Wollaston: I absolutely agree. The point is that in the UK harmful drinkers buy 15 times more alcohol than moderate drinkers, yet they pay 40% less per unit. Those are the groups that are most influenced by pricing. That is why I agree with my hon. Friends that the problem does not come from pubs.

I did have a prop for the debate. Last weekend, my researcher was able to access 2 litres of own-brand cider from Asda for £1.48, which worked out at just 18p a unit. With a four-pack of bitter for 68p, the price was just 17p a unit. I particularly objected to the labelling. It said, “Asda Smart Price”. I put it to hon. Members that there is nothing smart about charging 68p for four units of alcohol. That would send a woman well over the safe limit for a single day for just 68p.

Mike Wood (Batley and Spen) (Lab): I, too, congratulate the hon. Lady on securing the debate. It is significant that Asda is the supermarket she cited, because it is seen as the one supermarket that has so far taken a lead in trying to get to the bottom of two-for-one offers and the like. If Asda is still behaving as badly as that, what can we expect from the others?

Dr Wollaston: Asda has acquired a veneer of respectability by signing up to the new responsibility deal, but I would ask whether it is killing its customers with such pricing. Asda has liked to boast of its responsible approach in removing low-price offers from its foyers, but I put it to Asda that those who conduct proxy sales

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on behalf of teenage binge drinkers have no trouble in locating the cider at the back of the store. It is the ultra-low pricing that is causing the carnage.

I recognise that the Government are trying to introduce a floor price for alcohol that will include duty and VAT. The trouble is that the policy will not go far enough to solve the problem, as it will still allow white cider to be sold at below 10p a unit. It will establish the principle of minimum pricing without the prospect of delivering any meaningful results. Will the Minister set out what responses she has received from public health experts on that point? All the public health advice that I have seen is entirely pessimistic. The Daily Telegraph pointed out today that the policy will catch only one in 4,000 of the drinks currently being sold and will do nothing to save lives.

Andrew Griffiths: Does my hon. Friend agree that it was this Government who introduced, for the first time, a ban on below-cost selling? That was an important line in the sand—the first time that a Government have said that selling booze too cheaply is a bad thing. The question now is how cheaply?

Does my hon. Friend share my concern that the current tax system seems to encourage people to drink ever stronger and stronger drinks? The tax system encourages the strength of wine to increase dramatically, and the drink of choice of young people is now vodka.

Dr Wollaston: I thank my hon. Friend for making that point. We need to show what minimum pricing means in practice if we set a reasonable price. If we set a minimum price of around 45p a unit, as the Scottish Government are planning to do, in a Bill introduced at the end of October, it would mean that a bottle of whisky containing 28 units could not be sold below £12.60, a bottle of wine containing 10 units could not cost less than £4.50, and a pint of beer with two units could not cost less than 90p. Such prices would not suck all the fun from a night out; in fact, they would not raise the price of alcohol in the on-trade at all.

Mr Barron: Will the hon. Lady give way?

Dr Wollaston: May I make a little progress? The case against a minimum price of between 45p and 50p a unit may hang on the loss of income to the Treasury. Alcohol duty raised £9.5 billion in 2010-11, which is equivalent to 1.7% of total Government revenue. There is a certain illogicality in the bands set by the European Union, so to a certain extent, as my hon. Friend the Member for Burton (Andrew Griffiths) said, there is great encouragement towards higher strength products.

The amount received by the Treasury is the same whether a product is sold in a pub or a supermarket. VAT is levied on top, but there are no specific data on where and on what products it is levied. Will the Minister set out estimates of the loss of income that would arise from the introduction of a minimum unit price of between 45p and 50p? Will she also set that against the benefits in estimated savings to the Home Office, the Department of Health and the Ministry of Justice that would result from a reduction in alcohol-related harms?

The Department of Health leads on alcohol policy. It has stated repeatedly that it does not wish to disadvantage moderate drinkers on a low income. However, it has failed to point out that harmful drinking disproportionately

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affects the poorest and most vulnerable in our society, and is a significant contributor to health inequality. A report on the Department’s behalf from September 2011, titled “Narrowing the health inequalities gap”, makes it quite clear that if it were not for alcohol-related deaths, and if we had had an effective policy, the objective to narrow the overall life expectancy gaps for the spearhead local authority areas—the most deprived areas in our country—

“would…certainly have been achieved for males; and would be well on the way to being achieved for females.”

The evidence is not just that low-income groups suffer the most health harms, but that they suffer the most harms as a result of violence in their communities.

If we look at the evidence from some shopping basket data published in a university of Sheffield study, we can see that for

“a 50p minimum price, a harmful drinker will spend on average an extra £163 per year whilst the equivalent spending increase for a moderate drinker is £12.”

In other words, the published data state that such a policy will not penalise low-income moderate drinkers.

The deprived spearhead communities have the most to gain from an effective alcohol policy. A minimum or floor price can be set that is not regressive and is affordable for anyone who is not drinking at hazardous levels. As one of my correspondents pointed out:

“If you can’t afford 50p per unit it is a good sign that you are drinking too much.”

