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However, the 80% cut in teaching funding has also knocked on to affect postgraduate teaching, even though it was directly aimed at undergraduate teaching. In a sense, there are no Chinese walls. Many of the teachers at postgraduate level are also working in the undergraduate field. When we lose a teacher, or a teaching place, that loss is felt right across the university sector.
Of course, it is worth pointing out that the Government draw from the pool of postgraduate education and, in many cases, directly fund postgraduate education. I do not know if it is in order, Mr Hollobone, to speculate on the number of doctorates held by people in Westminster Hall today, including the civil servants and Clerks, but I will. I know that there are certainly MPs in Westminster Hall who are “doctors”, but I also know how little help they would be if I stubbed my toe on the way out. I am sure that there are people with doctorates and other postgraduate qualifications present right here in Westminster Hall, who feed directly into the machinery of Government.
Let us also look, for example, at the Department for Education, which directly funds the postgraduate certificate in education. We are already seeing that there are changes being made in that system, for instance the reduction in bursaries. Similarly, the Health and Social Care Bill will take away the requirement to train and develop doctors, nurses and others from the strategic health authorities, and it will pass that requirement to GPs.
In the broader context, therefore, a lot is changing in the postgraduate world. There is not only the reduction in funding to consider but the direct action that the Government can take to fund postgraduate qualifications.
Much of the training for those qualifications takes place in our modern-day universities. My hon. Friend the Member for Huddersfield made a very good point when he said that even if there is not a policy vacuum right now—perhaps there is a series of ideas that are being worked through to an ultimate conclusion, which we will hear about in time—it seems that there has been much focus on undergraduate education and much less focus on postgraduate education.
I spoke about modern universities right at the start of my contribution. What do they do? They support a large number of postgraduates; about two in five postgraduate qualifications are gained in our modern universities. They also provide much greater support to part-time graduate students than older universities; they are the ideal place for part-time students to be working in the postgraduate field, so that they can put their skills back into business and learn on the job, as it were. One in two of the postgraduate qualifications obtained by part-time students is obtained at a modern university. And modern universities also support older students, more so than, say, Russell group universities, which are at the other end of the scale for teaching older students. About 40% of the postgraduate students that modern universities teach are over 35.
In addition, modern universities are more likely to reach students from minority ethnic backgrounds and communities; I see that in my own local university, the university of Bedfordshire. Modern universities have also been proven to do very well in identifying new markets, such as creative industries. Postgraduate qualifications can add something to those sectors and to the economy more broadly.
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There are a number of things that can be done, and I hope that the Minister will respond in detail to my points when he winds up. At the moment, however, the situation feels a bit shapeless and baggy. Nevertheless, there is one idea that has a lot of traction—it is the idea of bringing in more funding directly from industry and enterprise.
That idea—of bringing private funding into the system—was made earlier in the debate, and it is a brilliant idea. In fact, I am very disappointed that the Browne review did not pick it up and run with it much more on the undergraduate side; I think that we have been quite vocal about that during the last 18 months.
Whatever system we come up with to ensure that our postgraduate education is among the best in the world—that it is adequately funded and that it reaches the students that we want it to, and not only those people who can feel they can afford postgraduate education or who feel a great expectation on them to study at postgraduate level, but a whole range of demographics—it is really important that the Government play a role in ensuring that the funding for that system is available to all students, regardless of where they choose to study and how they study.
My own preference is quite clear—there are obvious economic benefits in ensuring that funding is protected and enhanced. Where there is private funding, however, it should be the role of Government to ensure that it is available to all, regardless of where they choose to study. For example, a postgraduate student support and loan scheme might be a way forward, but we do not want banks simply shifting towards cherry-picking those students they believe have the best chance of earning significant sums in the future, based on the university that students attend or their background.
A loan scheme should be available to all postgraduate students, regardless of whether they are full-time or part-time students, regardless of their income and regardless of their credit rating or background. If the Government choose to go down the route of having a loan scheme, they should consider making it available to all students across the field.
In summary, I have three “asks” for the Minister and I wonder whether he might briefly comment on them. The first “ask” is quite simple; it is about improving the quality of the data that we collect about postgraduate students. Even in the time that I spent researching postgraduate education for this debate, I clearly noticed how little data we have on the types of students who are coming through. With the big funding changes at undergraduate level, it is all the more important that we start looking at the income, background, ethnicity, student profile and level of debt that people are coming into the sector with, so that we can see whether any changes being made by this Government are working well.
My second “ask” of the Minister is to ask him simply to acknowledge both the interdependency between the postgraduate world and the undergraduate world, and the fact that the 80% cut in the teaching budget will have an effect on postgraduate education as well as on undergraduate education. Indeed, I also ask him to acknowledge the point made by Labour colleagues that the cost of postgraduate education may also go up, just as the cost of undergraduate education has.
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My third “ask” of the Minister is to ask him to commit to delivering an equitable scheme that is accessible to all postgraduate students—even if is privately funded or supported—to ensure that all of our universities have the chance, the role, the ability and the privilege of providing postgraduate education and qualifications, regardless of where they are located or the courses they run.
3.36 pm
Shabana Mahmood (Birmingham, Ladywood) (Lab): It is a pleasure to serve under your lively chairmanship, Mr Hollobone, and to respond on behalf of the Opposition to what has been an excellent debate.
I congratulate my hon. Friend the Member for Huddersfield (Mr Sheerman) on securing this important and timely debate. He delivered his speech with passion and conviction, and he has a deep commitment to this area of policy. Indeed, he bought additional expertise to the debate, given his involvement in the Higher Education Commission, which is currently conducting an inquiry into postgraduate education. I am sure that all Members of the House look forward to the commission’s report, which will be produced once that inquiry is complete. However, having congratulated my hon. Friend on securing the debate, I must also congratulate my hon. Friend the Member for City of Durham (Roberta Blackman-Woods), who initiated the form-filling that helped to secure the debate.
My hon. Friend the Member for Huddersfield spoke very powerfully about the importance of postgraduate education and the fact that it has been somewhat isolated in the context of the current debate about university education. He also made the important point that higher education should be looked at holistically, and he is absolutely right about that. In addition, he spoke about the impact that the presence of a university has on the city and region in which it is located, and I too can relate to the experience of having a university in my constituency, given that Aston university is in my constituency and both Birmingham university and Birmingham City university are just outside my constituency boundary.
My hon. Friend spoke at length about postgraduate research, which I will discuss later. We also had excellent contributions from the other Members who spoke. My hon. Friend the Member for Sheffield Central (Paul Blomfield) addressed the issues in relation to taught postgraduate courses. He spoke powerfully about issues of access and the effect that widening participation in education can have, especially in improving access to the professions. Having been a barrister before I became an MP, I can absolutely attest to the fact that the professions often feel like middle-class enclaves, and when someone is from an immigrant working-class background—as I am—that is an entirely different kind of world.
My hon. Friend the Member for City of Durham spoke about the role of postgraduate education in strengthening both the academic community as a whole and international research teams, which is a very important point. She also talked about how that speaks to both our role and our reputation in the world. We have
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always punched above our weight, and we should treasure that. My hon. Friend returned to the important challenge of funding, which I will address later, and my hon. Friend the Member for Luton South (Gavin Shuker) rightly praised the role of modern universities. We are very lucky in this country to have a diverse higher education ecosystem, and we should cherish that diversity of mission, intake and teaching and research strengths.
