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House of Commons
Monday 23 January 2012
The House met at half-past Two o’clock
Prayers
[Mr Speaker in the Chair]
Oral Answers to Questions
Work and Pensions
The Secretary of State was asked—
Work Programme (Performance Data)
1. John Woodcock (Barrow and Furness) (Lab/Co-op): For what reasons Work programme contractors are not permitted to publish their performance data. [90837]
The Minister of State, Department for Work and Pensions (Chris Grayling): I thought that this afternoon we might have been extensively debating the benefits cap, but no Labour Members have been brave enough to raise the issue; I cannot think why.
The Department is following guidance issued by the national statistician in order to comply with the code of practice for official statistics and to protect the integrity and accuracy of data. However, we propose to allow providers to publish data that do not compromise the official statistics and will issue guidance to providers shortly.
John Woodcock: As the Minister knows, under the flexible new deal, providers were allowed to publish their data if they wanted to. If he is confident in his Work programme and knows that he has got the contracting incentives right, about which there is some doubt, why on earth is he refusing to let these providers publish their data if they want to?
Chris Grayling: It is precisely because I am keen to get information out there that we are looking at ways to ensure that that can happen, despite the rules about national statistics, which we have to obey very carefully. If the hon. Gentleman wants some statistics about employment programmes, let me share a set with him. The flexible new deal, to which he referred, cost the taxpayer £770 million and delivered 50,000 six-month job outcomes. He can do the maths on that—it amounts to approximately £14,000 per six-month job outcome. That is one failure of the welfare-to-work programmes we inherited, and that is why the welfare-to-work package that we have put together through the Work programme will be better value for the taxpayer and do a better job for the unemployed.
Mr Julian Brazier (Canterbury) (Con): Following that robust answer, does my right hon. Friend agree that when we are able to publish these data, they are likely to show the success of putting work out to contract when we see that organisations such as the Shaw Trust are much better at providing work for disabled people than the work done in-house by the Benefits Agency?
Chris Grayling: When I visit Work programme providers —I have now visited most of them—I certainly find a great deal of enthusiasm, a sense of purpose and successful progress. I hope that that will show through in the official statistics when the time arises. I am not in the business of burying good news, and I very much hope that we will be getting the good news about the Work programme out there as soon as we possibly can.
Stephen Timms (East Ham) (Lab): I welcome the U-turn on the publication of data that the Minister has just announced. The White Paper, “Open Public Services”, which was published only last summer, included the following commitment:
“Providers of public services from all sectors will need to publish information on performance”.
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So why did he write into the Work programme contract a ban on the publication of performance data by those providers?
Chris Grayling: As we can all see, one of the challenges that Labour Members face at the moment is that they are all over the place on policy. On Friday, they were attacking me for allegedly misusing statistics; today they are asking why I am not going round the rules set out for us by the Office for National Statistics. They need to make up their minds about what they really stand for, because at the moment they have no idea.
Stephen Timms: The Minister has signally failed to answer the question. We know that he did not ask the UK Statistics Authority, whose rules he regularly quotes, before he imposed this absurd ban. I welcome the fact that he has finally announced a climbdown today, but he cannot blame anyone for asking him what he was trying to hide.
Chris Grayling: I have absolutely nothing to hide. I have to say to the right hon. Gentleman, as I have been saying to him for weeks, that I am not in the business of burying bad news. None the less, the statisticians expect us to make sure that we have robust and clear statistics before we publish them. As the Work programme has been going for only six months, and we have barely started to make payments for providers’ success in getting people into work, he is, I am afraid, not portraying the reality of the situation. I am glad that he is pleased that we are going to try to get the good news out there as quickly as possible, but we have to stick by the rules.
Charlie Elphicke (Dover) (Con): Is not the key point that statistics must be first approved by the UK Statistics Authority? Will Ministers ensure that when statistics are available, the success of the benefits cap is also published, with the approval of the UK Statistics Authority?
Chris Grayling: I will absolutely do that because, as my hon. Friend knows, we are all about trying to help people out of poverty by getting them back into work. The benefits cap is one part of a portfolio of policies—including universal credit, the Work programme and the migration of people off incapacity benefit—that will deliver the kind of change to our welfare state that we so desperately need and was so desperately lacking in 13 years under Labour.
Kate Green (Stretford and Urmston) (Lab): The Minister will be aware that it is expected that the number of claimants on employment and support allowance who are routed to the Work programme will be about 150,000 lower than was expected when the contracts were let. What assessment has he made of the impact on their viability?
Chris Grayling:
Overall, as the hon. Lady will have seen from the figures that we published before Christmas about expected numbers in the Work programme, we are likely to see more people in the harder-to-help groups go into the programme than was previously expected. However, she will also have seen from the previous sets of statistics on ESA that we have a larger than expected support group, which is partly because of policy changes that we have made in areas such as
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cancer, addiction and mental health in which we are trying to provide better long-term protection for people who are genuinely vulnerable.
Personal Independence Payment
2. Nadine Dorries (Mid Bedfordshire) (Con): What steps he took to consult disabled people and representative organisations on the development of the personal independence payment. [90838]
The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller): We have consulted disabled people and their representative organisations at all stages of the development of the personal independence payment. That included a formal consultation in December 2010 and our response which was published in April 2011; an informal consultation on the draft assessment criteria in May 2011; and a 15-week formal consultation on the revised assessment criteria, which started on 16 January this year.
Nadine Dorries: I thank the Minister for that answer. Agate house in my constituency, a Leonard Cheshire home in Ampthill, looks after some of the most severely disabled residents. Some are born disabled and many have degenerative illnesses that mean that they will need greater levels of care in future. They will never need less care than they do today or be less disabled, yet they all have to go through the ignominy and bureaucratic process of an assessment of their allowance once a year. Will the Minister examine that matter? It seems an incredible waste of money, a bureaucracy, a waste of civil servants’ time and an embarrassment to residents. Could we change that?
Maria Miller: I thank my hon. Friend for her question and say to her that we absolutely share the objective of ensuring that the people with the severest challenges in living independently in our society do not receive undue assessments. At the moment there is no in-built reassessment under disability living allowance. She put her question in the present tense—I am not sure whether she was referring to other things for which people are assessed. I reassure her that under PIP, we do not intend to have fixed annual reassessments. They will be made based on individuals’ personal circumstances.
Barbara Keeley (Worsley and Eccles South) (Lab): In their report “Responsible Reform”, disabled people and carers analysed the responses to the Government’s consultation and raised many issues about the replacement of disability living allowance. Carers UK has also expressed deep concern about the impact on carers of cuts to disability benefits, yet today we learn that 5,000 carer households will be hit by the mean reduction of £87 a week as a result of the benefits cap. Will the Minister now publish an assessment of the impact on carers of all the Government’s cuts?
Maria Miller: To give the House total clarity I should say that the report that the hon. Lady references was highly selective. It examined only about 10% of the responses that we received on the DLA and PIP consultation.
I will answer the hon. Lady’s question about carers directly as she, like me, wants to ensure that carers get the support that they need. We have already made it
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clear that carers will be eligible for carer’s allowance as a result of the person for whom they are caring being in receipt of either level of PIP.
Jenny Willott (Cardiff Central) (LD): Many disabled people are deeply unhappy about the performance of Atos Origin in administering the work capability assessment. As a result, they are scared about the introduction of the new PIP assessment. What discussions has the Minister had with disability organisations about who will carry out the new assessments, and what reassurance has she been able to give them that the mistakes made with the work capability assessment will not be repeated with PIP?
Maria Miller: My hon. Friend will be aware that the new personal independence payment assessment will be separate from the WCA, and that any contracts that are in place for Atos are not at all connected with the new assessment that we need for PIP. In fact, a formal competition document is going out today to start the commercial process. To reassure her about the involvement of disabled people, I say that we already have an implementation development group, which involves disabled people closely at every step of the way.
Mrs Anne McGuire (Stirling) (Lab): Just for balance, I should like to put on record my thanks to those who gave us the Spartacus report, which was a challenging document and took apart some of the Government’s points.
The Dilnot report recommended that universal disability benefits for people of all ages should continue as now. However, under the new PIP the Government are scrapping low-rate care. Some 500,000 people, and probably more, could face escalating unmet needs that will result in pressure on council care services. What specific discussions has the Minister, as lead for the Office for Disability Issues, had on the changes with her colleagues in the Department of Health and the Department for Communities and Local Government, and with the Scottish and Welsh Governments, and what action has she taken as a result of any conversations?
Maria Miller: The right hon. Lady will know that we have been having very close conversations with both the devolved authorities and the Department of Health, and she is right that we have to consider the changes that are happening in the round. She should also be mindful of the fact that the changes that we are making under the PIP will remove something that we inherited from the previous Government—£600 million a year going out in overpayments to people whose conditions have changed and who no longer need the same level of support.
Health and Safety Regulation
3. Jessica Lee (Erewash) (Con): What steps he has taken to reduce the level of health and safety regulation affecting business. [90839]
7. Mr Tobias Ellwood (Bournemouth East) (Con): What steps he has taken to reduce the level of health and safety regulation affecting business. [90843]
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8. David Rutley (Macclesfield) (Con): What steps he has taken to reduce the level of health and safety regulation affecting business. [90845]
The Minister of State, Department for Work and Pensions (Chris Grayling): Britain has the best record in Europe for the prevention of death and serious injury in the workplace. We should be proud of that, and we will seek to retain it under the Government. We also have one of the worst records in Europe for unnecessary health and safety red tape. The Löfstedt report, which we published in November, recommends significant changes to our regulatory regime. We accepted the recommendations and, with other planned changes, we aim to reduce the total number of health and safety regulations by 50% by 2014.
Jessica Lee: My right hon. Friend referred to the Löfstedt review. Does he agree that, by returning to a common-sense approach to health and safety legislation, businesses such as mine in Erewash can concentrate on positively contributing to the local economy rather than fearing unnecessary prosecution?
Chris Grayling: Absolutely. That is very much our hope. We have already implemented one of the key recommendations of the Löfstedt review. On 1 January, we established the first challenge panel, which will allow businesses that believe that they are on the wrong end of a wrong decision as a result of a health and safety inspection to have a quick, easy and simple way of challenging and, if necessary, overturning it.
Mr Ellwood: Is it not the case that a culture of hesitancy, leading to paranoia, developed under the previous Government? That culture saw the term “health and safety” justify bizarre decision making, such as cutting down trees in school playgrounds in case children climbed them, or council office light bulbs being replaced only by those who had completed the “how to use a six-foot ladder” course. I hope that we will see some change from this Government on those issues.
Chris Grayling: We hope that a simpler regulatory structure will contribute to that. If we take the example of schools, we have already shortened the forms that need to be filled in for a school trip from more than 120 pages to eight. I encourage every Member of the House, including you, Mr Speaker, to challenge daft health and safety decisions when you come up against them in your constituency. There is almost certainly no basis for them in health and safety law.
David Rutley: The average annual cost of compliance with health and safety regulations is more than £4,000 for businesses of fewer than 50 employees. What steps are being taken to reduce further the burden of health and safety regulations on our start-ups?
