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House of Commons

Monday 16 April 2012

The House met at half-past Two o’clock


[Mr Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—


1. Mark Pawsey (Rugby) (Con): What steps he is taking to speed up the adoption system. [102818]

The Parliamentary Under-Secretary of State for Education (Tim Loughton): Earlier this year, the Government published an adoption action plan aimed at reducing delays in adoption by legislating to prevent local authorities from spending too long seeking a perfect adoptive match, by accelerating the assessment process for prospective adopters and by making it easier for children to be fostered by their likely eventual adopters in certain circumstances. We will also introduce an adoption scorecard to focus attention on the issues of timeliness linked to a tougher intervention regime.

Mark Pawsey: I compliment my hon. Friend on his Department’s excellent work in bringing a new focus to the adoption process in the interests of both children and adoptive parents. Often in the past, however, a major obstacle has been the lack of advice and information for families hoping to adopt. Will he update the House on his plans to introduce a national gateway for adoption?

Tim Loughton: I am grateful for my hon. Friend’s comments. He has taken a great interest in this subject and brought constituents to meet me about it. He is right that part of the process is to ensure that the public are better informed about the virtues of becoming a foster parent or adoptive parent. For that reason, earlier this year we set up a website, “Give a Child a Home”, on which there is all sorts of information. We will add to and improve that to encourage more people to come forward as prospective adopters. It is a big ask but a wonderfully fulfilling thing to do.

Ann Coffey (Stockport) (Lab): Children placed for adoption often have very complex needs, and the love and care that adoptive parents offer is sometimes not enough. What more can be done to support adopting parents to ensure successful adoption outcomes?

Tim Loughton: The hon. Lady is right; she also has great personal experience in this area. It is important that we ensure that more children for whom adoption is a likely destination are considered for it. Equally, though, we have to ensure that parents who come forward as prospective adopters are given proper training and support before, during and after the adoption process. I am particularly keen to encourage adoption agencies to work on adoption support services—we are looking at social impact bonds with a specific focus on that—to ensure that that help is there and that the adoption is permanent.

Mr Philip Hollobone (Kettering) (Con): Adoption services in Northamptonshire were recently branded by Ofsted as inadequate and failing to meet national minimum standards. With only 68% of children being placed within 12 months, Northamptonshire is 110th out of 142 local authorities. Will my hon. Friend ensure that

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local authorities not doing the job properly are pursued relentlessly until their systems are up to the appropriate national standards?

Tim Loughton: The simple answer is absolutely yes. It is frustrating that despite examples of good and best practice in local authorities up and down the country in a matter where speed is of the essence and where people are focused entirely on the best outcomes for children, there are other local authorities—I fear that my hon. Friend’s is among them—where that is not the case. The adoption scorecard will ensure that local authorities that are not pulling their weight or doing the best by children are named and shamed, and ensure that they get their act together and up their game, because it should be in the best interests of the children.

Catherine McKinnell (Newcastle upon Tyne North) (Lab): Ofsted’s latest report also stated that there was little evidence that delays were caused by social workers seeking the perfect match, which the Government have so far focused on. Rather, Ofsted mentioned parties to court proceedings demanding repeat assessments because they lacked confidence in social workers’ reports. What are the Government doing to tackle the issues that are really slowing up adoptions, rather than simply chasing easy headlines?

Tim Loughton: Given how much work we did before the general election, and how much we have done since, on the whole gamut of adoption, the hon. Lady will know that chasing easy headlines is the least of my concerns. I am concerned about getting a better deal for children who find themselves in the care system through no fault of their own. That means dealing with children’s services departments that are not treating adoption as a priority, dealing with the family justice system, which is too slow and tardy, and ensuring that every step of the way we are focused on getting the best outcomes for children who find themselves in the care system. That is not an easy headline; it is something that the Government place a great priority on.


2. Dame Joan Ruddock (Lewisham, Deptford) (Lab): What steps his Department is taking to reduce the number of young people not in education, employment or training. [102819]

5. Paul Blomfield (Sheffield Central) (Lab): What steps his Department is taking to reduce the number of young people not in education, employment or training. [102821]

9. Alex Cunningham (Stockton North) (Lab): What steps his Department is taking to reduce the number of young people not in education, employment or training. [102825]

13. Lilian Greenwood (Nottingham South) (Lab): What steps his Department is taking to reduce the number of young people not in education, employment or training. [102829]

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The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): We are making a record investment of more than £7 billion in 2012-13 to fund a place in education or training for every 16 to 18-year-old in England who wants one. In addition, we are investing £126 million to provide a new programme of intensive support for the most vulnerable 16 and 17-year-old NEETs.

Dame Joan Ruddock: Will the Minister congratulate Lewisham council on its highly successful NEETs programme and, in particular, the 150 successful apprenticeships, which stand in stark contrast to those exposed by the “Panorama” programme in “The Great Apprentice Scandal”? What will he do to root out the very poor providers that still exist in this country?

Mr Hayes: The right hon. Lady will know that this Government have done more on apprenticeship standards than any previous Government, including the one she supported. Minimum lengths for apprenticeships; statutory national standards; every level 2 apprenticeship moving to GCSE English and maths equivalent; tighter frameworks—these are things that the last Government could have done, but did not. Record growth, record standards—she should be proud of that, as we are.

Paul Blomfield: As the latest apprenticeship figures show, the Government are failing to make progress among 16 to 18-year-olds. Will the Minister therefore join me in congratulating Sheffield city council on its scheme for young people who are not in education, employment or training, which has created 100 new apprenticeships this year and promises 100 more next year, and will he urge other councils to follow that example?

Mr Hayes: The hon. Gentleman is a great authority on these matters, and he is wise enough to know that he needs to get his figures right if he is to quote them in the House. Although they are provisional, the latest data, for the first two quarters, show that apprenticeships for 16 to 18-year-olds continue to rise. That is not a surprise, given that over the last two years those young apprenticeships have risen by over 30%. Doing the best by young people—that characterises all that this Government do.