The charge is often made that without an increase in duty the profits will go to the drinks industry and retailers, not the Treasury. I can understand that, but if we can introduce windfall taxes on energy companies, why not have windfall taxes on supermarkets that profit from windfall gains? With more than 31 billion units sold in the off-trade, why not even consider a health levy on unopened bottles, perhaps of between 5p and 10p a unit, targeting just the off-trade? That would be more than enough to allow for decent treatment programmes. Evidence shows that for every pound we invest in such programmes, we save £5 in wider benefits to the economy because of reduced harms.

Guy Opperman: Does my hon. Friend think that it would be a good idea to introduce an alcohol Act similar to that which exists in Scotland?

Dr Wollaston: I could not agree more.

Finally—I know that other Members would like to come in—there are those who argue that a minimum price is illegal under EU law. If so, why are the Scottish Government so confident that it is not? I draw the Minister’s attention to a reply given by Mr Dalli on behalf of the European Commission to a question put by an MEP on that point. The bones of the reply are that

“the Commission fully shares with the Honourable Member the conviction that there are strong public health reasons for the EU to tackle alcohol-related harm including minimum pricing measures.”

Will the Minister set out today whether there have been discussions with the Scottish Executive on the matter? Will she also comment on what steps the Treasury will take to tackle supermarkets’ plans to undermine Scotland’s decisive action to tackle the carnage caused by alcohol? Tesco recently e-mailed Scottish customers

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to reassure them that they will still be able to access cut-price deals after the Act is in force, as the products will be delivered from across the border. Will the Minister join me in condemning that e-mail from Tesco?

Yesterday, the Select Committee on Health returned from a visit to Carlisle, and it is clear that the city is expecting an increase in cross-border sales. It would prefer to see us use an evidence-based policy to protect the north-west, which has suffered from the devastating impact of alcohol. There have been many calls for effective minimum pricing and numerous models show the amount of lives and money saved, so I do not want to go over them in detail, other than to point out again that a 50p minimum price could save nearly 10,000 lives a year.

We have shown that Britain is prepared to stand our ground in the EU when it comes to the City of London. Now is the time to put the lives of our young people ahead of the theoretical risk of a legal challenge. A precedent exists in the loi Evin, which the French introduced to protect children from the effects of alcohol marketing in France. It has been challenged repeatedly by the industry in the EU’s courts, but it was upheld on the grounds of the health benefits. I fully agree with that.

Mr Barron: I agree with the hon. Lady regarding unit pricing, as did the Select Committee. One issue that caught my ear in her presentation is that of spirits. For 10 years, I have sat in Budget speeches in the House of Commons Chamber, when everyone cheered when the duty on spirits never went up. Then a £6 bottle of vodka became the choice for binge drinking. That is one of the lessons that the Treasury should learn.

Dr Wollaston: I could not agree more. Pricing plays, and has played, a role in the massive increase in the drinking of vodka, particularly by young women.

There are other ways of levelling the playing field, if the Treasury wants more income after minimum pricing. I know that the Minister is aware of the paper written by Dr Nick Sheron in which he argued that we could vary VAT between the on and off-trades to achieve minimum pricing, without damaging our pubs. I accept that the Treasury is convinced that that would be illegal under EU law. That is just another example of the completely illogical rules by which alcohol duty is set from across the channel, and is a prime example of the intrusive and frustrating way so much of our legislation is controlled by the EU.

I finish by asking the Minister not to commit to a floor price that will be meaningless. Will she assure the House that she will meet her Scottish counterparts to discuss why they are convinced that it is legal to introduce a realistic minimum price for alcohol? Can she assure me that the Government will look at the consistent and evidence-based advice from health experts on minimum pricing, and at least ensure that supermarkets south of the border do not undermine what is happening in Scotland? Can she also assure me that the Treasury recognises that alcohol is not an ordinary commodity, but a psychoactive, teratogenic carcinogen, which also happens to be addictive?

I finish with a story from one of my constituents, who spoke to me after trying to stop a drunken lout urinating on a semi-conscious vulnerable woman in the

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street. Is that the picture of Britain that we want to send to the rest of the world in our Olympic year? It really is the picture that other people are starting to have of Britain, and it is completely preventable. We just need bold action from the Government. Otherwise, we are abandoning another generation of young people. There is no such thing as a free lunch and equally no such thing as a cheap drink. We are all cross-subsidising cheap deals in supermarkets by paying extra for our groceries and other products. There is no such thing as a cheap drink: we are all paying a heavy price.

4.51 pm

The Economic Secretary to the Treasury (Miss Chloe Smith): I congratulate my hon. Friend the Member for Totnes (Dr Wollaston) on securing the debate. I recognise that, as a general practitioner, she can draw on direct experience on dealing with the adverse effects of alcohol on health. I also acknowledge her reference to the contribution in The Daily Telegraph today from other professionals in the field.