Chris Grayling: That is particularly important. One of the Löfstedt review’s key recommendations was that we should exclude altogether from health and safety rules self-employed people who do not endanger the lives of others in the course of their activities. We have accepted that recommendation and will introduce it shortly.
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Andrew Miller (Ellesmere Port and Neston) (Lab): As a member of the Löfstedt review, I can confirm that there is a recommendation that has the potential to reduce significantly the net number of regulations. Will the Minister confirm that the review actually recommends consolidating lots of statutory instruments? It would not remove health and safety regulations and, more importantly, it is not a short, quick fix, but a very long-term systematic study that is needed.
Chris Grayling: Let me pay tribute to the hon. Gentleman for his work on that committee—his contribution was much appreciated and greatly valued. He is absolutely right, though I emphasise that there is a mix. Today, we have begun a consultation on scrapping the first seven regulations that we have identified as superfluous or duplicating other provisions. As I said at the start of my remarks, our approach is not about undermining health and safety, which protects people from death and serious injury in the workplace, but about creating a streamlined and simple system that businesses can understand quickly, easily and cost effectively.
Katy Clark (North Ayrshire and Arran) (Lab): The Minister will know that the Health and Safety Executive estimates that, each year, £22 billion is lost in the UK economy because of health and safety failures. Surely any reduction in health and safety regulation risks increasing that figure.
Chris Grayling: That does not follow because the Löfstedt review—and the hon. Member for Ellesmere Port and Neston (Andrew Miller)—identified many areas in which the rules and codes of conduct are too complicated and difficult for businesses to understand. We need to get back to a simple regime that is easy to understand and does what it is supposed to do: protect people from death and serious injury in the workplace.
Sheila Gilmore (Edinburgh East) (Lab): Given that the Löfstedt report does not say that our health and safety legislation is either excessive or wrong, will the Minister also say that and stop peddling the myths on health and safety legislation—the Löfstedt report says that they are myths—that some of his colleagues keep peddling?
Chris Grayling: The hon. Lady misunderstands the challenge we face. It is not Members of the House peddling myths; they are peddled all around the country, by local authority inspectors and middle managers in organisations who blame health and safety for things that have no basis in health and safety law. If we have a simplified regime that everyone can understand, it is much less likely that they can get away with doing that.
Disabled People (Residential Training)
4. Stuart Andrew (Pudsey) (Con): What plans he has to support residential training colleges for disabled people. [90840]
The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller):
DWP adult residential training provision is delivered in nine colleges. The Sayce review of specialist disability employment provision recommended that funding should focus on the individual
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rather than the institution. While the Government consider how to proceed following the recent public consultation, and to support the colleges through any period of transition, I have committed to provision continuing through to the end of the academic year ending summer 2013.
Stuart Andrew: I am grateful for that answer. Residential training colleges have built up a great deal of expertise in supporting disabled people back into work. How will my hon. Friend ensure that that expertise is preserved?
Maria Miller: My hon. Friend is absolutely right. We need to ensure that that expertise is protected and retained. That is why I have given a personal commitment to the colleges for provision to continue through to summer 2013. Indeed, other parts of DWP are supporting colleges to broaden their approach, particularly those such as Enham in Hampshire and near my constituency, which delivers the Work programme in the Thames valley and on the Isle of Wight.
Universal Credit (IT Systems)
5. Sarah Newton (Truro and Falmouth) (Con): What assessment he has made of the information technology systems which will support universal credit. [90841]
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): Universal credit is on track and on budget. The systems are not new or complex. After all, more than 60% of the total developed system is based on reusing existing IT. New developments will use tried and tested technology. The key difference between how this Government are doing things and how they were done before is that we have adopted commercial “agile” design principles to build the IT service for universal credit in four stages, each four months long.
Sarah Newton: I thank my right hon. Friend for his answer. Given the billions of pounds that were wasted by the previous Government on failed IT programmes, this matter is vital to me and my constituents. Will my right hon. Friend therefore explain to colleagues more about the testing regime before the new system is implemented?
Mr Duncan Smith: I should tell my hon. Friend that I am not complacent about delivery. Hon. Members on both sides of the House know that IT developments can have difficulties and can go wrong at key points, even when we are not expecting them to do so. I am trying to ensure that Ministers are directly involved at every turn. We get weekly updates and have fortnightly meetings with those in charge. I set up a programme board, which I chair, and a senior sponsorship group, which includes Her Majesty’s Revenue and Customs, the programme board and the Department for Work and Pensions. The major projects review group has regular reviews. “Agile” principles make it easier for us to pinpoint where there might be failures.
Glenda Jackson (Hampstead and Kilburn) (Lab):
This morning on the “Today” programme, the Secretary of State declared that he knew where and who the families were who would be most adversely affected by the introduction of universal credit. They will lose their
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homes, their children will lose their schools and they will have to find new medical treatments. Why does he need that system, and has he begun the process of informing those families about the cataclysm that he will bring down on their heads?
Mr Duncan Smith: With respect to the hon. Lady, she is mixing up policies. This question is about universal credit, but she is referring to the cap. I am sorry that no Opposition Member tabled a question on the cap—there might be a reason for that, but I do not quite know what it is.
What I said this morning was quite clear. I said that when it comes to the cap and smaller numbers of people, we have worked very hard over the last nine months or so to ensure that we know who will be eligible to fall within the cap. We know exactly all their details, which will make it easier for us to help them through the process. She should have a word with Opposition Front Benchers, and ask them why they did not ask a question about the cap.
Mr Peter Bone (Wellingborough) (Con): When the Secretary of State introduces the new IT system, will he consider introducing a skills database for all those who want a job, enabling employers to dial into the database and match the skills required with the person seeking a job, as against the other way round as at present?
Mr Duncan Smith: That is a very good idea and I am certainly ready to discuss it with my hon. Friend. If we can make something work, it would be brilliant.
Nick Smith (Blaenau Gwent) (Lab): The information technology necessary for university credit will depend on the Revenue’s new PAYE real time system. Is the Minister confident that every employer will be using the system successfully by next October?
Mr Duncan Smith: We are working towards that, and so far it has been a success. Small companies of nine employees or fewer will have access to free software upgrades, so those that do not have a software payroll system will not incur any great charge. We are running trials that will start in April and that will join with the DWP in October. We are on target and we will continue to work towards that date. That is our expectation and ambition.
Sickness Benefit (UK Citizens Abroad)
6. Priti Patel (Witham) (Con): What steps he plans to take to reduce the cost of sickness benefit paid to UK citizens living abroad. [90842]
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): We are bound by EU rules to pay sickness benefits abroad when people are eligible. I emphasise that they need to be eligible, and the same rules apply to the contributory element on employment and support allowance and incapacity benefit—there are no additional limits. We are determined to clamp down on people claiming when they are not eligible, and we are arguing that through at the moment, even in the Commission.
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Priti Patel: In the light of the significant sums being paid in sickness benefits to UK citizens abroad will my right hon. Friend update the House on the legal dispute between the Government and the European Commission? Will he assure me that he will fight the Commission all the way on this matter?
Mr Duncan Smith: The Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), is in the Councils on this one. My hon. Friend refers to the Commission’s idea that the habitual residency test should be abolished. That is quite wrong and we disagree with it fundamentally, but we are not alone: a large number of European nations disagree with the Commission and we join them in saying that this is a step too far—a leap into an area that has always been preserved for national Governments and in which it has no right. We will fight this, and I believe that we will win.
Dr Eilidh Whiteford (Banff and Buchan) (SNP): This is a very serious issue, but will the Government’s programme of closing the DWP’s overseas network in many countries around the world help or hinder efforts to ensure that benefits are paid only to those entitled to them?
Mr Duncan Smith: I believe that the hon. Lady’s question is not directly relevant to whether we are able to spot whether people are eligible, because anybody who claims will have to go through exactly the same checks as they would in the UK. That in itself will be a bit of a deterrent in their trying to claim something from a foreign doctor.
Universal Credit
9. Chris Kelly (Dudley South) (Con): What recent progress he has made on delivering universal credit. [90846]
19. Caroline Dinenage (Gosport) (Con): What recent progress he has made on delivering universal credit. [90857]
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): Design work is well under way. As I said earlier, we are continually testing with staff and claimants to ensure that it works and that we make progress. On 8 December the major projects review group panel report acknowledged that significant progress had been made over the past few months.
Chris Kelly: How many households are expected to receive a higher entitlement as a result of the universal credit, and how will it help hard-working families in constituencies such as mine?
Mr Duncan Smith: Universal credit will be a major sea change for my hon. Friend’s constituents, who will appreciate the fact that for the first time ever we will guarantee that work pays. Figures show that 2.8 million households will have higher entitlements under the universal credit.
Caroline Dinenage: Is there any flexibility in the way in which the universal credit will be paid? For example, could it be paid weekly rather than monthly, and could its housing component be paid directly to landlords in order to protect vulnerable families?
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Mr Duncan Smith: I thank my hon. Friend for that question. She has raised an issue that has been raised by a number of people. The reason why we want to try to pay universal credit monthly is simply that when unemployed people go back to work, they sometimes have to adjust to their wages being paid monthly rather than bi-weekly, which often causes them problems. One of the reasons why they often fall out of work is that they cannot settle on that. We want to try and pay the universal credit monthly, so that it assists them. We will give every bit of assistance we can to all those who have difficulty to help them manage their budgets, which will include a new test on the way we pay housing benefit and the way it will be allocated through their bank accounts. I also give my hon. Friend this undertaking: we will have set-back proposals to make it absolutely certain that we can assist those who genuinely cannot do so to pay their relevant bills.
Mrs Madeleine Moon (Bridgend) (Lab): Before Christmas it was announced that, at least initially, local authorities would have no role in the universal credit assessment. Will the Secretary of State tell me what impact that will have on those working in housing benefit departments in local authorities? Will his Department be helping with redundancy costs if large numbers of people working in housing benefit departments lose their jobs?
Mr Duncan Smith: The reason is that we will be talking full time, all the time, to local authorities. We receive a huge amount of information from them, so we are not talking about stand-alone assessments being made; rather, the functioning of universal credit requires that, at its best, it should be done in one location. However, we will be in constant contact with local authorities about the needs in their areas, and we will be with them all the way through in the way this is applied.
Tessa Munt (Wells) (LD): May I press the Secretary of State a little further on the matter of paying housing benefit directly to landlords? A number of my constituents have found that when they are overdrawn or beyond their overdraft, the bank snatches the money, leaving them still unable to pay their rent, so that they get into worse and worse difficulties. Will he reconsider?
Mr Duncan Smith: I recognise that, and the point is that although the vast majority of those who receive local housing allowance make their payments on time, there is always a group that does not. The way to deal with that is to recognise that we need to help landlords by not allowing those kinds of people to get away with it—for example, by paying a little bit at the two-month point, which sets the clock back to zero. We can make adjustments that way, and we can also deal with those who have difficultly by assisting them and, where necessary, making direct payments. However, those payments should always be the exception, to try to help people manage their budgets.