Alex Cunningham: At a time when nearly 12% of young people in the Stockton borough and 1 million nationally are not in education, employment or training, surely removing the requirement for schools to provide vital work experience for their pupils is a regressive step. Will the Government now do the right thing and reverse this bizarre policy?

Mr Hayes: I agree with the hon. Gentleman: it is right that we have work experience as one of the tools at our disposal, and I congratulate Stockton North, where the number of apprenticeships has risen by 76%. I know he will be very proud of that; however, he has been beaten by the right hon. Member for Lewisham, Deptford (Dame Joan Ruddock). As I think she said, in Deptford apprenticeship numbers are up 106%. What a record! What progress! What a Minister!

Lilian Greenwood: In my constituency, Nottingham city council has developed the employer hub, to ensure that public investment leads to job and training opportunities for local people, especially the young unemployed. Should not

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the Minister and the Education Secretary learn from Nottingham city council and put the full weight of their Department behind calls for apprenticeship guarantees in government procurement as a way of helping to reduce those not in employment, education or training?

Mr Hayes: The hon. Lady will know that I know Nottingham very well, having been a county councillor there for 13 years, and I am well aware of the economic profile of that city. I am also sure she will be aware that, together with the Minister for cities, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), I launched a new initiative in Nottingham—city apprenticeship hubs, which combine the work of local authorities with the work of the private sector and the work of government to boost apprenticeships in just the way she describes.

Simon Kirby (Brighton, Kemptown) (Con): Does the Minister agree that when it comes to apprenticeships, it is not only the quantity that is important, but also the quality?

Mr Hayes: Absolutely, and that is why this Government have placed unprecedented emphasis on quality. I repeat—for the sake of clarity, Mr Speaker; no more than that—that we have said that all apprenticeships should be on an employed basis. The last Government did not do that. They believed in programme-led apprenticeships —faux apprenticeships from a faux Government.

Dan Rogerson (North Cornwall) (LD): Through the youth contracts and apprenticeship programmes, which the Minister has already mentioned, the Government have demonstrated their commitment to tackling these problems. Is the Minister working with Departments across Government to ensure that those programmes reach into the most deprived urban neighbourhoods, and also isolated rural communities?

Mr Hayes: My work across Government is constant—almost endless. In particular, we are working closely with the Department for Work and Pensions. Of course, I am a Minister in two Departments—I am not just a one-Department man, but a two-Department man—so the relationship between the Department for Business, Innovation and Skills, the Department for Education and the DWP is critical to ensuring that our skills policy works across Departments.

Mr Speaker: The Minister expresses himself, as always, with the eloquence of Demosthenes, but I fancy that Demosthenes was somewhat briefer.

Nicky Morgan (Loughborough) (Con): The Minister will be aware that good careers advice and guidance are critical in tackling this problem. What are the Government doing to ensure that such advice and guidance are embedded in local communities and available to all young people?

Mr Hayes: Mr Speaker, you will know that, over the Easter break, while others were enjoying eggs and buns, I was launching the national careers service—a new, all-age service and the first ever in England. It will give impartial, informed, well-researched advice to people on learning, education, training and jobs.

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Bob Blackman (Harrow East) (Con): The explosion of apprenticeship places is indeed welcome, but small businesses in particular have difficulty taking on apprentices. What is my hon. Friend doing to help small businesses to take them on?

Mr Hayes: My hon. Friend is right: Britain’s small businesses are the backbone of our economy and of our communities. In the light of that, we are reducing the bureaucracy associated with apprenticeships and, excitingly, we are giving a special apprenticeship bonus of £1,500 to every small business that takes on a young apprentice.

Stephen Twigg (Liverpool, West Derby) (Lab/Co-op): The Minister mentioned the launch of the national careers service. Will he tell the House whether the proportion of 14 to 16-year-olds receiving face-to-face careers advice will be higher or lower this year compared with last year?

Mr Hayes: The hon. Gentleman knows that we have put in place new statutory guidance for schools which, for the first time, insists that they secure independent, impartial careers advice and guidance. That is a massive step forward and I know that he will want to welcome it. For my money, face-to-face guidance is an important part of that.

Stephen Twigg: So it will be lower. Careers England described the much-delayed guidance to which the Minister has referred as “dismal”. Is not the reality that Government action has ended statutory work experience, closed the Connexions service and left no guarantee of face-to-face careers advice? Is this not yet another example of this Government kicking away the ladder of opportunity for young people in this country?

Mr Hayes: The national careers service is the first all-age service, and the previous Government could have introduced such a service; there were calls for them to do so on many occasions. We estimate that its website will get 20 million hits a year, and that its telephone helpline will get 1 million calls a year. I expect 700,000-plus people to benefit from the face-to-face guidance that the hon. Gentleman describes. New professional standards will also be set out for the careers industry for the first time. That is progress by any measure, and he should acknowledge that.

Regulatory Burden (Schools)

3. Mr Christopher Chope (Christchurch) (Con): What steps he is taking to reduce regulatory burdens on schools. [102901]

The Minister of State, Department for Education (Mr Nick Gibb): The Government are committed to reducing regulatory burdens on schools. We have already removed a range of unnecessary duties via the Education Act 2011 and, subject to parliamentary process, we will remove further burdens in September. In addition to reducing regulations, we have cut the volume of guidance issued to schools by more than half, removed the lengthy self-evaluation form and the financial management standard in schools, and introduced a streamlined inspection framework. We have also made it clear that neither the Department nor Ofsted expects teachers to produce written lesson plans for every lesson.

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Mr Chope: I am grateful to my hon. Friend for that response, but does he think it fair to describe his Department’s performance as meriting a capital alpha for effort while it is still getting only a gamma minus for achievement? In particular, will he look again at the deregulation of admissions criteria, at the pupil numbers that schools can have, and at the whole issue of grammar schools and free schools that are still calling for more freedoms?