This has been an important, constructive and necessary debate. Members have already made the point that discussion of higher education in Parliament often focuses on undergraduates, especially on an 18-year-old undergraduate’s journey through the system. That is, of course, extremely important, but it sometimes prevents both recognition of the importance of part-time and mature students at undergraduate level, and adequate discourse about postgraduate education as a whole, which is deeply unsatisfactory. Quite apart from the fact that postgraduate education generates something like £1.5 billion in output, we must, as other Members have said, take a holistic view of the sector if the policies we then formulate are to encourage quality, competitiveness, growth and social mobility.
We very much welcome any expansion of postgraduate education, especially that which took place between 2005 and 2010, as it clearly has benefits for the individual and for society as a whole. Taught postgraduate degrees, particularly when accessed by mature students, can help an individual improve their career prospects or change career entirely, especially with part-time study. Given the tough economic climate we face, coupled with the sheer terror of potential unemployment and what that does to life chances, particularly those of young people, students taking up postgraduate education immediately on completion of undergraduate courses do so increasingly because of the growing belief that we need more than one degree to be competitive.
However postgraduate education is accessed, and for whatever reasons, taught postgraduate education creates an increase in the national skills base and in earning capacity, and in that way benefits the economy and growth. Also essential to innovation and economic growth is research-based postgraduate education, through which we have the best chance of stimulating the kind of innovation we need to effect the rebalancing of our economy and get back to long-term growth, and we believe that the Government can and should play an active role in that. The UK’s delivery of global research output is second only to that of the United States, which demonstrates the health of our sector and the fact that, as I said earlier, we punch above our weight in the world, but with increasing competition from across the globe the Government must ensure that we keep pace with our competitor countries. My hon. Friend the Member for Sheffield Central made an important point about the ageing demographic make-up of the research community, and such issues highlight the need for the Government to bring forward a strategy that maintains the strength and diversity of our research base, especially given the reliance in some parts of the sector on international students, welcome though their contribution is.
One of the biggest areas of concern, as we have heard today, is funding. Funding concerns have been amplified by the Government’s decision to treble undergraduate tuition fees to £9,000. We are concerned not only about
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the impact that that will have on access to and participation in undergraduate education, but about what higher levels of undergraduate debt will mean for postgraduate education. With cuts in the teaching grant and higher fees, the debt burden gets ever higher, and so too does the prospect that students from deprived backgrounds, who are more likely to be debt-averse, and mature students with family commitments will be locked out of postgraduate education, thereby cementing the dominance of the middle classes. Particularly telling is the situation of those who would have become mature students but are deciding not to bother with postgraduate education because of the higher fees and the associated debt burden. Their aspirations are being blocked because they have come to the view that financially it simply is not worth the risk. That will also have an impact on social mobility, especially when we consider, as other Members have said, that postgraduate education is an important route into professions such as law and the civil service, which are rightly and regularly criticised for the lack of diversity among their intake. That scenario will only get further entrenched in the present situation.
It is in that context that we have argued that the Government should have changed course, to bring the cap on undergraduate tuition fees down to £6,000, a measure paid for by not going ahead with a corporation tax cut for the banks, and by asking the top 10% of graduates to pay a bit more.
Mr Willetts: Will the hon. Lady confirm that her proposals would not reduce graduates’ monthly repayments of student loans in any way?
Shabana Mahmood: The important point is about the headline level of debt, which I was coming on to make. Our proposal takes into account, and does not change, the Government’s decisions on the overall budgets. It clearly shows that it was still possible for them to do more to bring down the headline level of undergraduate fees by one third, thereby reducing the overall debt burden, which in turn would have had less impact on the numbers of people going into postgraduate education.
We welcome the attention being given to future funding options for postgraduate education by various bodies, such as the Higher Education Commission. I also note the report by CentreForum and its proposal for a £10,000 state-backed loan scheme for people taking one-year taught postgraduate courses, and that the National Union of Students and others are considering possible packages. We welcome the work being done to develop models for the sustainable funding of postgraduate education, and while alternative models are being developed and their viability assessed the Government can and should consider what more they can do to encourage the availability of professional career development loans, and to ensure that they work with banks to get the best possible deal for postgraduate students.
The Government’s White Paper on higher education unfortunately barely mentioned postgraduate education. It certainly did not create any legislative space for the discussion of issues affecting postgraduate education, or of how those issues might be dealt with. That was a mistake, and a missed opportunity. I note that the Minister reconvened the Smith review last year, and that additional work will now be done by the Higher Education Funding Council for England, so perhaps
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the Minister will take the opportunity today to update us on that funding consultation exercise being undertaken by HEFCE, and the participation review.
It is clear from the contributions to this debate and from the concerns highlighted by the higher education sector that a comprehensive strategy for postgraduate education is needed. We have, as other Members have mentioned, heard rumours in the past couple of days that the Government have U-turned on their policy of expanding the presence of for-profit providers in higher education, and so will not now introduce their planned higher education Bill this summer. The Minister might, therefore, have a bit more time on his hands, and could have even more if he heeded our call not to make any further changes to the core and margin model in 2013-14, allowing the sector to enjoy a year of stability. I wonder if the Minister might take this opportunity to redirect his energies into preparing the comprehensive postgraduate education strategy that is being called for by so many.
3.48 pm
The Minister for Universities and Science (Mr David Willetts): Thank you very much, Mr Hollobone, for chairing this debate. I congratulate the hon. Member for Huddersfield (Mr Sheerman) on his opening speech. I have always had a soft spot for him; I remember his chairmanship of the Education Committee, and he was also a student of Michael Oakeshott, so all we Tories have great respect for him. We then heard a series of speeches, which I welcome, from the hon. Members for Sheffield Central (Paul Blomfield), for City of Durham (Roberta Blackman-Woods) and for Luton South (Gavin Shuker), and then from the Opposition spokesman, the hon. Member for Birmingham, Ladywood (Shabana Mahmood). There was a theme, which I am happy to join in the support of, that postgraduate education is very important for a lot of reasons. It is very important for the economy, and for the individuals.
I can tell the hon. Member for Sheffield Central that I was talking to senior managers from Boeing about their overall strategy for research and development. They said that when they were planning an investment in the US, they were taking some leading figures from American universities close to where they were investing to Sheffield, to see at first hand how business-university collaboration could be done successfully. We can get it right, and we should celebrate those examples. Clearly, great achievements have been made at the university of Sheffield and elsewhere.
We have an important and valuable postgraduate education experience. I realise that there are a range of concerns in the sector, expressed by Members in this debate, about the future funding of postgraduate study. Let me make several things clear. First, it is unhelpful to think of it as a problem caused by a pile of undergraduate student debt. The more one looks at the issue, the more it is clear that the idea of a debt mountain that is a burden on people’s shoulders is misleading. It should be thought of not as a debt but as a flow of payments. The model, which we took in many ways from the previous Labour Government, has the best features of a graduate tax. It is essentially 9% of any earnings above £21,000 a year until the cost of the university education is paid for. If a child of mine were leaving university with £25,000 in debt on his or her credit card, I would be worried, recognising that it would threaten their ability
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to borrow, for example, to pay for postgraduate education if necessary. However, that is not a fair analogy with our student finance proposals.
Paul Blomfield: Does the Minister not accept that he is trying to appropriate the language of a graduate tax to describe a system that is actually nothing but an income-contingent loan? He mentioned the central principle of graduate tax. Graduate tax is a system whereby people pay back according to what they can afford, as opposed to what they had to borrow to go to university.