Universal Credit (Costs to Small Businesses)
10. Dame Anne Begg (Aberdeen South) (Lab): What estimate he has made of the average cost to a small business of real-time reporting of PAYE information to enable calculation of universal credit entitlement. [90848]
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The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): Real-time information—there was a question about this earlier—should not be an additional cost to business, and I do not believe it will be. Ultimately, it will help to reduce administration burdens for employers. RTI will also be good for Her Majesty’s Revenue and Customs, because it will help to eradicate some of the errors caused by HMRC waiting a year before adjusting what it has already paid and then trying to chase people for that money. The fraud and error savings that will arise from the RTI programme—which the DWP considers vital for the universal credit—should be around £700 million, which is an important feature.
Dame Anne Begg: I do not think that the businesses I speak to have any idea whatever that this is about to hit them ahead of the introduction of auto-enrolment, which they are more conscious of and worried about. However, that may be academic, because from what I am hearing, HMRC’s timetable for real-time information has slipped. It will not be ready to roll out RTI universally across the country on the date that the universal credit is introduced. What happens to universal credit if RTI is not in place on its launch date?
Mr Duncan Smith: From the word go, we have not needed the full system of real-time information to be ready for universal credit. We get our information from essentially two feeds, which we have already been working on with HMRC, long before any further timetables. The reality is that RTI will dovetail nicely with universal credit, but we do not need it for that, and we are not expecting it to be ready at the start of universal credit. We were never expecting that, and we have been working on that basis. However, RTI will come in—it is “on timetable”—and those involved will be working hard to produce it.
Workfare Scheme
11. Grahame M. Morris (Easington) (Lab): What recent progress he has made on the introduction of the workfare scheme. [90849]
The Minister of State, Department for Work and Pensions (Chris Grayling): We do not operate a workfare scheme. I think the hon. Gentleman might be referring to mandatory activity; in which case, I can confirm that we have schemes in place as part of people’s job search. They include mandatory work activity and the community action programme, which is being tested as part of supporting the very long-term unemployed.
Grahame M. Morris: May I press the Minister to give a fuller answer to the question that my hon. Friend the Member for Barrow and Furness (John Woodcock) asked a little earlier? Profits at Poundland soared by 34% in 2011, with people on workfare forced to work for free in Poundland stores and being told at the beginning of their placement that there is no prospect of permanent employment, while they carry out the same duties as paid employees. Who is the real beneficiary of workfare: the taxpayer or the shareholder?
Chris Grayling:
The hon. Gentleman is telling a lot of complete nonsense to the House. The reality is that Poundland is one of many major retailers taking part in
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our work experience scheme, which is providing young people who are out of work with their first opportunity to get into the workplace so that they can show a potential employer what they can do. More than 50% of young people who go through the scheme move quickly into employment afterwards, including, in some places, with Poundland.
Nick de Bois (Enfield North) (Con): There is a lot of noisy criticism from those on the left about asking people to work in return for benefits. Does the Minister think that they are right?
Chris Grayling: My hon. Friend is right; those people keep harking back to the future jobs fund. Let me give the House a simple comparison. The future jobs fund resulted in about half the participants getting into work, at a cost of between £5,000 and £6,000 per placement. The work experience scheme is resulting in more than half the participants coming off benefit and going into work at a cost of about £300 per placement. Which one do you think is better value for the taxpayer, Mr Speaker?
Child Poverty
12. Mr David Hamilton (Midlothian) (Lab): What estimate he has made of the number of children who will be living in poverty in 2015. [90850]
The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller): The Government do not forecast in the way that the hon. Gentleman’s question suggests. Child poverty is dependent on a number of factors, and we know that the most sustainable way of reducing it is through parents going to work. I hope that the hon. Gentleman will take this opportunity, when asking his supplementary question, to show his support for the benefit cap, which will be one of the best ways of ensuring that work pays, for families throughout our country.
Mr Hamilton: The Minister will have a long wait. The independent Institute for Fiscal Studies has said that child poverty, as measured by the Child Poverty Act 2010, will rise by 400,000 by 2015, and that 200,000 children will be forced into absolute poverty. That means that the Government have no chance of meeting the targets set out in the Act, which both parties supported. Does the Minister believe that those forecasts are wrong? Also, will she make a commitment not to overturn amendments to the Welfare Reform Bill passed in another place when the Bill comes back here?
Maria Miller: As I have already said, the Government are not really into the forecasts that the hon. Gentleman is looking at, but we are firmly committed to eradicating child poverty. The IFS projections do not tell the whole story; they do not take into account fundamental things such as behaviour change, or our significant investment in early intervention, our education reform policies and our policies in other areas.
Andrea Leadsom (South Northamptonshire) (Con):
Bearing in mind the great importance given to the issue of child poverty across the House, will my hon. Friend tell us what steps she is taking to assess the amount of
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child benefit being paid to the non-resident children of EU workers in this country? What can be done to ensure that those benefits are minimised?
Maria Miller: We all want to ensure that the money available goes to the children who need it most, and I am sure that we will look carefully at my hon. Friends’s question.
Ann McKechin (Glasgow North) (Lab): Given that 92% of single parent households are run by women, will the Minister tell me what she is doing about the alarming rise in female unemployment, which is rising at a much higher rate than that of male unemployment?
Maria Miller: The hon. Lady will know that the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling) is doing a great deal to support women and men back into work in these very difficult times. I should like to commend him for the excellent work that he is doing further to expand the Work programme.
Duncan Hames (Chippenham) (LD): Families with children that are currently in receipt of disability living allowance are among those who are worried about what they read in the papers about the Government’s welfare reforms. Will the Minister take this opportunity to reassure them that they will not experience any reduction in the cash value of that benefit under the reforms?
Maria Miller: My hon. Friend is referring to the future of the personal independence payment. He will be aware of my firm commitment to ensuring that that payment is focused on helping those who need help the most. He will have seen from our recently published documentation that our initial work in that area shows that more of that money is going to people who really need it in order to live independent lives.
Pensions
13. Rehman Chishti (Gillingham and Rainham) (Con): What steps he is taking to protect the interests of people with small pension pots. [90851]
The Minister of State, Department for Work and Pensions (Steve Webb): The problems associated with small pension pots can include higher charges, losing track of a pension or facing barriers to moving the pension and getting a decent annuity. That is why we published a paper last month that sets out some radical options for some form of automated transfer system to make it easier for people to build up one large pension pot.
Rehman Chishti: Does the Minister have evidence on the number of small pension pots that will be created after automatic enrolment?
Steve Webb: I am grateful to my hon. Friend for that question. There is a risk that without action, in an auto-enrolment world hundreds of thousands of new small pension pots will be created each year as people change jobs. That is why it is doubly important that we should have some mechanism to combine those pots so that they are a pension worth having.
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Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab): The UK is in the grip of a private pensions crisis, with 60% of private sector employees saving nothing for their retirement. In the light of that fact and in the light of the emergence of new competitors in the auto-enrolment market, will the Minister consider ending the statutory restrictions on the national employment savings trust scheme so as to better serve the auto-enrolment market?
Steve Webb: The hon. Gentleman raises an important issue. The Labour Government introduced the constraints on NEST—and for a good reason, as it ensured that NEST focused on its target market. The situation has moved on and competitive developments in the market have emerged that were not necessarily foreseen. We are reflecting on the role of those constraints and I look forward to discussing the issue further with the Select Committee on Wednesday.
Social Fund (Closure)
14. Alex Cunningham (Stockton North) (Lab): What assessment he has made of the likely effect of the closure of the social fund on (a) homelessness, (b) hardship and (c) use of payday loans. [90852]
The Minister of State, Department for Work and Pensions (Steve Webb): The social fund is not closing as payments for maternity, heating and funeral expenses will continue. Some discretionary payments, particularly community care grants, will be replaced by targeted local provision at the same total level—so it is not a cut in the budget—and universal credit will provide a better service with payments on account supporting many people in need of short and longer-term credit.
Alex Cunningham: I am grateful for that update. For some people, the social fund is a crucial safety net, allowing them to avoid catastrophe. One of the major concerns about its abolition is that people will no longer be able to claim crisis loans to pay rent in advance when they move into private rented accommodation. What provision will there be to help formerly homeless people pay rent in advance when moving into independent accommodation?
Steve Webb: I know that the hon. Gentleman had written his question before he heard the answer, but the social fund is not being abolished. The new system under universal credit of payments on account will actually be more flexible, allowing people to draw down their universal credit ahead of time. That will be more efficient than the current rigid system of crisis loans.
Hywel Williams (Arfon) (PC): What discussions has the Minister had with the Welsh and Scottish Governments about the transfer of some responsibilities to local authorities and with what result?
Steve Webb: We are localising to English local authorities and, as the hon. Gentleman says, to the Scottish Government and the Welsh Assembly. We take the view—we have had a positive response on this from the Welsh Assembly—that the ability to shape a system for Wales is welcomed. Whether the Welsh Assembly chooses to do that through Welsh local authorities or at a national level in Wales will be a matter for it.
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Pension Funds (Charges)
15. Hugh Bayley (York Central) (Lab): If he will set a limit on the charges which pension fund managers may levy for the administration of pension funds. [90853]
The Minister of State, Department for Work and Pensions (Steve Webb): Initial evidence ahead of the roll-out of auto-enrolment later this year is that the creation of NEST, with its relatively low charges, and competition in the market are leading pension providers to offer products for auto-enrolment with lower than average charges. However, we believe that charging levels are important and have taken additional reserved powers under the Pensions Act 2011 to cap charges under auto-enrolment if that proves necessary.
Hugh Bayley: The report produced for the Government by Dr Christopher Sier shows that pensioners are losing out because of the excessive fees and charges levied by private pension fund managers. What action will the Government take to cap the amount that private fund managers can milk from the funds they manage on behalf of pensioners?
Steve Webb: I think the hon. Gentleman was a Minister in our Department under the previous Administration, and as he knows they chose not to cap charges but to give themselves powers to cap them if it proved necessary. At the moment, our judgment is that the early roll-out of auto-enrolment will deal with big firms who will give good deals and low charges and that we have more competition than was perhaps expected, with NEST coming in at around 0.5% and other providers at or below that point. We are encouraged by developments in the market but we are absolutely prepared to use the capping powers if it proves necessary.
Youth Contract
16. Mr Marcus Jones (Nuneaton) (Con): What recent progress he has made on the youth contract. [90854]
The Minister of State, Department for Work and Pensions (Chris Grayling): Since the launch of the youth contract, we have been engaging with employers, providers and stakeholders to give them an active role in shaping the delivery of the new offer. As a result, employers are now starting to sign up to support the delivery of the youth contract and we remain on track to implement it in April as planned. Let me pay tribute to all the employers that are currently and have committed in the future to offering places in our work experience programme and in sector-based work academies and to offering in other ways to support what we are trying to achieve.
Mr Jones: I thank the Minister for his response. I welcome the youth contract and I am sure it will help many of our young people into employment, but having spoken recently to a number of local business people, particularly from small businesses, I have concerns about the general level of awareness of the policy. Will my right hon. Friend assure me that he is doing all he can to raise awareness of this crucial policy with employers?