Mr Gibb: That sounds like Greek to me! The Department deserves an A* for what it has achieved. We have already removed statutory burdens. Performance targets have gone. Changes have been made to consultation on the school day, and it is no longer necessary to appoint a school improvement partner or to prepare and publish a school profile. We have also abolished the absurd rule requiring parents to be given 24 hours’ notice of a detention. We have abolished the requirement to join behaviour and attendance partnerships, and we have removed 20,000 pages of guidance from schools. We have more than halved the guidance going to schools—

Mr Speaker: Order. I am grateful to the Minister of State, but can I ask him not to keep swivelling round? The House cannot hear what he is trying to say, although we wish to do so—[ Interruption. ] We are grateful to him, for the time being.

Chris Bryant (Rhondda) (Lab): I do not object to regulation as much as the hon. Member for Christchurch (Mr Chope) does, so may I suggest one additional regulatory burden for schools—that every school and every child should have statutory and proper sex and relationship education? Notwithstanding the falls of recent years, this country still has a five times higher level of teenage pregnancy than Holland, and a quarter of this year’s terminations were by girls under 18. Please let us move forward.

Mr Gibb: I know that the hon. Gentleman is passionate about this subject. Sex education is compulsory in schools, but we are reviewing the personal, social, health and economic education curriculum and how the subject is taught to improve the teaching of PSHE. That is what will cover the issue that he raises.

Departmental Relocation

4. Mr Peter Bone (Wellingborough) (Con): If he will consider relocating his Department to Wellingborough. [102820]

The Secretary of State for Education (Michael Gove): As yet, my Department has no plans to relocate to Wellingborough, but we are anxious to make economies, so I am intrigued to hear more.

Mr Bone: The Department for Education employs more than 1,500 people in London and occupies five buildings worth more than £33 million. If the Secretary of State relocated most of the work to Wellingborough, he would work in a friendly and pleasant town, save a small fortune in accommodation costs, yet would be only 50 minutes away from London. Why not take it up?

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Michael Gove: My hon. Friend makes a compelling case, and I will recommend that the permanent secretary investigates it closely.

West Exe Technology College

6. Mr Ben Bradshaw (Exeter) (Lab): What due diligence his Department conducted on the governance arrangements at West Exe technology college in Exeter when considering its application for academy status. [102822]

The Secretary of State for Education (Michael Gove): West Exe technology college received an academy order because the school satisfied the Department’s published criteria for conversion to academy status, but the Department was alerted to matters that bear on the school’s conversion. Concerns were raised specifically about staffing practices. The local authority is therefore auditing the school’s finances and the school’s conversion is on hold, pending the outcome of that work.

Mr Bradshaw: The Secretary of State may recall my speaking personally to him in the corridor behind your Chair, Mr Speaker, a year ago. I said that the first school in my constituency to apply for academy status, and the one most impatient to do so, was the one whose leadership I had most concerns about. Yet the Department, in its apparent due diligence, saw no reason not to give the school initial approval. Does that not show that the due diligence process used by his Department is wholly inadequate?

Michael Gove: I am grateful to the right hon. Gentleman for the care he shows in ensuring that every school in his constituency finds itself in the right position and has the right status. When an academy order is granted, it is a rules-based process; if a school satisfies certain criteria, it is appropriate that an academy order be issued in most circumstances. Subsequently, however, a number of concerns—beyond those that the right hon. Gentleman rightly raised—are being investigated. At the conclusion of that investigation, I will make sure that the right hon. Gentleman, as the constituency Member, and others are informed about the decision that is eventually taken.

Academies and Free Schools

8. Chi Onwurah (Newcastle upon Tyne Central) (Lab): What recent discussions he has had on academies and free schools in Newcastle upon Tyne Central constituency. [102824]

The Secretary of State for Education (Michael Gove): My Department has a series of meetings with individuals in Newcastle and elsewhere about the progress of academy and free school applications.

Chi Onwurah: A free school is being proposed in Newcastle right next to an academy that was built only three years ago. Additionally, primary and secondary schools across the constituency are being forced to convert to academy status against the wishes of parents. Now that the city council finds that it faces a legal bill of hundreds of thousands of pounds for these conversions, will the Secretary of State assure me that the council tax payers of Newcastle will not have to pay for the chaos he is imposing on our education system?

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Michael Gove: The council tax payers of Newcastle have already paid in the past for the failure of that local authority to raise standards in schools to a level seen in other local authorities, including Gateshead, for example. It is critical that we raise standards in Newcastle and we will do so by welcoming new educational providers, including those who propose free schools. We will certainly do so by tackling underperformance at primary level. For far too long, the last Government tolerated primary schools that were generating children who left at the age of 11 incapable of reading, writing and adding up properly. I have no tolerance for that sort of nonsense, which is why we are acting now.

Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op) rose—

Mr Speaker: Hackney South and Shoreditch has much to commend it, but it is rather a long way from Newcastle upon Tyne Central, so we will leave that one for another day.


10. Mr Rob Wilson (Reading East) (Con): What proportion of secondary schools have academy status or are in the process of converting to academy status. [102826]

The Secretary of State for Education (Michael Gove): At present, we are fortunate in that more than 50% of secondary schools are either full academies or en route to converting to academy status.

Mr Wilson: I congratulate my right hon. Friend on that figure. I must tell him, however, that at a recent council meeting in Reading, the Labour administration launched an outdated left-wing assault on the academies programme. Given the clear benefits of academy status, will he condemn that backward-looking element of the Labour party and reaffirm the Government’s commitment to putting children first, not party-political dogma?

Michael Gove: That is an excellent point. Now that more than half the number of secondary schools are either academies or en route to becoming academies, those who attack the academies programme are attacking the majority of state schools in the country. It is a pity that there are people in the Labour party who are enemies of state education at a time when so many great head teachers are taking advantage of academy freedoms to raise standards for all.

Teaching Performance

12. Damian Hinds (East Hampshire) (Con): What steps he plans to take to improve the quality of teaching. [102828]

The Minister of State, Department for Education (Mr Nick Gibb): Nothing has more impact on children’s achievement at school than the quality of the teaching that they receive. We are raising the bar for new teachers, helping existing teachers to improve, and, when teachers cannot meet the required standards, making it easier for head teachers to tackle underperformance.