I can assure all hon. Members who have spoken—it is a pleasure to hear so many—that not only GPs have such concerns about the effect of alcohol on the welfare and well-being of society; that concern is shared by the Government. It is clear that alcohol abuse causes serious harm to health and leads to considerable costs to the NHS and that many towns and cities are affected by alcohol-related violence and crime, as my hon. Friend has said. Like her, of course I abhor behaviour such as that in the example on which she finished her speech.

For all those reasons, the coalition Government are committed to tackling problem drinking across a range of fronts. I shall set out a few points on which action has already been taken. I shall try to do so quickly, to get on to minimum unit pricing, as my hon. Friend has requested. I will begin by trying to tackle a couple of points made by other hon. Members. Irresponsible drinkers, rather than responsible drinkers in pubs and other places of safety, are the problem.

I shall try to tackle a couple of the specific questions. If I do not do get there in time, I hope that my hon. Friend will forgive me if I write to her on a couple of points. With regard to measures that the Government have already taken, I hope that they will demonstrate and reassure her that the Government are committed to an evidence-based approach. I specifically reassure her of that today. It is, of course, a subject on which data speak clearly. It is a complex subject that requires much analysis of evidence.

I shall start that process with what the Government have done. My hon. Friend will know that the Treasury published the review of alcohol taxation in November 2010, which among other things identified a problem with so-called super-strength lagers, about which others have spoken today. The Government confirmed in the 2011 Budget that action would be taken to discourage consumption of those drinks, introducing two new additional duties, which should help. There are also targeted approaches on other types of drink—for example, a minimum juice content for products that qualify as cider. I note my hon. Friend’s point about ciders.

Andrew Griffiths: The Minister has clearly got up to speed quickly on her brief. With regard to cider, does she agree that it seems completely incongruous that the

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4% duty paid on a pint of beer is twice that paid on cider—2%—at exactly the same strength?

Miss Smith: I am aware of that specific point, and I am sure that my hon. Friend and his colleagues will be even more aware of that tonight at the all-party parliamentary beer group’s Christmas party, if I have that correct. If he will forgive me, I will focus on minimum unit pricing in this debate, to deal with points raised by my hon. Friend the Member for Totnes. I shall briefly note that she raised the wider impacts of alcohol. Of course, it is not just the duty system that is important. I direct her to the Police Reform and Social Responsibility Act 2011, which I hope will help with the late-night economy. To make an important point, I direct her to a forthcoming paper from the Department of Health, which, with the Home Office, is responsible for this area, that will consider the wider social and health impacts of alcohol. I have no doubt that she will look at that in some detail.

Guy Opperman: A simple question: when assessing taxation in the alcohol strategy document, working with the Department of Health, will there be a difference in the views on taxing supermarket sales compared with the pubs that we all cherish and that are so affected by this?

Miss Smith: If my hon. Friend will allow me to come to that, I shall attempt now briefly to answer a number of the questions asked. First, as my hon. Friend the Member for Totnes explained, the Scottish Government have recently introduced a Bill that seeks to bring in a 45p per unit minimum price. She asked why this Government believe that that would be incompatible with EU law, when the Scottish Government do not. If I may quote the specific point: we believe that it could be incompatible with article 34 of the treaty of the functioning of the European Union. I should be delighted to go into more detail on that if she required. That is the position.

I should like to deal with the important point made by my hon. Friend the Member for Hexham (Guy Opperman). No one wishes to hit pubs unnecessarily. I take the examples about the behaviour of supermarkets

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that have been given. Like hon. Members, I am wary of those. If an indirect tax were introduced, it would be difficult to distinguish between points of sale. I am happy to come back to hon. Members in more detail on why that is difficult, but it is not as straightforward as saying that we want to hit supermarkets and not pubs; it is about how to set up an indirect tax.

On that note, as hon. Members will have heard in other debates, it is difficult to find ways to vary VAT on similar products. Again, I am happy to come back with more detail on that if required. On price distortion and perhaps distasteful practices at the border, the UK Government will look into that closely. My hon. Friend the Member for Totnes asked whether we will discuss matters with the Scottish Government. We will be watching the situation extremely closely in the service of seeing what works and what we can assess among these complex policy and legal issues.

I will go briefly to a couple of other questions that my hon. Friend asked me: have we received representations from public health representatives on the duty plus VAT measure? I regard that measure as a starting point, as a first step. She rightly notes that it introduces a principle and a starting point. Treasury officials are very closely involved in discussing such matters with the Department of Health and, as I have already mentioned, the Home Office, which is also responsible in part for alcohol. I hope that reassures her.

We have mentioned supermarkets. I shall briefly turn to whether a windfall profit tax could be introduced as a method of trying to tackle some of the harms. First, this is about evidence. It is questionable whether windfall profits are likely to arise, and therefore whether there would be something to tax, as a viable approach. That question rests on carefully analysing the evidence, policy and legal issues and what is possible.

Finally, I hope that I have set out that the Government have taken some action and made some starting points. The Government are keen to hear evidence on the matter and will observe carefully what is going on in Scotland and elsewhere.

Question put and agreed to.

4.59 pm

Sitting adjourned.