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Chris Grayling: I can indeed. I met representatives of the major business representative groups a few weeks ago. Communicating with individual businesses is certainly a challenge but we aim to do everything we can to ensure that employers are taking up the wage subsidies available from April. It is worth noting that later this evening we will debate the Opposition’s plans to create 100,000 supported jobs, but that through the wage subsidies in the youth contract we are offering a similar opportunity to 170,000 young people.
Troubled Families (Employment)
17. Jack Lopresti (Filton and Bradley Stoke) (Con): What progress he has made in assisting members of troubled families into employment through the use of payment-by-results programmes. [90855]
The Minister of State, Department for Work and Pensions (Chris Grayling): We launched the programme before Christmas, funded by European social fund money. This is the second major foray that this Government have made into payment by results, and I am confident that the payment-by-results approach, combined with the support that is available to those families if they move into the Work programme, will provide a transformational level of support in the lives of some of our most challenged families.
Jack Lopresti: I thank my right hon. Friend for his answer. Given that past Governments have not had great success at helping certain families get back into work, why does he think his approach will be more successful?
Chris Grayling: The big difference is that we are adopting the payment-by-results approach. The organisations taking part in the programme can be paid only at certain points—first, when they agree an action plan with one of the individuals in a problem household; secondly when they deliver that action plan, which might mean the person completing a training course or something similar; and thirdly when that person gets into employment. The taxpayer does not pay the bill unless that happens, and that is a much better deal than ever happened under the previous Government.
Kerry McCarthy (Bristol East) (Lab): In Bristol, we had the pilots for family intervention projects that involved working with families who had a multitude of problems to tackle some of these issues. Does the Minister accept that this is not just about working through one Department such as his own? Other Departments such as the Department of Health and the Department for Education, as well as drugs funding, will need to be supported if we are to succeed in tackling these problems.
Chris Grayling: I absolutely do that. Two points regarding the contracting of this support are crucial to what the hon. Lady says. The first is that referrals come from local authorities so that they know they are taking people from their problem family register and are not duplicating effort. Secondly, the contracting was based very much around the effectiveness of the firms in the bidding process at showing they could form the kind of partnerships that she rightly says are so important.
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Topical Questions
T1. [90862] Mr Tobias Ellwood (Bournemouth East) (Con): If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith): Today in the other place they will be debating an amendment on the benefit cap. I believe that that system will help to restore fairness by setting a cap for those on benefits of £26,000 a year after tax or £35,000 a year before tax. I cannot understand why those who have said they would support this and were in favour of it have voted against it as often as possible.
Mr Ellwood: I congratulate my right hon. Friend and his team on the work they are doing to modernise the benefit system following the mess that was left by the previous Government. On the benefit cap, does he agree that those who oppose it need to explain to those who are in work but who earn less than £35,000 a year why people on benefits should be better off than they are?
Mr Duncan Smith: My hon. Friend makes a powerful point. The reality is that almost everybody out there beyond the politicians and the game playing believe it is reasonable to say to people who are on benefits that if they are not working, they should not earn more than those who are working and paying their taxes. I am astonished at the Opposition, who do not seem able to get it. I understand from a recent poll that even their supporters are overwhelmingly in favour of the proposal.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab): I hope that the Secretary of State will not mind if I sustain his attention on the benefit cap for a moment because there will be an important debate in the other place this afternoon on the cap. This is a policy we support because, like him, we believe that people should be better off in work than on benefits. However, I want him to be absolutely straight with the House about what the cap will and will not achieve. Will he tell the House how much the housing benefit bill is going to rise over this Parliament as a result of his failure to get people back to work?
Mr Duncan Smith: There are two things to say about that question from the Opposition. If the right hon. Gentleman is, as he says, in favour of the cap, why does his party keep voting against it? Today, in the other place, it has tabled what is officially a wrecking amendment on the cap. Labour Members cannot weasel their way out and say that they are in favour on the one hand and against on the other. On housing benefit, I remind him that under his party, housing benefit pretty nearly doubled in 10 years, and it was set to rise far more than it will under us.
Mr Byrne:
Perhaps I can help the Secretary of State: the truth is that over the course of this Parliament—over four years—the housing benefit bill is set to rise by an extraordinary £4 billion. We do not want, on top of that, another bill for council tax payers—a bill to clean up the cost of homelessness. The Secretary of State for Communities and Local Government has already warned us that 20,000 people will be made homeless as a result of the way in which the cap will be introduced, and this morning, the Department for Work and Pensions published
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an impact statement that puts up the number of families who will be affected by the cap by a third. It is almost as if the Secretary of State for Work and Pensions is making the policy up as he goes along. I hope that this afternoon he will accept Labour’s safeguards against a new risk of homelessness. If he dismisses that risk—if he wants to be so glib about it—why does he not accept the amendment this afternoon? If he does not, we will support the lord bishops’ amendment to safeguard against a new bill for council tax payers. That is the way that we will get this vote—
Mr Speaker: Order. The right hon. Gentleman has had his say, and we are most grateful to him.
Mr Duncan Smith: First, I do not accept the bishops’ amendment, because of course it would raise the cap on the level of income to roughly £50,000; it would be rather pointless having a cap set so high that nobody could ever hit it. Interestingly, I have just had an e-mail from a vicar, who wondered why the bishops fail to recognise that he is paid only £22,000 a year. He wonders why they are getting excited about £26,000 being a poverty-level figure. As regards housing benefit, let me remind the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) that we are saving £2 billion a year; housing benefit doubled under him.
T4. [90866] Mr Andrew Turner (Isle of Wight) (Con): Will my right hon. Friend tell me what the Government are doing about migrants who live in the UK and claim benefits without working or paying tax? Will the Government consider recording the nationality of benefit claimants?
The Minister of State, Department for Work and Pensions (Chris Grayling): I can confirm that we will record the nationality of benefit claimants when universal credit is introduced in 2013. I also confirm to my hon. Friend that where we have identified people who have a question mark over their benefits and immigration status, investigations are already under way. For 27% of the people whom we looked at in our data matching process, we are not yet able to make a match between benefit claimant status and immigration status. We will continue to do detailed work to make sure that there is not a hidden problem, left behind by the previous Government, relating to benefit tourism and inappropriate claims.
Mr Speaker: Order. I remind right hon. and hon. Members, in the light of the extensive interest in topical questions, that topical questions and answers need to be brief. Let us be collegiate towards each other.
T2. [90864] Hugh Bayley (York Central) (Lab): The benefits bill this year will be some £15 billion higher than in the last year of the Labour Government, and that costs about £600 per family per year. What will the Government do to cut unemployment, which is what is pushing up the benefits bill so fast?
Chris Grayling:
Of course, we will debate this again tonight, but as I keep saying to the House, we will sort out the problems in our public finances to deliver stability in our economy. We will deliver the best possible support to business through the various measures that
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we have introduced, including enterprise zones and changes to the tax system. Through the Work programme, our work experience scheme, and the youth contract, we will deliver the best possible support to get the unemployed back into the workplace.
T9. [90871] Mr Rob Wilson (Reading East) (Con): My constituent, Dr Christine Davies, has contacted me with examples exposing the unfairness of Child Support Agency arrangements, which often fail to take into account the living costs of the non-resident parent. These are parents who are trying to engage with their children and do the right thing, but who are left to live on as little as £30 a week. What are Ministers doing to deal with this unfairness?
The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller): I thank my hon. Friend for his question, and I assure him that we are working very hard on reform of the maintenance system, which still fails to support around half of all children in separated families. He talked about cases in which both parents want to stay involved in their children’s upbringing; he and I share that objective, and I hope that he will continue to support the reforms that we are taking forward, which will provide far more family support to enable that to happen.
T3. [90865] Mr Dave Watts (St Helens North) (Lab): What advice can the Minister give the 3,259 people in St Helens who have been told to downsize their home, despite the fact that on existing turnover it will take five and a half years for them to do so while, in the meantime, losing their benefit? What advice would he give those constituents?
The Minister of State, Department for Work and Pensions (Steve Webb): I think that the hon. Gentleman is referring to social housing over-occupation. If people are in a particularly difficult situation, local authorities have been given an enhanced amount of discretionary housing payment to help them make that transition. It is vital that we tackle 1 million empty bedrooms in social housing.
Robert Halfon (Harlow) (Con): Going back to the issue of testing the disability living allowance, will the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller) reassure the House that testing will be localised, humane and fair?
Maria Miller: I thank my hon. Friend for his question, and I pay tribute to him for all the work he does to make sure that things are right as we reform the benefits system. I can absolutely assure him that we will look at ensuring that the new face-to-face assessment is done in a fair manner, and we are going out to commercial contracting on that.
T5. [90867]
Paul Goggins (Wythenshawe and Sale East) (Lab):
During the recent Westminster Hall debate on the future of Remploy, I was pleased to be able to tell the Minister that at the Wythenshawe print factory sales continue to increase while operating costs are falling. What action has she taken since then to procure additional print work for the factory from Government Departments and agencies, and when does she expect to be able to confirm that the factory will remain open?
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Maria Miller: That was an important and useful debate to ensure that the work that we are doing in government is made clear. I have asked officials to look at the situation that he raised regarding Wythenshawe to make sure that the appropriate sales teams are in place. He asked when we are going to talk about our long-term decisions, and I can assure him that we will respond on that as soon as is practicable. We are in year four of a five-year plan, and it is important that we have those new plans in place.
Nicky Morgan (Loughborough) (Con): I was pleased that the Minister affirmed her commitment to residential training colleges, including the college of the Royal National Institute of Blind People in my constituency. She may be aware of recently published figures from the Select Committee on Work and Pensions showing that 1,000 people who have suffered sight loss are still looking for opportunities to be helped back into work. Does she agree that those colleges provide a valuable opportunity to help those people find employment?
Maria Miller: I pay tribute to the work that my hon. Friend does to support her local residential training college. I absolutely agree that colleges such as the one in her constituency have a valuable role to play, particularly to offer specialist advice and support. I hope that the commitment that I have given the colleges to ensure provision through to the summer of 2013 will help them to plan for a future in which we focus more on individuals than on institutions.
T6. [90868] Ian Murray (Edinburgh South) (Lab): Recent reports have shown that more than £3 billion of pension charges are hidden from consumers. Will the Minister tell us what the Government plan to do to make it possible for pension fund trustees and consumers to compare charges between pension funds?
Steve Webb: The hon. Gentleman is absolutely right that charges are a crucial issue, so we are working with the National Association of Pension Funds and others who have undertaken an industry-led initiative to make charges information-transparent and consistent, and we are pleased to support them in that.
Sir Alan Beith (Berwick-upon-Tweed) (LD): May I assure the Secretary of State that a great many of my constituents object strongly to paying through their taxes for people to get more in benefits than they can get on a working wage, or to live in property far beyond anything that they could afford on their wage? It is important that we get the transition right, but the principles are sound.
Mr Duncan Smith: I absolutely agree with my right hon. Friend. It is remarkable that there is overwhelming support. Yes, he is right about making sure that we get the transition right, but the principle behind this and its application are vital. I simply cannot understand why the Opposition snigger and wriggle on this issue, failing to do what is right, and failing to do what is proper or to face up to their responsibilities.