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Damian Hinds: As my hon. Friend says, far the most important factor in the quality of teaching is the presence of our dedicated teachers. Will he consider widening access to taster sessions for potential teachers, both to attract more good people to the profession and to give more people a chance to decide whether it is really for them before committing themselves to a BEd or a PGCE?

Mr Gibb: My hon. Friend makes a very good point. The Teaching Agency’s new school experience programme for people who are considering teaching maths, physics, chemistry or a modern language at secondary level provides precisely the opportunities to which he refers. It gives participants an opportunity to observe teaching and pastoral work, and to talk to teachers about day-to-day school life. More than 800 people have benefited from the programme so far, and many more placements are planned for the future.

Kelvin Hopkins (Luton North) (Lab): Last week I listened with interest to a Radio 4 programme about the use of synthetic phonics in the teaching of reading in schools. It was clear that there was a fundamental difference between the philosophies relating to education and teaching methods which had not yet been resolved. Does the Minister accept that until we solve that problem, we will not overcome our fundamental problems in education?

Mr Gibb: The hon. Gentleman is absolutely right. Getting reading right in primary schools is fundamental to children’s future education. That is why we have introduced match funding for primary schools—£3,000 per school for new training and materials—and why every six-year-old will undergo a phonic check this June so that we can ensure that we spot the children who are struggling with reading. We are determined to end the scandal of one in 10 boys leaving primary school with a reading age of seven or less.

Mr Graham Stuart (Beverley and Holderness) (Con): We should celebrate and support the best teachers in our schools. Is the Minister aware of research by the Sutton Trust which shows that if a below-average teacher can be raised to the average, the impact on the lifetime earnings of that teacher’s classroom can amount to more than £250,000? The importance of teaching is critical not only to our society, to our culture and to social justice, but to the economy. What more can the Minister do to improve the quality of teaching?

Mr Gibb: My hon. Friend, who is the Chairman of the Select Committee on Education, is absolutely right. We are doing a huge amount to raise the bar both for entry to the teaching profession and for continuing professional development. That is what is behind the whole teaching schools programme. Already 218 schools have been designated teaching schools, which promote peer-to-peer training. The Government are determined to restore the centre of academic life to our schools.

Stephen Twigg (Liverpool, West Derby) (Lab/Co-op): The quality of teaching is indeed the single most important determinant of a school’s success, and it is vital that we attract the very best teachers to the most challenging schools. Schools already have significant flexibility when

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it comes to pay. Does the Minister agree that regional pay would make it harder to attract the best teachers to the most challenging schools?

Mr Gibb: I am surprised by the hon. Gentleman’s question. We have asked the School Teachers Review Body to consider the issue—[Interruption.] Yes, those independent experts are examining the issue of regional pay. We will submit evidence to them, as will the trade unions, and they will report to the Government in September.

Mr Don Foster (Bath) (LD): Graduates with first-class degrees in shortage subjects receive higher teacher training bursaries than those with second-class degrees. Is there any research evidence showing that those with a first-class degree are better teachers than those with a second-class degree?

Mr Gibb: There is evidence that teacher subject knowledge has a direct bearing on the attainment of pupils. There is also a correlation between the degree classification and the propensity of trainees to finish their course. There is also evidence from around the world that the highest performing education jurisdictions are those that take their trainees from the top 10% or top quarter of graduates.

Fiona Mactaggart (Slough) (Lab): The Minister will have read the OECD’s recent report showing that teacher status, pay and professional autonomy are key to teacher success and the learning of pupils. The Prime Minister tells us that we should follow the lead of countries with excellent records in this regard, such as Finland and South Korea. What is the Minister doing to increase teacher pay and professional autonomy?

Mr Gibb: The entire academies programme is built on the autonomy of the teaching profession; that is the essence of the programme. We want a well-rewarded teaching profession in order to attract and retain the best people, and we are determined to achieve that. Of course, because of the legacy left behind by the last Government, which the hon. Lady supported, we are having to take some very tough decisions right across the public sector. Despite all the problems left by the previous Government, however, in education we have maintained spending on schools at flat cash per pupil, and in addition to that we have the pupil premium, which amounts to a significant sum of money.

21. [102838] Jason McCartney (Colne Valley) (Con): Will my hon. Friend give us a quick update on what the Government are doing to attract talented individuals from the armed forces into teaching?

Mr Gibb: We have already allocated a number of places in the graduate teaching programme for service leavers, and we are working with the Ministry of Defence on schemes to encourage more service leavers into teaching through graduate and undergraduate processes. The skills and experience members of the armed forces have are crucial to raising standards in our schools, and we are determined to tap into those skills.

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Child Care

14. Kate Green (Stretford and Urmston) (Lab): What assessment he has made of the likely effects of changes in tax credit eligibility on the supply of early years and out-of-school child care. [102830]

The Minister of State, Department for Education (Sarah Teather): Eligibility for tax credits will change with the reduction of the earnings threshold and the increase of the minimum working hours for couples to 24 hours per week. These changes do not affect eligibility for the child care element of working tax credit. The Department does not consider that the impact of these changes on the supply of child care will be significant.

Kate Green: In my constituency, about 1,500 families have lost child tax credit and 465 families face the loss of working tax credit if they cannot find more hours. Parents coming to my surgery have told me that they may have to give up work and therefore their child care places as a result. What will the Government do to monitor the impact of these changes on the child care markets, particularly in areas of high unemployment?

Sarah Teather: As I have said, the change in hours should not have an impact on the child care element, because the hours remain the same in terms of the eligibility for the child care element of the tax credit. All local authorities have a duty to ensure that sufficient pre-school and after-school child care is available in their areas. However, we are monitoring this situation very closely and looking at capacity in disadvantaged areas, as we are rolling out a significant increase in the amount of early years education available for two-year-olds.