Mr Willetts: The total amount to pay back is determined by the cost of the higher education, and it keeps the connection with the university. That is where I part company with the graduate tax. The point that I am trying to make is that graduates will experience only a slightly higher deduction from their pay packet by Her Majesty’s Revenue and Customs, and if their income ever falls to less than £21,000, no payments whatever will be made. That matters to the debate about postgraduate education. I am not simply trying to reopen the debate on our undergraduate proposals.
The idea seems to be that it will be harder for postgraduates to finance themselves, because they will suddenly have an enormous amount of debt. In all the conversations that we have had with lenders about, for example, graduates’ ability to access a mortgage, they have said that what lenders look at is fixed monthly repayments. We have increased the threshold for repayments from £15,000 to £21,000, so the monthly repayments under our system have fallen compared with the system that we inherited from Labour. That matters to postgraduates’ ability to fund themselves. That is the source of Opposition Members’ anxiety: a misunderstanding of the implications of the reforms.
Nevertheless, I accept that there is concern about postgraduate issues. We recognise the need to monitor closely what is happening, investigate if problems arise and be absolutely clear what they are and what will need to be done about them. Today, we published the letter that we sent to the Higher Education Funding Council for England with the grant statement for the coming year. A paragraph in that letter specifically discusses postgraduates:
“We are pleased that the Council is taking the lead on gathering evidence to improve our understanding of the purpose and characteristics of, and outcomes from, postgraduate study, with the intention of reviewing postgraduate participation following the changes to undergraduate funding.”
We accept that it must be monitored.
“We also note the progress the Council is making, with its HE Public Information Steering Group”
on better information for postgraduate students. Also, of course, we refer to continuing
“work on strategically important and vulnerable subjects”.
Mr Sheerman: Where can we get hold of that letter? We would like it urgently. I also remind the Minister, who always mentions that I studied under Michael Oakeshott, that I was also taught by Ralph Miliband.
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Mr Willetts: That in turn gives the hon. Gentleman an opportunity to educate the junior Milibands. The letter was published today on the website of the Department for Business, Innovation and Skills.
We have asked HEFCE to monitor the situation. I accept that one finds when one digs into the matter that we need better access to data. Some data are collected by the Higher Education Statistics Agency, and some by HEFCE. The hon. Member for Luton South, in particular, discussed that. We need to do better at making those data accessible.
I have asked officials to continue to consider all the policy issues on postgraduates. This is a coincidence, I think, but this very afternoon—probably as we speak—a round table discussion on postgraduate education is being held with BIS, HEFCE, the research councils, the learned societies, mission groups and other interested parties. We recognise the importance of watching for any effect on behaviour and seeing whether any policy proposals are called for. However, we must not forget that at the moment, postgraduate education is a mixed economy.
Of course there will be a lot of interesting ideas. People have referred to Tim Leunig’s paper for CentreForum, one of the few policy ideas proposed so far. I would welcome a more wide-ranging debate, but good for Tim Leunig for setting it going.
I do not think that there is scope under any political party for the creation of a new public spending programme. We would have to be very careful. We already support postgraduate education and research through a range of expenditure programmes, not just through HEFCE, although that alone contributes to the cost of supervision to the tune of £200 million. We also support postgraduate work through the research councils, and the proportion of PhD students training in cohorts through centres for doctoral training is increasing. Those centres have been shown to have value for students. They develop people who are internationally competitive and more productive and have a high impact.
Only yesterday, at the university of Reading—again, this is a coincidence—I announced a £67 million new investment in postgraduate training and development in the biosciences. Over the next three years, the doctoral training partnerships that I launched yesterday will support 660 four-year PhD students, as well as 70 other postgraduate studentships from this autumn. Those programmes aim to ensure that postgraduate study and research in the UK continue to have strength and depth.
The coalition recognises the value of the postgraduate experience to both the individual and the economy. We recognise that it is a key part of our universities’ role, and that it has grown more rapidly than the undergraduate experience. It is a source of important revenue, notably external revenue, for our universities. We will collect more data on participation than previously. We are continuing to see what policy options are available if they should be necessary, but we must work within a framework. We do not wish to create a new public expenditure programme when, historically, the mixed economy has worked successfully.
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Stoma Care
Mr Philip Hollobone (in the Chair): Someone has asked me to explain the subject of this debate on sponsored nurses and off-script tendering in stoma care, but I do not know where to start, so thank goodness that the hon. Member for Cardiff North (Jonathan Evans) is here to reveal all and enlighten us.
3.59 pm
Jonathan Evans (Cardiff North) (Con): Thank you, Mr Hollobone, for that generous introduction. It is a privilege to serve under your chairmanship for the first time in my political career, and I hope that I will enlighten you.
Every year, more than 40,000 people in this country are diagnosed with bowel cancer. Bowel cancer is the UK’s second biggest cancer killer, but if found early enough, 90% of patients can be treated successfully. Often, colon or bladder surgery will lead to the fitting of stoma products or bags. Two thirds of such patients are estimated to need stoma care for the rest of their lives. With more advanced screening and the excellent work that is being done to raise awareness, it is expected that those patient numbers will only rise to even higher levels.
Valuable work is being done by many charities in this sector, and I give particular praise to Lynn Faulds Wood for her efforts in highlighting the prevalence of bowel cancer and for campaigning for greater awareness and early intervention. The charity Beating Bowel Cancer has designated this week as “be loud, be clear” week, and the charity is at Westminster today—its members are at the Speaker’s apartments as I speak—raising awareness among our parliamentary colleagues.
We are all in debt to such individuals and organisations for their campaigning work, but I want to make it clear that the focus of this debate is not on the challenges of bowel cancer itself, but on two specific concerns in relation to the current operation of stoma care—the care of those who have had colon or bladder surgery and require the fitting of medical devices, such as stoma bags. My concern relates to the private commercial sponsorship of stoma nurses and the potential impact of major changes that are being discussed between private sector manufacturers and primary care trusts that might eliminate any patient choice in relation to the medical appliances that they receive.
I am grateful to the three major patient groups in this sector—the Colostomy Association, the Urostomy Association and the Ileostomy and Internal Pouch Support Group—all of which have supported me in drawing attention to these issues and provided helpful background information.
Let me set this debate in context. There is almost daily comment about the Government’s proposed reforms of the NHS, and any such debate regularly throws up the charge that change in the NHS inevitably means privatisation of the NHS. Only last week, the House debated those issues, and over the weekend the head of the Royal College of Nursing added his voice, on behalf of the nursing profession, to those who are calling on the Government to abandon their reforms. It has therefore been a major surprise to discover over the past 18 months that the vast majority of NHS nurses who provide
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stoma care through health trusts in the UK actually have their salaries met by private commercial sponsors.
Glyn Davies (Montgomeryshire) (Con): I am one of the 40,000—I contracted bowel cancer in the past and have had a colostomy. I also have a commercially sponsored stoma nurse, who is a guardian angel. We need to realise that a number of stoma nurses are marvellous. My stoma nurse made it clear to me that there were alternative products that I could have used, but it so happens that I accepted one from the same company that was paying for her. It was clear that I could choose any product that I wanted, and I was not put under any pressure.
Jonathan Evans: I respect my hon. Friend’s views on many matters and also have only praise for stoma nurses, but that does not take away many of the concerns in relation to sponsorship. Sponsors have a direct interest in the clinical decisions made by nurses, because they are the manufacturers of the products that are being prescribed under the NHS.
If the Secretary of State for Health had proposed the introduction of such an arrangement—the sponsorship of nurses by commercial organisations—as part of his current reforms, we can imagine the outrage it would have produced. “Newsnight” and the “Today” programme would have relentlessly questioned the Minister. We might even have seen a “Panorama” special on the BBC. The reality is that this extraordinary situation started more than 30 years ago and expanded to its current pre-eminence during the years of the previous Government.