T7. [90869]
Katy Clark (North Ayrshire and Arran) (Lab):
The disability advocacy group Black Triangle has said that 11 disabled people have committed suicide
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in circumstances in which the coroner said that it was as a result of assessments as part of the work capability assessment. Is that figure right? Can the Minister advise whether he has looked into what legal liability the Government may have and, in particular, whether there is exposure under the corporate manslaughter legislation?
Chris Grayling: It is always a matter of regret when any person on benefits or indeed any person at all commits suicide. We always look carefully at reports that suggest any link between anything we do and people finding themselves in such a position. Let us be clear: the principle of trying to help back into work people who have been on benefits long-term is very important in supporting people who have mental health problems. If we do not reassess people, we will never be able to identify those who can benefit from that help.
Margot James (Stourbridge) (Con): Average earnings in my constituency, Stourbridge, are £23,700 a year, on which there is a tax liability of some £5,000. Does my right hon. Friend agree that to oppose or to equivocate on the policy of a cap on benefits is an outrageous insult to all hard-working people in this country?
Mr Duncan Smith: My hon. Friend is absolutely right. The cap is fair and popular, and it helps to put right the welfare system that we inherited, which is in a mess and is trapping people in dependency when we could free them. My hon. Friend is right that the Opposition position is ludicrous. The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) has taken more different positions on the issue than a Jane Fonda work-out.
Mr Speaker: I call Mr Jim Cunningham, not necessarily on the subject of work-outs, but on whatever appeals to him.
Mr Jim Cunningham (Coventry South) (Lab): May I ask the Minister whether employers can still take a pensions contributions holiday and, if so, how many?
Steve Webb: Where employers run defined benefits pension schemes, if they are in deficit and have a recovery plan agreed with the Pensions Regulator, there is no obligation on them to overfund above 100%, and there are Inland Revenue rules that affect surpluses, which are still in place.
Andrew Bridgen (North West Leicestershire) (Con): Does my right hon. Friend agree that those well-intentioned but misguided individuals who oppose the introduction of a benefits cap are in serious danger of killing with kindness the very people they seek to help, by condemning them to a lifetime of benefits dependency and worklessness, which the benefits cap will seek to reverse?
Mr Duncan Smith: I fully understand those who on every principle and in every regard oppose the cap, but I cannot understand those who say they are in favour of it and then vote against it.
Mr Speaker: Order. I am sorry to disappoint colleagues. There is a great deal of interest, but we must now move on.
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Executive Pay
3.32 pm
Mr Chuka Umunna (Streatham) (Lab) (Urgent Question): Will the Secretary of State for Business, Innovation and Skills make a statement on the Government’s proposals on executive remuneration?
The Secretary of State for Business, Innovation and Skills (Vince Cable): I welcome this opportunity to set out Government proposals on executive pay. Last September I published papers that explored the issues around the rapid growth in executive pay in our largest listed companies, and embarked on a call for evidence.
The evidence is clear that business and investors recognise that there is a disconnect between top pay and company performance, and that something must be done. We cannot continue to see chief executives’ pay rising at 13% a year while the performance of companies on the stock exchange languishes well behind, and we cannot accept top pay rising at five times the rate of average workers’ pay, as it did last year. It is not Government’s role to micro-manage company pay, but there are things we can do to address what is a clear market failure.
Today I can announce a package of measures that the Government will take forward to tackle the issue on four fronts: greater transparency, so that what people are paid is clear and easily understood; more shareholder powers, such as the introduction of binding votes, so that shareholders can hold companies to account; more diverse boards and remuneration committees; and best practice led by the business and investor community. No proposal on its own is a magic bullet, but together they can enable a major transformation to get under way.
Let me start with transparency. Shareholders have told us that they need clearer and more relevant information about pay, particularly the link to performance. At present many company pay reports are simply impenetrable. Through secondary legislation later this year the Government will require companies to publish more informative remuneration reports on how executives are rewarded. This will start with reports being split into two sections: one detailing proposed future policy for executive pay, and the other setting out how pay policy has been implemented in the previous year.
On future policy, remuneration committees will be expected to explain why they have used specific benchmarks and how they have taken into account employee earnings, including pay differentials, when setting pay. Companies will also have to explain how they have consulted employees and taken their views into account. UK employees in large companies already have the right to request that their employers consult them on issues relating to the organisation, including pay, through the Information and Consultation of Employees Regulations 2004. This potentially powerful mechanism for employees has been underutilised to date, so I encourage employees to use it and put executive pay on the agenda.
Shareholders say that pay policy too often appears totally disconnected from their company’s overall strategy. I want companies to state clearly and succinctly how their proposed pay policy reflects and supports company strategy, how performance will be assessed and how it
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will translate into rewards under different scenarios. In the backwards-looking section of the report, companies will have to provide a single figure for total pay for each director and explain how pay awards relate to the company’s performance. To provide context, companies will be mandated to produce a distribution statement outlining how executive pay compares with other disbursals, such as dividends, business investment, taxation and general staffing costs.
Alongside more information, shareholders need new powers to hold the board to account. I will consult shortly on specific proposals to reform the current voting arrangements and give shareholders a binding vote, enabling them to exert more pressure on boards. This will include a binding vote on future pay policy, including details of how performance will be judged and real numbers on the potential payouts directors could receive. Companies will have to include a statement on how they have taken into account shareholder views and the results of previous votes.
There will also be a binding vote on any director’s notice period longer than one year and on exit payments of more than one year’s salary. Shareholders will still get a vote on how the agreed policy has been implemented. I will consider whether we need further sanctions that could be applied when a significant number of shareholders dissented in the advisory vote. In addition, we will review what level of shareholder support is needed to pass pay proposals—for example, whether the threshold for a successful vote should be raised to 75% of share votes cast. By way of context, last year four FTSE 100 companies failed that test.
Let me move on to diversity in remuneration committees. Having diverse remuneration committee membership is crucial to changing the status quo on executive pay. The right way to tackle this is by having more diverse boards. I want to see more people who come from different backgrounds appointed, including people from the professions, public servants, academics, lawyers, and people who have not been directors before. For example, I would like at least two board members to have never previously been members of a board of directors.
In October a new provision in the UK corporate governance code will come into force requiring companies to report on their policy on boardroom diversity, how they propose to deliver it and what progress has been made. That sits alongside a new code of conduct for executive head-hunters and good practice guidance from the Association of British Insurers on the importance of board diversity, board evaluation and succession planning. The Government will also address fundamental conflicts of interest in the pay-setting process and require greater transparency on the role of remuneration consultants, how they are appointed, their fees, and who they advise and report to.
We have also observed that in the FTSE 350 about 6% of remuneration committee members are executives of other companies. There is a perceived conflict, as those individuals have a personal interest in maintaining the status quo in pay-setting culture and in pay levels, and we are looking at mechanisms to limit that.
In the context of such changes, we must deal with the specific issue of payments for failure. Some of our consultees have argued that all quoted companies, not just those in financial services, should have a clawback mechanism in place, and we will ask the Financial
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Reporting Council to revise the corporate governance code in order to require all large public companies to adopt clawbacks.
In relation to best practice, this package of measures will create a more robust framework within which executive pay is set and agreed. Moreover, lasting reform depends on active shareholders and responsible businesses accepting the need for change and pushing the agenda forward.
Deborah Hargreaves, who chairs the High Pay Commission, will launch a new project next week to monitor the state of pay at the top. The high pay centre will perform an important role in delivering the high-quality research that this area of debate badly needs. Companies have to show leadership on this issue, and in the following weeks and months I will be working with business and investor groups to build on the current momentum for reform, to agree on what best practice looks like, and to promote that more widely.
Mr Speaker: Order. I am extraordinarily grateful—[ Interruption. ] Order. I am extraordinary grateful to the Secretary of State, but I have been immensely—perhaps excessively—generous, because the right hon. Gentleman took precisely three times as long as he is supposed to take in answering an urgent question. I know he will understand—I listened to him with great interest and respect—that I must make allowance for that with regard to the Opposition Front Bencher’s response, but above all I make the point for the future that those on the Front Benches must stick to the limit, because my concern is to protect the rights of Back-Bench Members.
Mr Umunna: Thank you, Mr Speaker, for forcing the Secretary of State to come to the House today to set out the Government’s proposals in this area—[ Interruption. ] The Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey) chunters from a sedentary position, but it is quite extraordinary for Ministers to demand greater accountability and transparency from people in business, and then to seek to avoid being held to account for their policies in that area in the House of Commons.
The problems of excessive executive pay and rewards for failure have grown over the past few decades; in fact it was probably 30 years ago, when the current Business Secretary was a happy and active member of the Labour party, that things were more in proportion. We agree that it is right that those who work hard, generate wealth and create jobs for our country are rewarded, but excessive pay and rewards for failure are bad for business, the economy and society at large.
I welcome much of what the Business Secretary says, but his proposals simply do not go far enough in promoting the transparency, accountability and fairness that people want to see. We support all the recommendations of the independent High Pay Commission, to which the Business Secretary referred, but why will he not do the same, particularly given that his Treasury spokesperson in the Lords is a member of the commission, and presumably supports its recommendations?
The Business Secretary and other Ministers have underlined the importance of consulting employees, so why will he not back moves for employees to sit on the remuneration committees that set pay? Employees play that type of role in Europe’s strongest economy, Germany,
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and on the board of one of our most successful businesses, John Lewis. We read that he would like to back the proposal but has been prevented from doing so by the Prime Minister and the Chancellor. Can he confirm that?
The right hon. Gentleman said nothing about the publication of pay ratios within businesses. Why will he not agree to that proposal? If I am wrong, I am happy to be corrected. I agree with him on the need for greater clarity about the role of remuneration consultants. They currently owe their duty to the board, as I understand it. Does he agree that there is a case for changing the situation so that, much like auditors, they owe their duty to shareholders?
Above all, I do agree that increased shareholder activism is key. Two issues have been cited as obstacles: that more of our UK stock is held by foreign investors and that it is held for a shorter period. Does the right hon. Gentleman agree that that need not be an insurmountable barrier to increased shareholder activism?
Finally, on shareholder activism, the Business Secretary, the Deputy Prime Minister and other Ministers who ultimately bear responsibility and control the public stake in the banks—RBS, in particular—have said that they are in a position to stop the chief executive of that bank receiving a large bonus while he is issuing thousands of redundancy notices to RBS employees. How and when will that happen? Does the right hon. Gentleman think that it is acceptable for the chief executive of RBS to take a bonus of the order of £1 million when thousands of company employees are being made redundant?
Vince Cable: I start by acknowledging that the issue is, as some of the hon. Gentleman’s questions implied, complex. The best way to proceed with it for the country is to have an all-party consensus. The contributions made in recent weeks by the Prime Minister, the Deputy Prime Minister and the Leader of the Opposition have contributed in a very positive way towards that, and we can make some progress on that. I contrast that slightly with the hon. Gentleman’s somewhat carping response. I believe that today he put out a press release describing as “half-baked” proposals that he had not seen; he did not know what was coming. That was not terribly clever.