Mrs Sharon Hodgson (Washington and Sunderland West) (Lab): According to the National Day Nurseries Association insight report, 65% of nurseries reported decreased occupancy levels towards the end of 2011—when parents were feeling the impact of slashed child care tax credits—leaving more than one in 10 settings with occupancies of less than 50% and therefore at serious risk of closure or of having to increase prices for the remaining parents. As more than 1 million families are counting on losing child tax credit or working tax credit this month, what are the Government doing to ensure that all child care providers are not driven out of business by falling occupancies?

Sarah Teather: What has had the most impact, unfortunately, has been some people losing their jobs, which inevitably affects the demand for child care in the areas concerned. However, the most significant impact on the early years sector, and in particular the private providers, will come from the roll-out of the two-year-olds offer, which I mentioned a few moments ago. That amounts to a very substantial increase in the amount of money going through early years settings. A significant number of places will need to be created. There will be some areas that are under-occupied, of course, but there will also be very significant demand for places for two-years-olds in some settings, and many in the sector are seeing this as a huge opportunity.

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Rural Schools (Funding)

15. Miss Anne McIntosh (Thirsk and Malton) (Con): What recent representations he has received on funding for schools in rural areas; and if he will make a statement. [102832]

The Minister of State, Department for Education (Mr Nick Gibb): The Government recently held two meetings with delegations to discuss education funding and the issues faced by schools in rural areas. I met a delegation of hon. Members to discuss funding for rural areas following a debate in Westminster Hall on 8 February. My right hon. Friend the Secretary of State met the f40 group, which represents the lowest-funded authorities in England, to discuss Government proposals on school funding reform.

Miss McIntosh: May I thank my hon. Friend for that reply but point out that North Yorkshire is one of the lowest funded and most sparsely populated local authorities, and that it has the highest cost of fuel in the country so there are tremendous problems in getting children to school at the moment? Will he please review this issue as a matter of extreme urgency?

Mr Gibb: I understand my hon. Friend’s concerns about funding in North Yorkshire, which is ranked 114th out of 151 authorities, with its schools receiving £4,786 per pupil compared with the national average of £5,082. The current system is unfair. It is opaque, which is why the Government’s announcement at the end of March begins the process of moving towards a fairer system with reforms to the local formula. We intend, ultimately, to move to a national funding formula, but of course in the current economic climate, stability has to be a priority.


16. Mike Weatherley (Hove) (Con): How many people aged 16 to 18 started an apprenticeship in (a) Hove constituency, (b) the south-west and (c) England in 2011. [102833]

The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): For the academic year 2010-11, final data for young people aged under 19 show that there were 110 apprenticeship starts in Hove constituency, which is an increase of 8% on the 2009-10 figure; 15,720 apprenticeship starts in the south-east region, which is also an increase of 8% on the 2009-10 figure; and 131,700 apprenticeship starts in England, which is an increase of more than 32% over the past two years.

Mike Weatherley: I congratulate my hon. Friend on the outstanding progress he has made in promoting apprenticeships. The previous Government provided for so-called apprenticeships without even a requirement for apprentices to have a job. Will he reassure me that under this Government the requirement to be in proper work will remain the core of our apprenticeship offering?

Mr Hayes: One of the first things I did when I became a Minister was to insist that apprentices should be employed, in order to end programme-led apprenticeships. They were the hallmark of the previous Government’s

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approach, as was recently highlighted in the programme referred to a few moments ago.

The letter that I am holding was sent to me, and it says:

“We warmly welcome the Government’s focus on Apprenticeships and its efforts to guarantee”

apprenticeship “quality”. It is signed by some of Britain’s leading companies and by the TUC. So business, unions and the Government are coming together—only the Labour party is standing apart.


17. Mark Lancaster (Milton Keynes North) (Con): What steps he is taking to speed up the adoption system. [102834]

The Parliamentary Under-Secretary of State for Education (Tim Loughton): As I said earlier, the Government have published “An Action Plan for Adoption”, which aims to reduce delays in adoption by legislating to prevent local authorities from spending too much time seeking a perfect adoptive match; accelerating the assessment process for prospective adopters; and making it easier for children to be fostered by their likely eventual adopters in certain circumstances. We will also shortly introduce an adoption scorecard to focus attention on the issue of timeliness; this is linked to a tougher intervention regime.

Mark Lancaster: I commend the Government on the action they have taken to speed up the adoption process, but concerns remain about the level of support provided to families after that process. Will the Minister therefore expand on the action the Government will be taking to support families once they have actually adopted?

Tim Loughton: My hon. Friend raises a very important point, which was covered slightly in my earlier answer. I am concerned about getting good pre-adoption support, peri-adoption support and post-adoption support, because the worst thing that can happen is a breakdown in adoption. There is scant evidence about breakdown in adoptions, but some of the highest-performing adoption agencies in the country, be they local authority or independent, are those that invest in adoption support, which means that adoptions do not break down. That results in not only a financial saving for that authority, but, more importantly, a social gain for the child, who gets a safe, stable and loving home—permanently.

Meg Munn (Sheffield, Heeley) (Lab/Co-op): I was recently contacted by some adoptive parents in my constituency who unfortunately are experiencing a breakdown with one of their adopted children, many years after the child was adopted. They felt that they were not given enough information before the adoption, particularly about attachment issues. In the push to increase the speed of adoption, what will the Minister do to ensure that the preparation for adoptive parents is not too fast and that the right information is given to enable them to deal with the issues when children are placed?

Tim Loughton: The hon. Lady, too, is an expert on this subject. In trying to provide better timeliness, rather than leaving a child in limbo in care when there is no safe way back to their birth family, we will not sacrifice

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quality. We will beef up the assessment process so that prospective adopters are given a clear insight into what becoming an adoptive parent is all about. If they are up for it, they should be helped and supported through the process as quickly as possible. It is necessary to ensure that a suitable match is provided, which they are capable of taking on, along with all the support that needs to go with it. It is a false economy—financially and, more importantly for the child, socially—not to do that.