The concept was thought up not by the commercial firms themselves, but by the health care trusts, which first approached the manufacturers to explore the commercial opportunities. The Department of Health does not appear to have played any part in the dialogue, not even in terms of establishing a protocol that could reassure the public that commercial sponsorship does not impact upon clinical judgment, just as my hon. Friend the Member for Montgomeryshire (Glyn Davies) has said that he is satisfied that that was not the case in his experience.
Jim Shannon (Strangford) (DUP): Does the hon. Gentleman think that it would be acceptable if sponsorship were offered to help the patient or the health board itself?
Jonathan Evans: I am not going to propose the end of sponsorship, but we need more robust mechanisms of managing the potential conflicts of interest. I will develop that argument in the limited time available.
The Department of Health appears to take comfort in the professional code of nurses, which states:
“You must ensure that your professional judgement is not influenced by any commercial considerations.”
Surely, we can be sure that that code is being properly observed only if the Department undertakes, at least from time to time, some assessment of the commissioning decisions being made, but it has never done so.
In January 2001, The Guardian drew the practice to wider public attention, reporting that the NHS planned to crack down on these commercial sponsorship deals. The paper claimed that more than half of stoma nurses were funded by commercial deals that were worth—
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remember that this was a decade ago—up to £100,000 a year to each health trust. The RCN claimed that the manufacturers specified that a minimum percentage of patients had to be fitted with the commercial sponsor’s products.
The previous Government’s response to The Guardian’ s revelations was to issue new guidance requiring NHS trusts to review all such arrangements in which suppliers met all or part of the cost of members of staff, discounts on drugs and equipment, or subsidised research and training as a condition of the contract. Nevertheless, Health Ministers maintained that they did not want to prevent collaborative partnerships between the NHS and private contractors—nor do I—but they also said that clinical decisions should always be based on evidence of what was best for the patient. I agree, but how do we know? Again, the Department did not undertake any assessment of its own to reassure itself that that was being done.
By 2003, sufficient concern was being expressed over these commercial deals that the then Government launched the first of what was to be a series of consultations on the arrangements for paying appliance contractors. By 23 January 2006, the Government issued a report on the consultation, noting:
“Specific and frequent mention was made of the issue of sponsored nursing posts in secondary care, with most parties”
“feeling that this practice was inappropriate, and that it should cease.”
The Department of Health’s response to that concern was to ignore it. It maintained its policy of resisting any assessment of impact of commercial sponsorship on commissioning decisions, and that strand of concern was, interestingly, subsequently eliminated from further consultation on these matters by Health Ministers.
In Scotland, the Scottish Executive took a completely different line. The Scottish Government decided that commercial sponsors could no longer directly subsidise specialist nurses in stoma care. The nurses were taken on and paid directly by the NHS. In fact, the British Healthcare Trades Association funded transitional support to the Scottish health boards for two years because of that dramatic financial change. The outcome was also dramatic. Free samples of stoma products were withdrawn from Scottish hospitals by the manufacturers that had always previously provided them, and it is estimated that, over the following five years, the number of specialist stoma nurses in Scotland fell by up to half.
In Scotland, therefore, the policy has been to ban commercial sponsorship—this addresses the concerns expressed by my hon. Friend the Member for Montgomeryshire and the hon. Member for Strangford (Jim Shannon)—with a consequential fall in both the quality and the availability of specialist stoma care to patients. By contrast, the policy of Health Ministers here has been to refuse to undertake any assessment whatsoever of the impact of commercial sponsorship on these arrangements within the rest of the UK.
As I hope I have made clear, I am not arguing for the Government to follow the Scottish policy. Patient groups have made it clear to me—this is endorsed by the words of my hon. Friend the Member for Montgomeryshire—that
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they recognise that the quality and the availability of stoma care in Scotland has fallen markedly. I want to make it clear that I am not questioning in any way the commitment or the concern of stoma nurses. Again, I can say that patient groups who have briefed me for this debate have made it clear that they deeply value the services that are provided by stoma nurses.
Nevertheless, as I indicated to the hon. Member for Strangford, there are real questions about conflict of interest, which successive Governments, sadly, have ignored. Let me draw an analogy with another sector that we debate a lot in the House: the financial services sector. Today, all financial services companies are required to satisfy the regulator that they have robust processes in place that are fully understood by all staff for managing conflicts of interest. Can we imagine a Minister standing at the Dispatch Box talking about concerns with financial services and saying that he is entirely satisfied there is no need for robust conflict of interest processes because he is satisfied that the professional code of those who work in financial services will always require them to act properly? That is a ludicrous proposition. There is a need for the management of conflicts to be subject to a similarly robust process in terms of stoma care.
In March 2011, Health Ministers were asked by parliamentary colleagues some basic questions to glean information on the number of stoma care nursing posts sponsored in the UK. No helpful response was provided, and the Department had no statistics to share with colleagues. So, for this debate, I have had to turn to the British Healthcare Trades Association for the figures. According to the association, stoma care manufacturers sponsor more than 200 of the 337 departments in England at a cost of £10 million a year. However, some of those manufacturers share the same concerns about commercial sponsorship that I am outlining. They only maintain their sponsorship for fear that other suppliers will otherwise corner the market. Those manufacturers have even expressed their concern to me that the current commercial arrangements might fall foul of the new Bribery Act 2010. Have Ministers undertaken any assessment of that?
On 15 October, I wrote to the Minister and received a response from him on 9 November confirming again that the Department had not made any assessment of the commissioning decisions of PCT employees sponsored by private enterprises. Again, he highlighted the fact that Ministers relied on the code of professional conduct, but he said in his letter that he was satisfied that that was a concern and that he had asked his officials to make further studies into the activity. I hope that the Minister can tell us the outcome of those studies.
The issues that I have raised relate to the maintenance of patient choice in the appliances that are prescribed for stoma care, and the concerns are shared by patients, charities and several manufacturers. Such concerns have been shown to be very well-founded by reports of recent discussions between major manufacturers of stoma care products and PCTs about what has come to be called off-script tendering, which you mentioned in the second part of your comment, Mr Hollobone. What is being proposed is that preferred or single supplier agreements are made between commissioners and manufacturers, in which the commissioning body would get a bulk discount for requiring all patients to take one manufacturer’s products. The arrangements would then
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bypass the operation of the drug tariff for the provision of such products, which is regularly reviewed on an annual basis by the Department.
Currently, a GP or suitably qualified nurse issues a patient with a prescription—an FP10—and the patient is free to take that to the manufacturer of their choice to have the product dispensed by a pharmacy contractor or an appliance contractor. The drug tariff industry forum considers the advantages of that system to be patient choice, cost and value for money, quality of products and a centralised system working on a local basis. The British Healthcare Trades Association has obtained legal advice that suggests the off-script arrangements being discussed by big manufacturers might be beyond the powers of health trusts. However, the question arises whether such arrangements could be taken forward as part of the Government’s health reform.
Those questions were raised by the Urology Trade Association, which is a body representing 95% of manufacturers, and by the Urology User Group Coalition on behalf of patients in evidence given last year to the Select Committee on Health. Unfortunately, follow-up questions by parliamentary colleagues confirmed the long-standing Department of Health response that no assessment of those issues had been undertaken either.