The hon. Gentleman’s central criticism was that we had not gone far enough. Let me reflect on what that means. We have emerged from 12 years of Labour government, when many of the issues could have been dealt with. That period of government started with something called the “prawn cocktail offensive”, which led to my immediate Labour predecessor saying that he was “intensely relaxed about people being filthy rich”. Those were the standards that we inherited. I remind the hon. Gentleman about what happened in that period of government. At the beginning, chief executives’ pay was 47 times average pay; at the end, it was 120 times average pay. That is the problem that we are now trying to correct. Before the hon. Gentleman lectures me any further on not going far enough, he should reflect on why so little was done when his party had the power to do it.
Let me respond specifically to the point about workers on boards. It would be very desirable if there were more workers on boards. The initiatives being promoted in respect of encouraging John Lewis-type arrangements,
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which by definition will get workers on boards, will take that further. We welcome worker participation in industry; that is one of the reasons why my ministerial colleague, in conducting the Royal Mail legislation through Parliament, laid such insistence on worker shareholding and giving workers a right to participate. But there is a specific set of problems around mandating companies to have workers on their boards. Consider the position of the large number of FTSE companies whose employees are predominantly overseas. How would the work force be selected? Worker participation is a good idea for many companies, but let it be done without the prescriptive route, which would simply not work.
The same applies to pay ratios. There is a lot to be said for pay ratios; the hon. Gentleman may not have heard me, but I did advocate that kind of metric as a way of assessing what is happening. But if he had reflected for a few minutes, he would have seen that there is a big difference between a company that, for example, has a large number of unskilled workers, and another company that has outsourced a lot of its unskilled labour force, producing totally meaningless figures in respect of ratios. So we welcome pay ratios, but they should not be mandated and prescribed.
The hon. Gentleman asked about the High Pay Commission, which has done excellent work; I referred to it during my contribution. I checked back on its 12 recommendations, and we are implementing 10 of them in practice or in spirit. Of the remaining two, one—about employees on boards—I have already referred to. The other was a very specific recommendation on the structure of pay, which we judged to be impractical.
On RBS, let me just say that that matter is above my pay grade. The Prime Minister has said that he will ensure that it is dealt with properly. I am sure that it will be, and that there will not be excessive bonuses.
To return to my first point, we can make progress in this important area on an all-party basis. I encourage the hon. Gentleman to revert to his usual more constructive and moderate approach, and to work with us to achieve far-reaching and overdue reforms.
Mr John Redwood (Wokingham) (Con): I welcome anything that recognises that it is the role of shareholders and competitive markets to decide pay in companies. With that in mind, let us consider what happens where the Government are the shareholder. Will the Secretary of State remind us what deal the Labour Government signed up to for RBS top executives, explain why it was so far in excess of the dreadful results that have been delivered in public ownership, and say what this Government can do to put that right?
Vince Cable: My right hon. Friend is right to stress the central role of shareholders and to remind us about the conditions according to which the head of RBS was appointed and the contract negotiated. Of course, the problem is not just with pay; we are now also having to consider the problem of knighthoods that were awarded for appalling behaviour in British banking.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op):
A lot of what the Secretary of State has said will have cross-party support. The Government are backing employee
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share ownership, the logical outcome of which is employees on the board. In view of that, and his rejection of the automatic right of employees to be on the board, for the sole reason that a lot of companies have foreign employees, is the Secretary of State really trying to address this issue and to find a way through? Although it may be difficult in practice, it is very good in principle.
Vince Cable: There is no logic to suggest an automatic carry-over from worker shares to representatives on boards. Those are separate issues. I simply urge the hon. Gentleman to look back on my comment about the use of information and consultation arrangements. There is a regulation that came from the European Union— one of its better ones—back in 2005, which employees in many companies could use to engage directly in conversations with their management about their pay. Far too few people have taken advantage of that. I hope that he and others will encourage them to do so.
Simon Hughes (Bermondsey and Old Southwark) (LD): I congratulate the Secretary of State, who, after 13 years of a Labour Government who did nothing about this issue, has persuaded our Conservative colleagues that this is the right policy for the new century. I urge him to continue to be robust and to suggest that each individual company should have a policy that reflects the differential between the highest and the lowest-paid, according to the make-up of its own work force.
Vince Cable: Again, I do not want to be too negative. One of my Labour predecessors, Patricia Hewitt, advanced the issue by introducing advisory votes. That was a step forward but it was not enough, and we have to go further. However, that step was usefully taken. My right hon. Friend asked specifically about pay ratios. I have said that those are useful metrics, and that we should encourage their use. However, companies have very different structures, and pay ratios mean different things. Therefore, mandating them is a different matter.
Andrew Selous (South West Bedfordshire) (Con): Does the Secretary of State agree that it is generally undesirable for public companies to pay more out in bonuses, particularly to their senior staff, than in dividends, especially as dividends are often paid out to pension funds, which include many members of the public on low incomes?
Vince Cable: Yes, my hon. Friend is correct. That is why one element of transparency that we have advocated is a breakdown of the different streams of payment by companies, which include payments to shareholders, payments to employees and other costs.
Mr Pat McFadden (Wolverhampton South East) (Lab): Does the Secretary of State agree that context, as well as contracts, matters? Whatever it says in the contracts of the top people in the banks in which the Government have a major stake, the context is pay freezes for millions of workers and the biggest squeeze in living standards since the war. Will he therefore resist the temptation to rely on the defence advocated by the right hon. Member for Wokingham (Mr Redwood) about contracts and agree that there is nothing to stop bankers exercising restraint, given the economic context?
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Vince Cable: Across the coalition, we have been very clear that we expect restraint. In some cases that has been accepted: the head of Lloyds, for example, has waived his bonus for this year. We should not trivialise the issue of contracts, which is a serious matter involving how business is conducted.
Mr Dennis Skinner (Bolsover) (Lab): Whatever happened to the phrase, “We’re all in it together”? I listened carefully to what the right hon. Gentleman said. He talked about “we”. Does he mean himself and the Liberals, or does he mean the whole Government? The truth is that the workers will carry the can, and the bankers and executives who have got their 50% pay increases will get away with blue murder.
Vince Cable: As my right hon. Friend the Member for Wokingham (Mr Redwood) reminded us, we are dealing with a legacy in which precisely the failings that he described were allowed to happen over a long period. We are trying to put that right. Addressing executive pay is only one means by which we deal with the fundamental injustices and inequalities in society. There are many other issues, including tax and regulation. However, this proposal will make a significant difference.
Mark Pritchard (The Wrekin) (Con): The Secretary of State mentioned ending the rewarding of failure. Has he consulted business people? Many of those to whom I speak believe that over the past few years far too many politicians have themselves been rewarded for failure, which has brought our economy down from the seventh to the eighth largest in the world. Does he accept that the vice of greed should not be replaced with the vice of envy?
Vince Cable: I do agree with that. Of course, it is essential, in a successful economy, and particularly a successful private enterprise sector, that enterprise, entrepreneurship and good management should be properly rewarded. The issue is not envy but performance.
Paul Blomfield (Sheffield Central) (Lab): The Secretary of State acknowledged that he gave a fairly lame answer to the question asked by my hon. Friend the Member for Streatham (Mr Umunna) about worker representation on boards. Will he now try to give a proper answer on why the Government could not end the cosy closed shop on remuneration committees by legislating for worker representation?
Vince Cable: Ending the cosy closed shop on remuneration committees involves wider diversity in general. Workers are part of that, but so are consumers and people who have no other connection with the company. Diversity is a much wider concept. At the moment we are promoting the idea of women on boards. I gave a considered answer to the question about workers on boards. We must remember that other issues are involved. For example, different companies have different types of labour force spread across the world. There is also the question of how to ensure that a worker representative accepts the full legal responsibilities of a director. If the hon. Gentleman looked at what those legal responsibilities are, he would find that it is not practical to employ that approach.
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Margot James (Stourbridge) (Con): Incentives and rewards are fundamental to the private sector growth that we are all keen to ensure. Does my right hon. Friend accept that it is sometimes hard to distinguish between performance and failure, and that certain companies facing extremely difficult trading conditions might have to hang on to an executive through the incentive of high pay?
Vince Cable: Yes, and that is why operational decisions must remain with the company so that it can make a judgment on the matter. Through these recommendations we are trying to ensure that investors are properly informed, and we are, through transparency, giving them the power to make the judgment that the hon. Lady described, and act accordingly.
Tony Lloyd (Manchester Central) (Lab): Does the Secretary of State accept, as a number of his Back Benchers do not, that this is fundamentally a question about what type of society we want to be, and that when we see executives being paid 75 times more than the lowest-paid people in the company, that is not about economic efficiency or incentives, but immorality?
Vince Cable: Yes, this is about different types of society, but of course there are many wider issues than the remuneration policies of public listed companies and many aspects of fairness and inequality. I simply make the point that many other private enterprise economies —Germany, the Scandinavian countries, Japan—have a much more disciplined approach to executive pay than has been the case in the UK, and many of their companies do very well commercially.
Mr Adrian Sanders (Torbay) (LD): The Secretary of State will be aware of the book “The Spirit Level”, which suggests that the most successful economies and societies are those in which the gap between the richest and the poorest is the narrowest. Does he believe that the announcements that he has made today will widen or narrow that gap?
Vince Cable: They will certainly narrow it, in contrast with the trend over the past decade that was identified in a recent OECD survey. It showed that almost uniquely in the developed world, the big disparities between the top and bottom are widening in Britain. Today’s announcement is one key element in rectifying that adverse trend, which we have seen particularly in the past decade.
Helen Goodman (Bishop Auckland) (Lab): The Secretary of State said that the decisions about RBS top pay were above his pay grade, but unlike the workers, he is on the board of the Government, namely the Cabinet. Will Ministers set a good example and control Stephen Hester’s bonus?
Vince Cable: Ministers have already made it very clear that bonus restraint should be employed in that company.
Mike Crockart (Edinburgh West) (LD):
I welcome the Secretary of State’s announcements today, especially those on transparency and increasing shareholder power. Does he agree that the fundamental principle must be
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that executive pay reflects company performance? That is a principle that the 107 bankers suing Commerzbank for £1.6 million in bonuses next week would do well to remember.
Vince Cable: Yes, the theme of what I have been saying today has been the link between pay and performance, and as my hon. Friend knows, there are specific problems in the banking sector, not least because until the Vickers report is implemented we still have a “too big to fail” problem and an implicit Government guarantee. That is why rather stricter provisions have to apply in the sector.
Mr David Winnick (Walsall North) (Lab): Does the Secretary of State really want us to believe that those who get vast salaries, bonuses and share options and probably earn well over £1 million a year are now terrified as a result of what he has said today? The truth is, that it does not really amount to much, does it?
Vince Cable: I do not expect them to be terrified, but I do expect them to think a little more carefully about their wider responsibilities.
Philip Davies (Shipley) (Con): I have heard some drivel in my time, but I do not think that in all my years in opposition did hear as much drivel from the Treasury Bench as I heard from the Secretary of State today. Businesses look to his Department for support and help. May I suggest that he gets off their backs and lets them create some wealth, and that he spends his time in his Department trying to sort out the massive problems of their own that the Government face without interfering in every business across the country?
Vince Cable: May I just gently suggest that my hon. Friend reads through the responses to the consultation, which are predominantly from businesses and investors advocating measures such the ones we are implementing? He might particularly want to examine the contribution of the CBI.