Parental Choice (Schools)

18. Gordon Henderson (Sittingbourne and Sheppey) (Con): What steps he is taking to ensure that more parents in (a) Sittingbourne and Sheppey constituency, (b) the south-east and (c) England are able to send their children to their first choice of school. [102835]

The Minister of State, Department for Education (Mr Nick Gibb): The latest figures show that almost 86% of parents in England were offered a place at their first preference school starting in September 2012. That compares with 83% for Kent, 87% for Medway and 85% for the south-east overall, but it still means that 74,000 children have missed out on a place at their first choice school, so the broad thrust of our education reforms is to increase the supply of good school places.

Gordon Henderson: I am grateful for that answer. Will my hon. Friend go further and encourage local authorities, when considering appeals for the 2012-13 intake, to take into account the recently updated school admissions code for 2012, which shows a commitment to prioritising previously looked-after children but will not come into force until 2013-14?

Mr Gibb: My hon. Friend is right to say that we have changed the admissions code so that not only looked-after children but previously looked-after children—those who were in local authority care but who have subsequently been adopted—are given priority in the admissions process. The change is designed to help speed up the adoption system and recognises the difficulties that those children have encountered in their early childhood. Appeals are based on the admission arrangements in force at the time, and so for 2012 they will not include a priority for previously looked-after children.

Funding Formula

19. Elizabeth Truss (South West Norfolk) (Con): What recent assessment he has made of the 16-to-19 funding formula. [102836]

The Secretary of State for Education (Michael Gove): The system needs reform.

Elizabeth Truss: Schools are paid 12% more for offering A-level media studies or psychology than for offering A-level maths or further maths. Given that we have the smallest proportion of students from 16 to 18 studying maths of any country in the OECD and given that maths is the subject in which we have the greatest teacher shortage, does the Secretary of State agree that we should have a subject premium for A-level maths?

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Michael Gove: With characteristic acuity, my hon. Friend puts her finger on precisely the scale of the problem we inherited from the previous Government. The system for funding sixth forms was dysfunctional, subjects that deserved better support, particularly mathematics, were not receiving it and we needed change. I am not in favour of a subject premium such as that outlined by my hon. Friend, but I am in favour of the approach outlined by Professor Alison Wolf in her report on improving vocational and technical education.

Nic Dakin (Scunthorpe) (Lab): The Young People’s Learning Agency and the Department for Education have recently released data that reveal that in 2011-12 sixth-form colleges received approximately £4,500 per student whereas schools and academies received £5,600 per student. When will the Secretary of State act to address this anomaly and discrepancy?

Michael Gove: We have already acted. The hon. Gentleman was the distinguished principal of an outstanding further education college, so I know that he will be pleased that we are equalising funding between all sixth-form institutions. Sixth-form colleges and further education colleges do wonderful work. For too long, they have been Cinderellas, but under this Government they are at last going to the ball.

GCSE History

20. Iain Stewart (Milton Keynes South) (Con): How many schools did not offer GCSE history to pupils in 2011. [102837]

The Minister of State, Department for Education (Mr Nick Gibb): In 2011, 57 mainstream maintained secondary schools in England entered no pupils for a full course GCSE or iGCSE in history or ancient history. We have introduced the English baccalaureate to encourage schools to increase opportunities for pupils to study history as part of a core of key academic subjects and early evidence suggests that the measure is already having a positive impact on pupils’ subject choices.

Iain Stewart: I recently spent a day shadowing an inspirational history teacher at the Hazeley academy in my constituency. If my hon. Friend would like to see a good example of a school offering history in its curriculum, may I urge him to visit the school?

Mr Gibb: I would be delighted to return to my hon. Friend’s constituency to visit the Hazeley academy. I agree that it is vital that the history curriculum should enable pupils to know and understand the key events of our country’s history. It is one of the issues that the curriculum review is destined to address, and I look forward to seeing inspirational history being taught at the Hazeley academy.

Vocational Education

22. Julian Smith (Skipton and Ripon) (Con): What steps he is taking to improve the quality of vocational education in schools. [102839]

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The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): High-quality vocational education is vital, underpinning economic growth, and vocational qualifications must enjoy the same rigour as academic qualifications. If we are to build the status of practical learning, it is critical that they do so, and that is why, alongside our focus on apprenticeships, we are incentivising schools to offer the best vocational qualifications to provide a high-quality and respected route into employment and further and higher education.

Julian Smith: Andrew Cummings, head teacher of the excellent South Craven school in my constituency, is concerned that the current focus on purely academic subjects is threatening that school’s focus and efforts on vocational learning. I have tried to reassure him—can the Minister help?

Mr Hayes: I know of the good work of that school, and my hon. Friend has been a doughty champion of that good work. He is right that good vocational education is as important as good academic learning. For too long, we conned ourselves into believing that only through academic prowess could people gain a sense of worth and purpose. I believe it is time to elevate the practical; this Government will do so.

Mr Speaker: It is also important to me to reach the hon. Member for Chippenham (Duncan Hames).

Home-educated Children

23. Duncan Hames (Chippenham) (LD): What support his Department provides to children who are home-educated; and if he will make a statement. [102840]

The Parliamentary Under-Secretary of State for Education (Tim Loughton): Last but not least, parents who home-educate their children have always taken on the full responsibility for their education and the Department does not provide support for home-educated children. Local authorities have the discretion to provide support for home-educated children with special educational needs or to enable a young person to attend college or access another education provider. Where they provide significant support, they can claim funding through the dedicated schools grant.

Duncan Hames: As the Minister says, it has always been so, but given that home-educating parents face a number of logistical challenges in putting children through exams, including with invigilation and coursework evaluation, it is of dismay to them that the cost of entering a child for a single GCSE exam can be as much as £115. Why is it that children who are educated at home do not have their exam entry fees paid for by the Government when the Government do pay those fees for children who are educated at school?

Tim Loughton: As I have said, my hon. Friend the Minister with responsibility for schools is looking at the whole system of home-educated children, and local authorities have the discretion to make those grants where they think it is appropriate but it has never been the role of Government to provide that support to home-educated children. Perhaps the key to all this is to

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make sure that every school in this country, in the maintained sector in particular, is so good and there is such a good choice that all parents will want to send their children to the local school and will not feel it necessary to home-educate their children.