The thousands of patients who suffer bowel or bladder cancer and require ongoing stoma care deserve better. They should be assured that the Government will defend patient choice and maintain robust processes for managing real or perceived conflicts of interest in the commissioning of services. The Government should ensure the continued provision of specialist nursing advice and support and reassure us that it is in no way influenced by financial or commercial considerations.
Mr Philip Hollobone (in the Chair): All has become clear. What are the Government going to do about it?
4.16 pm
The Minister of State, Department of Health (Paul Burstow): It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Cardiff North (Jonathan Evans) on securing the debate and on setting out so clearly his concerns. I want to spend the rest of the debate trying to address the points he has made.
I certainly echo my hon. Friend’s comments about the excellent work that Lynn Faulds Wood has been doing over the years to highlight and raise awareness of bowel cancer, not least through her personal experience. This month, the first ever Government funded “Signs and Symptoms” campaign for bowel cancer has been launched and the pilot of the roll-out of flexi-sigmoidoscopy has also begun. The Government can therefore rightly claim to be taking these matters very seriously indeed and to want to see significant improvements in survival rates from bowel cancer.
My hon. Friend also talked about the fact that—this might come as a surprise to some people who listen to this debate or read it afterwards—private involvement in the NHS is not some creation that has occurred in the past 18 months. The interrelationships between the NHS and the private sector have been there right since its foundation and were a growing feature of it during the life of the previous Administration.
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Glyn Davies: Will the Minister give way?
Paul Burstow: Let me develop my point a tad further and then I will be more than happy to give way to my hon. Friend, although I hope to ensure that I conclude answering the questions of my hon. Friend the Member for Cardiff North.
My hon. Friend is absolutely right. As part of the reforms that the Government are introducing, we need to ensure that we close the loopholes that the previous Government left gaping in their legislation. We also need to ensure that, as a Government, we have transparency and clear rules under which people operate, so that we see competition as a servant of the patient’s interest and not as an end in itself. That is absolutely integral to those reforms.
Glyn Davies: I simply wish to say how shocked I was to discover the arrangements nearly 10 years ago, when I was given a colostomy nurse of my own. I was making the very point that my hon. Friend the Member for Cardiff North (Jonathan Evans) made—that by pushing the matter, I was threatening the future of the service in that particular hospital. If we try to address what is a legitimate concern, we must have a guarantee that there will be funding, so that we do not have a repetition of the Scottish experience.
Paul Burstow: That is a very succinct summary of the case that our hon. Friend has made in his Adjournment debate today.
Let me say something about prescribing arrangements because it may help if I set out the arrangements for these products or appliances, as they are usually called, in terms of the NHS in England. Prescribers operating under the NHS primary medical care contracts are able to prescribe as appropriate for their patients those stoma and neurology appliances listed in part IX of the drug tariff. There should be no barriers to prescribing a stoma product on the NHS, as long as it is listed in part IX of the drug tariff. NHS dispensing contractors, pharmacies, dispensing appliance contractors and dispensing doctors are able to dispense prescriptions of these products. Primary care trusts are responsible for ensuring that general practitioners are complying with their primary medical care contractual arrangements and that dispensers are complying with their contractual frameworks. Within that, there is a set of checks already in place to deal with the prescribing practices of GPs.
Jonathan Evans: In that context, will the Minister say that he deprecates off-script tendering arrangements, in which major manufacturers—in fact, multinationals—seek an arrangement with PCTs making them the sole supplier?
Paul Burstow: I will come to that part of my hon. Friend’s speech a little later, if he will forgive me.
New services associated with dispensing such appliances in primary care were introduced in April 2010—I stress that date—including emergency supply of appliances at the request of the prescriber, repeat dispensing service and, where pharmacies and appliance contractors choose, provision of appliance use, reviews and customisation of stoma appliances. Customisation—personalisation and greater choice—is an essential part of what we need throughout health care delivery.
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The key point in my hon. Friend’s debate is sponsored nurses, the role that they play and possible conflicts of interest, highlighted by all hon. Members who contributed. There is concern in some parts of the industry, including companies in my hon. Friend’s constituency, which led him to write to the Minister of State, Department of Health, my right hon. Friend the Member for Chelmsford (Mr Burns).
Jonathan Evans: And patient groups.
Paul Burstow: My hon. Friend rightly mentioned patient groups and I pay tribute to their work.
Stoma specialists play a vital role, as we have heard, supporting patients adapting to a life with a stoma, which often involves a number of physical and psychological changes. Stoma care patients face a number of issues, many of which are still considered taboo and can lead to embarrassment and distress. Services provided by stoma nurses are therefore much valued, as we have heard today, by those receiving them.
I am aware that the employment of some specialist nurses is funded by some manufacturers of stoma products to support patients in hospital and in their own homes. That can also lead to concerns, which have been so well set out today, about potential conflicts of interest. Although I recognise the potential for conflicts of interest, my hon. Friend will forgive me if I repeat the code of professional conduct that he mentioned, because it is relevant to this point, and I will mention why it remains relevant.
The code states that nurses must ensure that their professional judgment is not influenced by any commercial considerations. Any concerns about professional conduct are of course within our framework of regulation of professional groups, which is a matter for the Nursing and Midwifery Council. As a result of my hon. Friend securing this debate, I have made further inquiries of the NMC and the Royal College of Nursing, asking whether they are aware of any concerns being raised. The answer was no. I suspect my hon. Friend would say that that is because they are not reviewing and monitoring this matter either.
I will follow up on the report published some years ago by the RCN, which my hon. Friend mentioned, because although it is a little bit out of date it clearly speaks to some of the issues that he talked about. I will go further than that, because officials have had discussions of the sort mentioned by my right hon. Friend, in his response to my hon. Friend’s letter of November 2010, with suppliers and trade associations on sponsorship. I understand that one prominent trade association, the British Healthcare Trades Association, is discussing the industry’s views with its members. We have yet to receive the final feedback on those issues from the industry. I hope that, through this debate, we can ensure that we get that response, because the Department will certainly want to see it.
The BHTA code of practice—another code of practice—for health care and assistive technology products and services states:
“No pressure must be exerted on the sponsored individual to favour the sponsoring company’s products over any other. At all times the products supplied should be that which the professional considers is best suited to the client’s needs.”
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Clearly, the trade bodies themselves recognise that potential risk and have identified it in their own codes of conduct with regard to their members.
On localised formularies and tendering, I am sure my hon. Friend is aware of the pressures facing NHS organisations as a result of our ageing population, and the increased diagnosis and treatment of cancers that he mentioned. On top of that, the NHS obviously has to achieve the Nicholson challenge of £20 billion of efficiency savings by 2015 through a focus on quality, innovation, productivity and prevention. Every saving made from that is being reinvested in patient care to support front-line staff. As we move forward, it is very important that NHS procurement is undertaken at national, regional and local level via the NHS supply chain, regional collaborative procurement organisations and individual trusts. Some NHS organisations may also use formularies to form the basis of a recommended list of products for prescribers, which is intended to provide a sufficient range of choice to meet the clinical needs of most patients. They may also run tenders to acquire local supply of these products. Local formularies or tenders are generally prepared by multi-disciplinary teams and reflect, as far as possible, best clinical practice.
I understand the concern that the hon. Gentleman has about choice and I appreciate the importance that stoma patients often place on continuing to receive a product in which they have confidence. We want to ensure that patients are at the heart of the clinical decisions that are being made about them, which is one of the reasons that we want to see a wide range of products available through the drug tariff to meet different needs of individual patients. However, and it is important that I stress this, any local arrangements of the sort that the hon. Gentleman has described do not override the clinical judgment of the GP who is still free to prescribe products listed in part IX of the drug tariff to meet specific needs of patients. Any decisions to undertake local procurement activity rest with local NHS organisations—primary care trusts now, clinical commissioning groups in the future—and we expect them to act in accordance with the principles when they are exploring the opportunities for tendering.