Mr Speaker: It is interesting to note that the shyness and reticence that previously overcame the hon. Member for Shipley (Philip Davies) have now been successfully overcome.
Jonathan Ashworth (Leicester South) (Lab): A few moments ago, the Secretary of State told us that he would consider it desirable to see more employees represented on boards, but then he told us about what he considered to be insurmountable obstacles. If Germany, Austria, Finland, Sweden, Norway and Denmark can do it, why cannot we?
Vince Cable: I have dealt with this question several times already. I am aware that those countries—[Interruption.] Yes, of course those countries have a different system that results in workers on boards, but of course that does not happen in isolation. They have completely different systems of corporate governance.
Since the hon. Member for Streatham (Mr Umunna) reminded me of my days in his party, I shall say that one of the last things that I tried to do under the 1979
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Government, when I was working with John Smith, was introduce a co-determination system, but alas that Government showed very little interest in implementing it.
Mr David Nuttall (Bury North) (Con): As shareholders already have the power to vote out of office directors who they believe are underperforming, why is there a need for any further measures that will serve only to undermine the competitiveness of British business?
Vince Cable: As I have already explained to the hon. Member for Shipley (Philip Davies), the consensus view among business and investors is that the status quo is not supportable and is leading to damaging and perverse rewards, including rewards for failure, and that we need to reform the system comprehensively.
Mr David Hamilton (Midlothian) (Lab): May I remind Government Members that they agreed with Labour for 13 years about releasing details of chief executives’ pay? Will the Secretary of State take retrospective action against any companies that try to get through the barriers before the changes come into operation?
Vince Cable: In general, retrospective legislation is not a good thing, but I will look at the implications of the question.
Duncan Hames (Chippenham) (LD): As we have heard, some hon. Members argue that nothing should be done to put at risk a light-touch, risk-based regulatory regime. In my right hon. Friend’s attempts to achieve cross-party consensus on the matter, how does he hope to persuade the shadow Chancellor to abandon that position?
Vince Cable: I was not aware of the shadow Chancellor’s wisdom on that particular subject, but his party leader has spoken constructively and I hope that that will lead to agreement between our parties on how we can proceed.
Angela Smith (Penistone and Stocksbridge) (Lab): Does the Secretary of State still believe that all bankers paid more than the Prime Minister should publish details of their remuneration, as he believed when he was in opposition?
Vince Cable: I am surprised that Labour Members keep reminding us about bankers’ pay. Bankers’ bonuses in 2008-09, when the Labour party was still in government, were something of the order of £13 billion. They have now come down to about a quarter of that.
Mr Rob Wilson (Reading East) (Con): How does the Secretary of State think that his plans will help attract inward investment and so aid growth?
Vince Cable: I think they will help considerably. Many of the countries from which we attract inward investment have good corporate governance systems, in which there is considerable restraint on excessive pay, and reward for success rather than failure.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op):
The Secretary of State will know that youth unemployment now stands at more than 1 million. Why will not the
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Government repeat the bankers’ bonus tax, which could create up to 100,000 jobs for young people?
Vince Cable: This argument has been rehearsed many times. The then Chancellor of the Exchequer, who introduced the bonus tax, made it clear that it was a one-off measure and that, if it were continued, banks would simply avoid it by converting bonuses into consolidated pay. It was a good idea at the time. It worked for a year, and we now have a much more effective and credible way of taxing banks.
Jason McCartney (Colne Valley) (Con): Rewards for failure: the old boss at ITV, where I used to be the trade union representative, slashed jobs, made a succession of poor business decisions and brought the company to its knees while picking up millions in pay, perks, bonuses and share options. Is my right hon. Friend surprised that the Leader of the Opposition has rewarded that failure with a key role in restructuring the Labour party?
Vince Cable: I have not followed those developments, but perhaps I should retract some of the complimentary things I said about the Leader of the Opposition.
Mr Speaker: I remind the Secretary of State that he has absolutely no responsibility for restructuring the Labour party.
Alex Cunningham (Stockton North) (Lab): Here is another opportunity for the Secretary of State to clarify his views on RBS bonuses. The share price has collapsed by 35% in the past year, so will he use any powers he has to block any bonus for the chief executive, or has he really surrendered those powers to the Prime Minister and the Chancellor, who simply do not agree with him that the bonus must be stopped?
Vince Cable: I have heard at least three different sets of recommendations on RBS bonuses, including that they should be reduced and that they should be stopped altogether. If we get a coherent, single source of advice, perhaps I can respond better to it.
Bob Stewart (Beckenham) (Con): Does the Secretary of State think that it is more important to have a board with diversity or a board with competence, which looks after the shareholders, the workers and the company?
Vince Cable: I do not accept that there is a dichotomy between diversity and performance. All the evidence suggests that particularly the drive to get more women on boards has nothing to do with political correctness and everything to do with improving performance.
Diana Johnson (Kingston upon Hull North) (Lab): A few months ago the Secretary of State said that the Government could intervene to stop bankers’ bonuses if they so wished. Does he stand by that? If he does, why is he not dealing with the RBS situation?
Vince Cable:
I remind Opposition Members that the semi-publicly owned banks, including RBS, are managed on an arm’s length basis under an arrangement devised by the previous Labour Government. This Government
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have made it clear that we expect restraint in bonuses in the banking system and in RBS in particular, and we will see what happens.
Andrew Bridgen (North West Leicestershire) (Con): Will the Secretary of State confirm that proposals to tackle excessive pay are just part of the Government’s plans to reconnect the principles of risk-taking, success, hard work and rewards in both the private and the public sector?
Vince Cable: The hon. Gentleman is absolutely right, although we have of course already introduced principles governing remuneration in the public sector, including greater transparency, ratios and things of that kind. We are now extending those into the private sector where it is appropriate to do so, while recognising, as he implied, that in the private sector we need also to give incentives to entrepreneurship and good management.
Debbie Abrahams (Oldham East and Saddleworth) (Lab): The Secretary of State mentioned that he was not accepting the High Pay Commission recommendation to publish the ratio between the highest and the average earners in a company because it was too complex. Will he expand on that please?
Vince Cable: That was not the recommendation to which I referred. The commission also made a specific recommendation about a double number between salary and top-up to salary. For a variety of reasons, we do not feel that being quite so prescriptive is appropriate, but that was the recommendation to which I referred and which we were not able to take forward.
Mr Marcus Jones (Nuneaton) (Con): Does the Secretary of State agree that the state should not control private sector pay, but empower shareholders with the information they need so that they can be active and committed company owners?
Vince Cable: That is a pithy summary of what I was trying to say, on which, as Mr Speaker ruled, I took rather too long.
Sheila Gilmore (Edinburgh East) (Lab): Apparently, the chief executive of Peacocks took a hefty pay increase just last year when clearly his company must already have been failing. I am sure that all workers facing redundancy from Peacocks would like to know how the Secretary of State’s proposals might assist people in their position in future.
Vince Cable: The hon. Lady refers specifically to Peacocks, on which I have been approached by several concerned elected representatives. Having looked at the facts, the Government do not judge that there are any grounds for intervention in the wider public interest, but I have great sympathy for the employees, who are in a very bad position because of bad decisions made in the past by their management.
David Rutley (Macclesfield) (Con): Does my right hon. Friend agree that there is an important role for lawyers to big City firms and large plcs in advising their clients on best practice when drawing up arrangements for contracts and bonuses?
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Vince Cable: In mentioning diversity, I think I included lawyers, improbable as that may seem. There is probably a dissenting view on the Opposition Front Bench.
Mr William Bain (Glasgow North East) (Lab): Does the Secretary of State accept the finding of the High Pay Commission that in the year to last autumn—on his watch—the pay of FTSE 100 directors increased by 49%, whereas average incomes rose by only 2.7%? Does that not make the case for a permanent body on high pay to ensure that companies reflect the social obligations that they owe to all of us?
Vince Cable: As I understand it, the commission is in the process of encouraging the establishment of a monitoring body of that kind. That is not governmental or Government financed, but it would be a very useful institution in helping us to understand the trends.
Robert Halfon (Harlow) (Con): Does my right hon. Friend agree that crony corporatism, high taxes and high regulation are as unjust, if not more so, than some of the problems he has set out today? Will he pay as much attention to dealing with those things as he is to dealing with the issues he set out?
Vince Cable: I am not terribly comfortable with the phrase “crony corporatism”, but my hon. Friend refers specifically to directors serving on each other’s boards. We have looked at the facts on that. There are few examples of reciprocal agreements, but there are cases— 50 out of 1,000 or something of that order—in which directors serve on the board of another company. We are looking at how we can limit that, because it creates a somewhat more incestuous environment and lacks the diversity we are seeking.
Kerry McCarthy (Bristol East) (Lab): It is often not the management or those in executive roles who get the highest pay packages, particularly in the financial sector. For example, I have heard a rumour that at least one of the traders at RBS is going to get a higher bonus than Stephen Hester. Will the Minister tell us whether his proposals, particularly on transparency, will cover traders too?
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Vince Cable: The hon. Lady is quite right: there is a different pay structure in investment banks, because of the problems that she describes. The Chancellor has already initiated action, in the form of a proposed regulation through the Financial Services Authority which will require financial institutions to declare the highest pay of employees who are not on the boards of those companies.
Mr Peter Bone (Wellingborough) (Con): The Secretary of State must be extremely happy. The liberal, left-wing clap-trap that he has announced today—which even Labour did not do, in 13 years—has somehow got through the coalition in the hope of a good headline. It has done nothing to increase growth or employment in this country. Is he a happy man?
Vince Cable: I am actually. I realise that when I first raised the issue of responsible capitalism 18 months ago, I was denounced in parts of the press as a Marxist. I thought I had left that behind, but apparently not.
Tessa Munt (Wells) (LD): I am sure that my constituents will be absolutely delighted with the arrangements for more transparency and, in particular, increased shareholder power. I wonder whether the Secretary of State will consider the fact that Somerset county council has imposed a pay freeze and is making people redundant—indeed, it sends me a Christmas card, at the same time as it is shutting libraries and slashing youth services—and is now considering abandoning youth carers, to save a paltry £70,000. Will he consider applying exactly the same principles of transparency and shareholder power—or in this case taxpayer power—to councils and their pay and bonuses arrangements for senior management?
Vince Cable: Mercifully, I am not responsible for local government, but there are certainly moves afoot, which my hon. Friend is aware of, to ensure much greater transparency in pay. Will Hutton prepared a report for Government with some good recommendations, which include those she mentioned.
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Points of Order
4.17 pm
John Cryer (Leyton and Wanstead) (Lab): On a point of order, Mr Speaker. As you know, on Friday a consultation paper was introduced that is intended to lead to legislation creating a statutory register of lobbyists. That was trailed in the press like confetti, across the media. It was accompanied on Friday by a brief written statement and nothing else. This is such an important issue that the Prime Minister himself has said that it is the next big scandal in British politics. Should not Friday’s statement be accompanied by an oral statement, and has the Deputy Prime Minister contacted you to indicate that he wishes to come here to make a statement?