Topical Questions

T1. [102841] Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): If he will make a statement on his departmental responsibilities.

The Secretary of State for Education (Michael Gove): It is good news today for the Leader of the Opposition, the right hon. Member for Doncaster North (Edward Miliband). In December 2009, Campsmount technology college in his constituency suffered significant fire damage, but today that school is reopening as a result of the reforms we have put in place. The cost has been significantly less than it would have been under the previous Government’s Building Schools for the Future programme and the school is opening on an accelerated time scale—proof once again that this coalition Government are reforming in the interests of all children.

Luciana Berger: Labour’s education maintenance allowance helped thousands of students to meet the costs of further education but this Government have scrapped EMA, abandoning young people who are desperate to fulfil their potential. In Liverpool, Labour’s mayoral candidate Joe Anderson has pledged to work with local schools and colleges to introduce a city-wide EMA scheme. Will the Secretary of State back Labour’s plan and admit that his Government were wrong to scrap EMA?

Michael Gove: It is always a pleasure to hear from the voice of the Mersey. I am delighted that the Labour candidate for the Liverpool mayoralty, Mr Anderson, has endorsed the extension of academy schools in Liverpool and I hope that the hon. Lady will join me in working to ensure that those schools transform outcomes for young people. Education maintenance allowance has been reformed by this Government and as a result of those reforms we have seen—[Hon. Members: “Scrapped!”] I am so sorry that Members take such a negative and cynical view; it does not suit them. Education maintenance allowance has been replaced by a form of support for 16, 17 and 18-year-olds that is more effectively targeted and has seen them achieve even better.

T5. [102845] Esther McVey (Wirral West) (Con): Will the Secretary of State join me in congratulating Kirtana Valabhaneni from West Kirby grammar school for girls, along with Danny Wheeler, Sam Mills, Asher Winterson, Gokhul Ramakrishnan and Cameron Douglas from Calday Grange grammar, on winning the BAE Systems leadership award in this year’s Big Bang national awards? Will my right hon. Friend explain what the Government are doing to encourage such budding scientists in schools and to promote future science jobs?

Michael Gove: It is fantastic news, and I am delighted that another female representative from a Merseyside constituency is accentuating the positive, because there is a lot to celebrate in state schools on both sides of the

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Mersey. We are supporting an emphasis on science, technology, engineering and mathematics by paying more to high-quality graduates to teach those subjects.

T2. [102842] Debbie Abrahams (Oldham East and Saddleworth) (Lab): There is overwhelming evidence of the negative impact of poverty on children’s educational attainment and, in turn, on their life chances and ultimately how long they can expect to live. In my constituency, nearly 6,000 children are affected. With the assessment of the Institute for Fiscal Studies that child poverty is set to increase under this Government, what is the Secretary of State’s estimate of the impact on the educational attainment of those children?

The Minister of State, Department for Education (Sarah Teather): That is precisely why we have introduced the pupil premium: £2.5 billion targeted at the most disadvantaged children. It is also why we are rolling out 15 hours of early education for all two-year-olds. To pick up the points the hon. Lady mentioned, we know that high-quality education will make a real difference to the life chances of those children.

T6. [102846] Tony Baldry (Banbury) (Con): Has my right hon. Friend had the opportunity to read the report, chaired by Priscilla Chadwick, on the future of Church of England schools? Does he agree that the recent changes in education introduced by the Government provide opportunities for the continuing involvement of the Church of England in education, particularly in delivering distinctive and inclusive new academies?

Michael Gove: I absolutely agree. Education on both sides of the border was driven in the first instance by the vigorous missionary activity of Churches, and we praise and cherish the role of the Church of England in making sure that children have an outstanding and inclusive education. I welcome the report, and I look forward to working with Bishop John Pritchard to extend the role of the Church in the provision of schools.

Ms Karen Buck (Westminster North) (Lab): How many of the free schools currently planning to open in September, and seeking expressions of interest from parents on that basis, have not yet signed contracts for specific premises?

Michael Gove: Of the free schools that are planning to open this September, more than half have agreed sites, 21 are in negotiations about sites and four, including one in the hon. Lady’s constituency, do not yet have sites. That is significantly better progress than at this time last year, yet we went on to see every single free school that was advertising that it would open opening in time.

T8. [102848] Mr Peter Bone (Wellingborough) (Con): Earlier, I just failed to seduce the Secretary of State to come to Wellingborough, but may I tempt him a little more? He would escape from the Westminster bubble and would be in the heart of England, surrounded by Conservative councils and best of all—or nearly best of all—there would be no Liberals; but the real bonus would be that daily he would get the advice of Mrs Bone. Surely there could not be a better opportunity.

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Michael Gove: It is one of the many causes of envy in my breast when I contemplate my hon. Friend to know that he has the benefit of Mrs Bone’s advice at the breakfast table every day. All I can say is that Northamptonshire has many, many attractions—chief among them, of course, Mrs Bone—but the matter of whether the Department should relocate is properly one for the permanent secretary.

T3. [102843] Diana Johnson (Kingston upon Hull North) (Lab): Does the Secretary of State think that granting a licence to one of the Chuckle Brothers to set up a free school was one of his better ideas, and now that it has been rescinded how much did it actually cost to progress the project?

Michael Gove: I am surprised that the hon. Lady is so opposed to northern comedians, given that her party has been such a fantastic platform for so many of them. It was not one of the Chuckle Brothers whom we invited to open a free school in Rotherham, but the vice-principal of a very successful school in the north-east. In the end, that lady decided to withdraw her application, but the fact that someone who is strong in the variety world wanted to back it is, to my mind, proof that increasingly, when people from whatever background look at the Government, there is a smile on their face as they contemplate our achievements.

T9. [102849] Mr Dominic Raab (Esher and Walton) (Con): I welcome the Secretary of State’s plans to give up Whitehall control over the A-level syllabus and empower our top universities to restore the gold standard. Does he agree that grade inflation under the last Government fooled no one, and served to devalue the currency of our children’s education?