When it comes to patient choice, we want to go further than that. As part of our commitment to this policy of any qualified provider, we identified continence services as a good candidate for the approach. We felt that the competition should be on quality and not on price.
Jonathan Evans: Before the Minister concludes his remarks, let me again raise one question in relation to sponsored nurses. He referred to the code of professional conduct, which places the onus on the nurse. Nurses have to exercise independence of thought while knowing that their salary is being met by a commercial sponsor. Is it not the case that the position of those nurses would be enhanced if the Government were to ensure that there was a robust arrangement for the management of conflicts of interest, which manufacturers knew existed, rather than leaving all the onus on the nurses themselves? That is placing too much on them and not ensuring that the public are satisfied that we have the same processes for requiring management of conflicts that we require in other public policy areas.
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Paul Burstow: The Government recognise that sponsored nurses provide a valued service. We have heard that very well expressed in this debate. There is a potential for conflict of interests. There are codes that provide a framework in which those decisions should be made. My hon. Friend has presented very clearly his concern on behalf of a range of patient groups that that is not working as well as it needs to. We have already indicated our desire to engage with the trade associations and we need to carry that through to its conclusions. We are looking forward to the response of the trade associations. I would certainly be happy to give further thought to the points that my hon. Friend has made during this debate. Our reforms are very much about ensuring that conflicts of interest are identified, managed and transparent. I hope that, as a result of this debate, we have brought this issue to this Chamber in a way that is very helpful so that we can move it forward after today.
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Micro-Businesses
Mr Philip Hollobone (in the Chair): We cannot mention the word micro-business in this House without thinking of the hon. Member for Newton Abbot (Anne Marie Morris). We now have a very important micro-debate on micro-businesses.
4.29 pm
Anne Marie Morris (Newton Abbot) (Con): I look forward to serving under your chairmanship, Mr Hollobone, and I am delighted to see the Minister in his place. As you rightly say, micro-business is absolutely at the heart of what I have been doing in my time here in the House. Perhaps I should start by saying that there is no division or debate about the importance of micro-businesses. I am absolutely clear that the EU and the UK recognise their importance and the role that these very small businesses play in growth and community stability. The challenge for us today is this: what can we do to ensure that Government policy is best shaped to help that growth? I will consider that in relation to four different areas.
First, we need to consider how we might clarify what we mean by a micro-business. Secondly, we need to examine regulation. We need to consider what the Government could do to reduce the burden of regulation and to reduce not just the amount of taxation—that is a difficult issue—but the bureaucracy that goes with it. Thirdly, I should like to consider how we might help micro-businesses to get access to finance and to consider alternative sources. Finally, I should like to consider the culture change that we need to make to help this country to grow micro-businesses and to help young people to see them as a career route to which they might want to aspire.
In the UK, we do not have a definition of a micro-business. The EU has definitions; they are not compulsory but voluntary ones. It defines small and medium-sized enterprises, micro-enterprises and micro-entities. Perhaps when the Minister is considering any changes at EU level, he will suggest that the last two names are too similar. Let me explain the difference between a micro-enterprise and a micro-entity. A micro-enterprise is a business with fewer than 10 employees and a turnover of less than €2 million. By contrast, a micro-entity still has a cut-off of 10 employees, but the turnover cut-off is €700,000. There is an additional option test of assets worth up to €350,000. Those are ceilings to the definition, and the criteria—whether we consider the number of employees, turnover or assets—are optional, so it is a very flexible definition.
As a matter of practice, the UK Government and particularly the Department for Business, Innovation and Skills have accepted the ceiling in most cases, but it is interesting to note that the Department for Work and Pensions has recognised that there is a significant difference between those businesses with fewer than five employees and those with more than five employees. It has recognised that a business with fewer than five employees does not have the same managerial support and expertise. Therefore, the burden of regulation is that much greater. In secondary legislation under the workplace pensions reform, the DWP said that micro-businesses should mean businesses with fewer than five employees. That is particularly
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relevant now, because the EU is considering reviewing the definitions again, while it reviews the Small Business Act.
The Minister will know that I have argued for some time that the definition of fewer than 10 employees encompasses too large a group of businesses to enable the Government to focus their policy, not that I would choose a smaller definition to exclude businesses from relief. On the contrary, unless the definition is realistic and properly applies to a recognisable group, there will be fewer exemptions from which small businesses will benefit.
My real concern, however, is that when the European Union looks again at the definition, it may choose to remove the flexibility and instead have a fixed definition, with a fixed number of employees and turnover. That will significantly reduce the UK’s ability when it wishes to use those definitions, as indeed it may be required to under EU legislation. So I think that it is for the Minister and the Government to decide now what they think the right definition is, not only so that they can lobby the Small Business Act review group, but for their own purposes, so that should they want to use a small definition for a tax scheme or in relation to pensions, they still have the flexibility to do so.
Both the EU and the UK are committed to reducing the burden of regulation on these very smallest of businesses. Indeed, for new legislation, the EU has a lovely mantra: “Think Small First”. That is spot on. Going forward, it has concluded that any new legislation should, de facto, exclude micro-entities—that is the smallest size that it has come up with—unless there is a good reason for including them. That sounds like a good starting point. It also says that for the next size up—micro-enterprises—any new legislation should have a light-touch approach.
Andrea Leadsom (South Northamptonshire) (Con): My hon. Friend has done extraordinarily well to obtain this debate. Micro-businesses are such an important part of our economic growth going forward. Does she agree that as more than 90% of very small businesses are UK-only, it is astonishing that the EU is telling them what to do at all?
Anne Marie Morris: My hon. Friend makes a very good point. Such businesses need the freedom and flexibility to do what entrepreneurs do extremely well. Her intervention is absolutely en pointe.
Turning to the UK, I am pleased that the Government have introduced a three-year exemption on new regulation, and they are to be commended for that. The real challenge for the EU and the Government is what do we do about the pages and pages of existing regulation. The Government have introduced the red tape challenge, and I commend them for that. They have already looked at 12 sectors, and there are five more to come. I believe that they will report in three months or so, which will be valuable. Will the Minister adopt the EU mantra, “Think Small First” when he considers what can be got rid of? The EU has also gone through a simplification procedure on a number of occasions, but at the end of the day, we need to move faster and further.
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The Minister has already looked at one area that needs further review from the perspective of micro-businesses: employment law. The British Chambers of Commerce has raised the issue with Ministers and in its various reports, but recruitment and dismissal procedures are onerous for very small businesses. No one wants to take away an employee’s rights, but the overall protocols and processes are complex. The second issue that small businesses have raised with me is health and safety. Lord Young has done some valuable work, and I look forward to it being implemented so that low-risk businesses can be excluded from much of the burdensome regulation and a more pragmatic approach is taken to those in higher-risk categories.
Still under the heading of regulation, I want to raise some issues about taxation. Paying less tax is clearly something that we would all be happy about, but it is the burden of the process that causes real pain for very small businesses. First up is fuel duty. I would, wouldn’t I?—I have been approached by a number of small businesses—plead with the Minister not to implement the fuel duty rise in August and to look again at a price stabilisation mechanism, because that would make the cost of petrol affordable and predictable for the smallest businesses. Both things are equally important.