Mr Speaker: I have not been contacted in the way that the hon. Gentleman expected or would have advised. What I would say to him is twofold. First, the form of Government statements is overwhelmingly a matter for Government to determine. The hon. Gentleman rightly references the fact that although the Parliamentary Secretary, Cabinet Office, the hon. Member for Forest of Dean (Mr Harper) tabled a written ministerial statement on this subject on Friday, there has been no subsequent oral statement. What I would say to the hon. Gentleman, secondly, is that my understanding of the matter is that the Government have launched a consultation process. It is an extremely important consultation process, on what, as he rightly says, is an extremely important matter, but that is the stage that we have reached. If, following the consultation process, the Government have specific policy changes to recommend, I feel certain that they will do so via an oral statement to the House; and, knowing the hon. Gentleman as I do—we entered the House together in 1997—I know that he will be eagerly expecting such an oral statement and will probably be the first in the queue to complain if it is not forthcoming.
Robert Halfon (Harlow) (Con): On a point of order, Mr Speaker. Following the weekend reports that the Houses of Parliament may be slipping into the River Thames, will you give a statement to the House, just so that we know whether or not to buy ourselves lifejackets?
Mr Speaker: I am grateful to the hon. Gentleman, in particular for his concern for all those who work, or even live, within the precincts of the Palace of Westminster. I have known him for over 20 years, and I have never regarded him as an inveterate worrier. As he can see, I am not worried. He should not believe everything that he reads in the newspapers, or in those even more downmarket rags that in so describing themselves are almost certainly breaching the Trade Descriptions Act. Getting overexcited is their stock-in-trade; keeping calm and doing the right thing is ours.
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Opposition Day
Food Prices and Food Poverty
Mr Speaker: In the light of the increased interest that has been expressed in participating in this debate, I have decided to impose an eight-minute limit on each Back-Bench speech. For the benefit of the shadow Secretary of State—the hon. Member for Wakefield (Mary Creagh) —and the Secretary of State, I remind them that there is no time limit on Front-Bench speeches, but I hope that they will apply a certain self-denying ordinance in order to enable more of their colleagues to contribute than would otherwise be possible.
4.20 pm
Mary Creagh (Wakefield) (Lab): I beg to move,
That this House notes that food prices rose by more than 4 per cent. over the last year and that an increasing number of families are relying on foodbanks; is dismayed at Government delays to the Groceries Code Adjudicator and that it has rejected recommendations by the Business, Innovation and Skills Committee and Environment, Food and Rural Affairs Committee to give it teeth; believes that the Adjudicator should have the power to fine retailers and that third party organisations should be able to report retailers for unfair practices; calls on the Government to bring forward proposals for the Groceries Code Adjudicator early in the next Parliament to ensure fairness across the food supply chain; and further calls on the Government to work with the retail sector to provide more responsible, transparent price promotions and clearer unit pricing to offer genuine value-for-money for consumers.
I am sure that hon. Members on both sides of the House will do their best to abide by your strictures, Mr Speaker.
On Friday, I visited a food bank in Bradford and met people who use its services. One woman had fled her violent husband when she was eight months pregnant. Another had left her husband but discovered that he had set up loans in their joint names for which she was still liable. There were women there who had held down high-powered jobs—one had been the personal assistant to the chief executive of a large bank in Canary Wharf—but, through a combination of bad decisions, bad luck and bad men, they had fallen on hard times.
One of the women apologised for not following politics, but said that she could not afford a television licence. Another described how she had found herself shouting at her children when they asked for a bit of jam on their bread, and how she visited relatives at teatime to ensure that her children were fed, while she herself went to bed hungry. Another described cooking tea for her children and eating their leftover food. One woman told me how, the first time she brought home a food parcel, she cried all night because she could not do something as basic as feed her own children.
Robert Halfon (Harlow) (Con): The hon. Lady has mentioned food banks, and we have a very good one in Harlow. Can she explain why the previous Government stopped jobcentres handing out vouchers for local food banks? This Government have reversed that terrible decision.
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Mary Creagh: I do not know the answer to that question. I am not sure whether it is the role of jobcentres to pass people on. There is a question mark over whether it is appropriate for a Government agency dealing with people’s welfare and benefits to outsource the food element of that to charities, so I throw that question back to the Government.
I went with the centre manager, Gareth Jones, to make up a food parcel. It contained cereal, tins of beans, four tins of meat and four tins of fish—all nutritionally balanced by a health visitor who advises the centre. The hardest part for me was choosing the four treats. Would the children prefer a pot of honey or a treacle sponge pudding, meringue nests or another pot of jam? Those are treats that we all put into our shopping trolleys without a second thought.
Gareth told me that it was important to put in a mix of branded and non-branded goods, so that when people opened the bags at home, they would feel valued. He told me how he holds pampering sessions at which mums can enjoy a hot chocolate while someone minds their children for half an hour. He described how the type of person coming to the food bank had changed from the homeless and destitute to the working poor. He said that families were referred to it by charities, social services or even—as the hon. Member for Harlow (Robert Halfon) said—the jobcentre. When the state does not provide, the big society is left to pick up the pieces.
Alex Cunningham (Stockton North) (Lab): Much has been made of the importance of food banks, but does my hon. Friend share my concern that the New Life church in Billingham in my constituency has felt the need to set up a food bank for the first time, to help local people who are struggling? I support the church in doing so, but I am sure that she would agree that these facilities should not be necessary. Is not this another illustration of this Government’s failure to address the needs of the most vulnerable people in our society, who need food to eat?
Mary Creagh: I completely agree with my hon. Friend and pay tribute to the church in his constituency. We are seeing a proliferation in the number of food banks around the country and one of our challenges to the Government is to ask them to map where those food banks are and what social and economic policies are needed to tackle the proliferation of them and hunger in our society.
The Trussell Trust states that it now has 163 food banks around the country, with one opening every week. Last year, its food banks fed 61,000 people, 20,000 of whom were children, and this year it expects that figure to double.
Debbie Abrahams (Oldham East and Saddleworth) (Lab): Is my hon. Friend aware that in Oldham a food bank has been established for the first time? That was in the paper today. The vicar who set it up said that the banks are not just for homeless people but for hard-working families who are at crisis point. Reports by the Joseph Rowntree Foundation and other organisations show that such problems exist up and down the country. Does my hon. Friend agree that the cuts and austerity are not working?
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Mary Creagh: I agree and it all comes back to the social and economic failure of this Government. We are seeing these problems in places that were never hotspots for homelessness, such as Oldham. We associate them with our big cities and do not expect them in our smaller towns. There is a food bank in Wakefield now, whereas previously there was not one.
Kate Green (Stretford and Urmston) (Lab): My hon. Friend might be aware of the campaign conducted by Sainsbury’s shortly before Christmas, where the company invited customers to buy an extra item with their shopping and pop it in a shopping basket so that it could be distributed to needy households. I was shocked when I attended my local Sainsbury’s to meet many people who said that they would like to help but could not afford to buy that extra item. Is not the idea that we can rely on charity to meet the need bound to be too limited?
Mary Creagh: I agree with my hon. Friend. If Sainsbury’s is inviting consumers to put their hands in their pockets, it should match that investment item for item, rather than simply adding it to its bottom line.
Kate Green: In fairness, I should say that Sainsbury’s matched every donation.
Mary Creagh: That is very good to hear.
Mrs Madeleine Moon (Bridgend) (Lab): Bridgend food bank covers four of the 10 most deprived wards in Wales, so the service it provides is critical. In its recent report, it said that the people who applied for food there did so because of
“low income or ill health…repossession of their home…job loss or desertion by the…breadwinner, or”
“house fire or unexpected benefit cuts.”
People who go to food banks go for a variety of reasons, but is it not appalling that in 2012, when we are celebrating the Olympics and spending millions of pounds, people are still starving?
Mary Creagh: I agree. Charities such as the Salvation Army and HelpAge are seeing an explosion in demand as incomes fall, working hours are cut and prices rise.
Mr Jim Cunningham (Coventry South) (Lab): I know that my hon. Friend, like me, comes from Coventry. Would she be surprised to learn that 35,000 children from Coventry and Warwickshire will now be on the poverty line, and does she think that that is an indictment of this Government’s failed policies? More importantly, many families are now struggling with electricity prices, heating bills and so on, which is feeding through—
Madam Deputy Speaker (Dawn Primarolo): Order. Interventions must be brief, as we are in a short debate with time limits on speeches.
Mary Creagh: I am very sorry to hear that my home city of Coventry has 35,000 children living in poverty. I am sure the number was similar when I was growing up there in the 1970s and 1980s and I am only sorry that much of the good work we did in government is falling away and poverty is increasing.
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FareShare, which operates nationwide and works to redistribute aid from the food industry to charities, says demand is growing faster than supply. I pay tribute to both Sainsbury’s and Brakes, which recycle their in-date surplus to FareShare. It is important that the food is in-date so that there is no risk associated with that food, which includes fresh vegetables and, in particular, meat. Supermarkets could be doing much more to recycle food waste to hungry people. FareShare estimates it gets 1% of supermarket food waste, which prompts the question of where the other 99% is going. More of it should be recycled to hungry children in this country, which is one of the richest on earth. We can learn from food businesses such as Pret A Manger, which delivers surplus sandwiches around its London stores in the evening. We recall with horror the Tory proposals from Westminster council last year, when it wanted to make food distribution illegal. I pay tribute to all those who fought that proposal and protected people’s basic human right to a square meal even in the city of Westminster.
Gareth said that food is at the heart of everything his organisation does, but as my hon. Friend the Member for Bridgend (Mrs Moon) said, charities are tackling a complex web of abuse, abandonment by the breadwinner, debt, unemployment, non-payment of benefits and other equally serious issues such as house fires, which she mentioned.
Mark Pritchard (The Wrekin) (Con): The hon. Lady is talking about the situation in the UK, but does she accept that rising food and commodity prices are an international phenomenon and that biofuels are taking out of production a lot of agricultural land, which means that food prices are rising not only in this country but around the world?
Mary Creagh: Commodity prices of certain things, such as wheat, have remained stable over the past 20 years, whereas others have risen. [ Interruption. ] Well, at the Oxford farming conference I saw the US Department of Agriculture’s figures on that. However, the hon. Gentleman is right that there is an issue with commodity pricing, particularly with the financialisation of that sector, which is leading to increased volatility, making it harder for food producers to hedge and putting on pressure. We can see from Department for Environment, Food and Rural Affairs figures that where we are self-sufficient we are more protected from those food price spikes than where we rely on imports, which have to have the costs of transporting those materials added on. Also, when our pound falls significantly against other world currencies that puts those prices up.
The people who food charities are seeing are no longer just the homeless and the drug and alcohol users but the respectable mums and dads who have fallen on hard times and the pensioners whose energy bills are so high that they cannot afford to eat. It is an utter disgrace that, although we are the seventh-richest country in the world, we are seeing thousands of people going to bed hungry at night—many of them children. We need to look this issue squarely in the face. A wave of invisible hunger is taking root in our cities, towns and villages. Those charities are the canaries down the mine telling us that respectable working-class and middle-class poverty is on the rise—and this is happening before the housing benefit changes and universal credit come in.