Turning to national insurance, the Government have a good record on the rate and the holiday that they introduced for new businesses, so that they would have relief from employer national insurance for their first 10 employees. I suggest that we could allow mini-micro businesses—we have so many definitions on the table at the moment, but those with fewer than five employees—who take on up to four employees, so those with a total work force of four, not to pay employer’s national insurance for the first year, although employee contributions would stay in place. That would enable them to assist with the cost of the training and general upskilling of those new employees.
The group employing one to four employees represents 7% by turnover of the private sector, so it is not a small group for which I want to the Government to provide support. They are already considering the challenge of aligning PAYE with the national insurance regime, and I look forward to the results. May I encourage the Minister and his Cabinet colleagues in the Treasury to look at simplifying the classes, because there are so many that the average bookkeeper is totally confused?
I turn now to business rates. Again to the Government’s credit, they extended the small business rate relief and said that the scheme they were introducing would apply for a further year. I suggest to the Minister that that becomes a permanent feature, or lasts at least until the end of this Parliament. It is valued by small businesses, and that really would make a huge difference. However, business rates give rise to process issues, the first of which concerns valuation. Why do so many of the large business players, such as Tesco and Sainsbury’s, seem to be paying less than the smaller players? There is something wrong with the way in which the valuation criteria work, and they might sensibly be reviewed. I am often approached by small businesses that believe that they are suffering hardship and are frustrated by the appeals procedure. It is so bureaucratic and takes so long from start to finish that generally they are out of business by the time that they have finished the process, which simply cannot be what the Government intend.
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My final point on business rates concerns empty properties. I accept that an incentive is needed to bring such properties back into use, but allowing six months, or three months for retail, to do so is not long enough, and the penalty for leaving them empty longer than that is disproportionate.
I turn now to VAT—a tax that is necessary and without which we would not be able to take this country back into the black. None the less, it has some wrinkles that the Minister and his Treasury colleagues might helpfully look at. We have on a number of occasions talked about the possibility of reducing rates for restoration and repair of houses, bringing the rate down to 5% rather than the full 20%. It seems to me that, given the pressure on the Government to increase the available housing stock, now is the time to look at that again.
Colleagues have considered a reduced rate of 5% for the accommodation charge for bed and breakfast and in hotels. Given that this is our Olympic year, why do we not set the rate at 5%, just for this one-off tax year, and let it be part of our marketing campaign to get people to visit the UK and enjoy the Olympics?
Perhaps one of the biggest challenges is the VAT cliff: once a business is earning £73,000, it has to register for VAT, and if it provides services to individual customers who are not VAT registered, the increase in profitability that it has suddenly to achieve is significant. I suggest that we look at introducing a ratchet mechanism or a VAT rebate, which will ease the situation so that the full force of VAT does not affect the business in the first year.
Jeremy Lefroy (Stafford) (Con): Does my hon. Friend accept that in some cases the VAT threshold—the cliff edge—acts as a disincentive to growth?
Anne Marie Morris: My hon. Friend makes my point extraordinarily well. It prevents growth, and if we can find a way of easing the burden, that would be well worth while.
My final point on VAT concerns the enforcement challenge. Only last night a small business came to me saying that it was one week late with its VAT and had been asked to pay £955 as a penalty on an original bill of £6,370. Clearly, we want people to pay, but that business was only a week late and the penalty seems disproportionate.
The third issue is access to finance. The challenge is how to make better use of what we have and how to find new sources and new organisations to provide money to very small businesses. Under the existing arrangements, the problem for the banks is that they are in a cleft stick. Given the capital adequacy requirements, if they offer a loan to what is inevitably a risky start-up business, they have to do so at very high rates, so the loan might not be accepted. Can we consider capital adequacy adjustment for the banks—just for loans to micro-businesses, not for the rest? The Government schemes to provide equity, debt and so on are aimed at the whole SME community, ranging from those with no employees to those with 250. Banks are in business to make money and are targeting most of their help at the larger businesses with good, clear business plans and a track record. We need some ring-fenced schemes specifically for micros. The Minister might like to consider that with his Treasury colleagues when we get to credit easing.
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The Government are consulting on new sources of finance until the end of this week. The Federation of Small Businesses has looked at other sources of funding and will share its findings with the Government. I recommend that the Government look at what is going on in central and eastern Europe, in Asia and in south America—countries that have more experience than we do of different funding mechanisms.
I have an additional suggestion. One of the challenges faced by most small businesses is that, when they start up, they cannot separate the risk and the liability of the business from personal assets and find themselves having to mortgage their house and give personal guarantees. Can we not consider extending the limited liability partnership?
4.45 pm
Sitting suspended for a Division in the House.
4.58 pm
Mr Philip Hollobone (in the Chair): It is likely that we will be called to another vote imminently, but I shall call the hon. Member for Newton Abbot (Anne Marie Morris), who might want to use these next two or three minutes to wind up her remarks.
Anne Marie Morris: I shall repeat my last point, because it might have been lost. I should like the Minister to consider using the limited liability partnerships legislation to create a new limited liability sole trader equivalent, which would enable the enterprises to have the limited liability benefit without the corporate registration requirement.
In conclusion, I believe that the Minister has enough to think about, and I should like him to go away and indeed think about the matter, and then come back and tell me what might and might not be possible. I recognise that not only does the detail need to be addressed, but that we have the bigger challenge of changing the culture through our education system—primary, secondary and tertiary—our local businesses, which might support these little baby businesses, local government, which can provide incubators and start-up units, and our local enterprise partnerships, which can also provide support and guidance. I therefore look forward, with pleasure, to the Minister’s response.
Mr Philip Hollobone (in the Chair): The Minister with responsibility for small businesses, but with a big heart: Mark Prisk.
4.59 pm
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk): You are very kind, Mr Hollobone. Within the 10 minutes that I gather I have, I should like to try to respond to the smorgasbord of ideas suggested by my hon. Friend the Member for Newton Abbot (Anne Marie Morris). Although this is indeed a debate about micro-businesses, it is nevertheless significant—colleagues are still streaming back from the vote in the main Chamber.
This country has a strong tradition of entrepreneurship, and we as a Government really do have an ambition to ensure that we retain, and indeed strengthen, our position as one of the best places in which to start and grow
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businesses, throughout their life cycle—start-ups, micro-businesses, small and medium-sized enterprises, and so on. About 4.3 million micro-businesses exist in the UK, and yes, they represent about 95% of all enterprises in the country. In that cohort lies a huge variety of enterprise, everything from the university high-tech business—the spin-off—right the way through to the traditional family concern. Therefore, the Government need to be clear and effective in focusing on the right long-term framework for all types of enterprise, regardless of size and throughout their development. That will relate, in a moment, to the question of definition.
My hon. Friend has rightly set out her thoughts about how we can best help micro-enterprises, and I want to put very firmly on the record, as you have done Mr Hollobone, that with her enthusiasm and knowledge she is one of the best champions in this field. We could do with more champions like her.
I shall address the question of definition, and then come on to some of the other issues, at reasonable speed I am afraid, given the time before me. The issue that has been highlighted is: how do we define micro-enterprises? In some cases, people have argued that we might look at that group of up to and no more than four employees—
Mr Philip Hollobone (in the Chair): Order. I am sorry to interrupt the Minister, but what we feared would happen has happened: there is another Division in the House. I encourage Members to come back as quickly as possible. I should like to restart the debate at 16 minutes past 5, at the latest.
5.1 pm
Sitting suspended for a Division in the House.
5.9 pm
Mr Philip Hollobone (in the Chair): I thank hon. Members for returning so quickly. We have until 5.21 pm.
Mr Prisk: I shall recap, although Hansard will seamlessly slide through the process, unlike the rest of us.
I was trying to respond to my hon. Friend’s suggestion that we need to revisit the definition of a micro-business, not least to make the policy more effective. This has largely revolved—in our previous discussions, including with other hon. Members—around whether we need to narrow that definition from 10 employees to fewer than five to target better the policies, as my hon. Friend highlighted.
I understand the point. I share the view that when we set policy, we need to ensure that it really addresses those people we are trying to help. It is also true that the Treasury will rightly want to ensure that when we are using taxpayers’ money, we direct financial support accurately at what they like to call leakage, which is a strange phrase but one that is understood in terms of the money being spent not necessarily reaching the people one is trying to support.
The definitions that we use are quite well established across Government and within the Office for National Statistics. As my hon. Friend also rightly said, those are clearly understood and are adopted on the basis of policy development in the EU as well. Without securing
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a change in definition across Whitehall and with the ONS and the EU, there is danger of confusion between different definitions when we develop policy.
Let me give some practical examples. At the moment, we are in the middle of discussions with EU partners about exemptions for micro-businesses from future regulations, to which my hon. Friend alluded. These are important. If we were to engage in a process, which would probably take a year or so to establish, according to which we might wish to define micro-businesses in a way that is different from the EU as a whole, clearly there would be a problem. It would be similar, in a sense, to our discussions with our EU partners over the next round of structural funds, which would start in 2014.
It is also true that we need to be careful about domestic policy and how that is applied. For example, my hon. Friend mentioned the micro-business moratorium, the moratorium from regulation, giving micro-businesses relief from the burden of additional changes in rules and red tape. We have secured significant reductions: the two that immediately leap to mind are, first, the postponement of the change in rules banning the display of tobacco products in shops, which is now only applicable to supermarkets, giving small businesses three years to consider how their business might be developed and, secondly, giving them the opportunity not to face those costs up front.
A similar case with a greater financial benefit to the smaller firms is the exemption that we secured, mentioned in part by my hon. Friend, on auto-enrolment for pensions. Again, that is a big saving for small businesses. Were we now to change the definition, there is a danger that there would be an immediate impact on firms employing between five and nine employees that are currently enjoying micro-business status.
I should like to highlight that, although there are benefits from considering whether the definition is accurate, our concern would be that there are obviously adverse consequences as well.
Anne Marie Morris: Does the Minister agree that it is crucial that we engage with the debate at European level about what those definitions should be, so that they work not just for other European member states, but for ourselves? Although I accept what he says, it is perfectly possible, without conflict, to have a UK definition that works within this ceiling umbrella, which the EU has created.
Mr Prisk: I think that that is true. My only concern would be that, as the policy is applied, if a business found itself defined as a micro-business in terms of one set of policies but not another, there is a danger of confusion in the very group that we are trying to help. I understand my hon. Friend’s point. We are not oblivious to the fact that, often, government of all forms probably thinks of small businesses as businesses employing 100 people, let alone ones employing three, four or five people, as we are discussing.
I shall deal with the definition, then I will get on to the practicalities in respect of what we are doing to help this important group. I am not seeking to dismiss the issue; I am trying to explain why the Government would be cautious about embarking on this path. I am happy—I have said it to my hon. Friend before, but am happy to
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put it on the record—to engage with her and the all-party parliamentary group to look precisely at how the definitions work, where the pinch points lie and how Government policy can best help this group.
My hon. Friend mentioned numerous important issues, and I will canter through them briefly in the few minutes that I have. The first is tax. I am grateful for her support for the changes that we have made, for example to small business rate relief. We have extended that holiday for smaller businesses for a further six months from October this year.
I understand the point about appeals. It is always a little challenging for a sole trader to take on the process. I trust and will ensure that my ministerial colleagues in the Department for Communities and Local Government consider that, and it is certainly high on our agenda.
Tax enforcement is always a sensitive issue. Clearly, it is principally a matter for my colleagues in the Treasury, but as the Minister with the privilege of responsibility for small businesses, I can say that we occasionally have a direct dialogue—he said carefully—with my Treasury colleagues and the tax and revenue authorities. They need to understand that ultimately, all of us, as public servants, are paid for by those same businesses, so the manner of enforcement is important. A careful distinction must be made between the real rogue and the person who has made the odd mistake on their VAT return late on a Sunday afternoon at the end of a working week. It is an important one.
I am also grateful to my hon. Friend for supporting what we have achieved on national insurance. She raised numerous other issues about tax, including fuel duty and the VAT threshold. Ironically, the VAT threshold—the cliff edge, as I think our hon. Friend the Member for Stafford (Jeremy Lefroy) called it—is, in a way, a cutback to the argument about how to define micros. We must be careful, but I welcome the points raised by my hon. Friend the Member for Newton Abbot. As I would like to remain the Minister with responsibility for business and enterprise, I will not pre-empt what the Chancellor might or might not say in his Budget in a few weeks’ time. However, those are good representations, and I am sure that the Treasury is listening.
Access to finance is an important issue. We have tried to think about micros. The enterprise finance guarantee was put in place specifically for those businesses without security to offer when seeking a loan, and it is very important for a micro-firm. Under the Merlin agreement, lending to small businesses increased in the past year over the previous year. Perhaps it might not achieve the full 15%, but we have yet to see the final figures.
Anne Marie Morris: Has my hon. Friend’s Department asked the banks to break down what sizes of business are benefiting from the schemes, so that he can see how many sole traders and mini-micros with fewer than five employees have benefited? That would be informative.
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Mr Prisk: The Small Business Economic Forum regularly meets the small business organisations and the banks. We will ask it for that kind of breakdown, so that we can get a better understanding of the scale of micro, small and medium. It is important.
I agree with my hon. Friend that some of those proposals do not necessarily reach the smallest businesses. That is why we have supported the community development finance institutions. Working through the regional growth fund, we have put together a package in response to an application, so that some £30 million of taxpayers’ money can unlock something like £60 million of lending. The money involved is very often the several thousands of pounds that a micro-business needs to make the difference between a good idea that becomes a profitable venture, and a good idea that remains just a good idea. It is an important area and very often it is an area where, frankly, retail banking struggles to justify the work involved to deal with such loans, and CDFIs are well placed to fill that gap.
In finance terms, the business angels are a crucial part of this equation. When we think of micros, we tend to focus simply on the type of lending—whether that is loans, credit cards or whatever—that the smallest of enterprises engage in. But I am a strong believer that, alongside the larger venture capital funds, we need to ensure that business angels are encouraged. That is why we have put together a co-investment fund of £50 million, to start to grow that market substantially.
Anne Marie Morris: That is a great idea, Minister; my challenge is to get that communicated. Can we ensure that the local enterprise partnerships have a role in that communication, because the money is there but nobody knows about it? The new website—the “Business In You” website—has 851 of these schemes listed, and it is fantastic, but it is not something that is easy for someone to work their way around.
Mark Pritchard: Indeed. It is not too difficult, on the basis that I can work my way around it, so it is fair to say that it is not too challenging. Nevertheless, I understand the point that my hon. Friend is making and, yes, communication is important. That is the purpose of the campaign that has been announced by the Prime Minister.
To conclude, we very much welcome this debate. It has been a useful opportunity—albeit one that has been slightly interrupted—to address the questions of what we mean by micros and how can we best help them. As a Government, we are determined to provide the support that micros need and I am confident that in the years ahead the UK will remain one of the best places in which to start, invest and grow a business.