Michael Gove: That is a very good point. The reforms that we hope to make to A-levels, in tandem with the work being done by higher education institutions, will, I hope, once more restore confidence in these valuable qualifications.

T4. [102844] Ian Lavery (Wansbeck) (Lab): Some 75% of UK schools contain asbestos, and more than 140 teachers have died as a result of mesothelioma over the past 10 years. Will the Secretary of State explain what measures his Government have taken to avoid future asbestos-related deaths in our schools?

Michael Gove: The hon. Gentleman makes a very good point, and he has a strong record in campaigning on these issues. We want to make sure that everyone who teaches in schools built when building standards were lower has the support that they need. The changes that we have made to building regulations are intended to ensure that schools built in future are fit-for-purpose and refurbished appropriately. I am happy to ensure that officials and Ministers in my Department liaise with him to make sure that teachers and children are protected from unfit buildings.

Andrea Leadsom (South Northamptonshire) (Con): If the permanent secretary is considering moving the Department to Northamptonshire, may I recommend Towcester or Brackley? We had a fabulous team win at the Chinese grand prix this weekend.

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To come to my point, on adoption, does the Minister agree that, given what we now know about the development of a baby’s brain, it is absolutely essential that, wherever possible, a baby gets the best chance of attaching to new adoptive parents by being adopted before the age of two?

The Parliamentary Under-Secretary of State for Education (Tim Loughton): My hon. Friend, who within and outside the House is an expert on attachment, is absolutely right. That is why, for young children in the care system for whom there is clearly no safe way home to their birth parents, getting a good-quality, strong, attachment in adoption as speedily as possible is absolutely essential, so that they have a good chance of a safe, stable, healthy upbringing with a loving family—something denied to them by their birth parents.

T7. [102847] Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op): In the constituencies of Newcastle upon Tyne Central and Hackney South and Shoreditch, and in many other constituencies up and down the country, applications have been put in for free schools—bids for taxpayers’ money with which to run a school for children. When will the Secretary of State publish the financial plans that those schools have submitted, or will he continue with the secrecy of the Department, which does not publish the plans until the schools are open?

Michael Gove: I am grateful to the hon. Lady for asking her question, and particularly grateful for the warm welcome that she showed me when I recently went to her constituency to visit the school of which your chaplain, Mr Speaker, is such an effective chairman of governors. All funding agreements for all free schools are published on the Department for Education website. Further information will be made available as funding agreements and other contracts are entered into.

James Morris (Halesowen and Rowley Regis) (Con): I recently launched an apprenticeship challenge in my constituency, encouraging local businesses to provide 50 new apprenticeships by the Olympic games. What can we do to break down barriers and get more apprentices into small and medium-sized businesses?

The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes): My hon. Friend is doing a great job in promoting apprenticeships in his constituency, and the whole House will want to celebrate that fact. He is right that small businesses sometimes perceive the risk of taking on apprentices as being greater than larger firms do. We need to make the process much simpler and take out the bureaucracy. We have provided a toolkit and put financial incentives in place, but we will go still further to ensure that in every village and town, every business has the chance to take on an apprentice.

T10. [102850] Jim Dobbin (Heywood and Middleton) (Lab/Co-op): It is important, when individuals and groups apply to open a free school, that proper checks on them are made. Can the Secretary of State give me guarantees that those checks are in place?

Michael Gove: The hon. Gentleman makes a good point. One of the things that we have done in the Department is to set up a specific unit—the preventing

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extremism unit—which exists specifically to ensure that those people who may come from a fundamentalist religious background or from an intolerant tradition are prevented from having access to public money. Whether they are intending to set up a free school or to subvert the operation of an existing school, safeguards are in place. They can always be better, and I look forward to working with the hon. Gentleman and everyone else in order to ensure that public money does not go into the wrong hands.

Philip Davies (Shipley) (Con): One in a Million free school in Bradford is due to open in September and I know that the people involved would very much like the Secretary of State to come and open it, but before he does that, would he agree to meet me so that we can discuss the capital allocation to that school and make sure that when it opens in September in a part of Bradford where it is much needed, it opens with a chance of giving the students there the best possible opportunities?

Michael Gove: My hon. Friend is one in a million and I look forward to meeting him. I think there is an opportunity in the diary at 11 o’clock this Wednesday for us to have a cup of tea. I am committed to doing everything I can to improve education in Bradford. It is a great city and it has some great representatives.

Mrs Jenny Chapman (Darlington) (Lab): I will be as quick as I can. Will the Secretary of State have a look at the 16-to-19 funding formula as applied to Darlington college and make sure that it has been done correctly?

Michael Gove: I will do everything in my power.

Simon Hughes (Bermondsey and Old Southwark) (LD): My colleagues in London are arguing that there should be youth hubs across the city, open five days a week and in the evenings and at weekends for young people to receive advice and support. Whoever wins the London elections and is elected to the Assembly, will Ministers support that proposal so that young people can have better services across the capital city?

Tim Loughton: My right hon. Friend has been a great champion of some of these youth centres and he has one of the soon to be 63 myplace centres in his constituency, which have been such successful hubs, and which I hope will be open during the whole week and at weekends for as long as there are young people who want to use them—a policy that was started by the previous Government but without the funding that has been secured by this Government to make sure that they all open.

David Simpson (Upper Bann) (DUP): Further to the question about adoption, will the initiative by the Government to speed up the process for potential parents help older prospective parents?

Tim Loughton: I hope it will help all prospective adopters who are capable of offering a good quality, stable, loving family environment for that child. I have been trying to bust all the myths that people of a certain age or a certain weight or who happen to be smokers or not are instantly vetoed from being adopters. That is

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absolutely not true. If people of a certain age think they can offer a home to a child, I would encourage them strongly to come forward and see if they are up for it.

Andrew Bridgen (North West Leicestershire) (Con): Last week I presented certificates to 12 young people in my constituency who had completed the Prince’s Trust team programme, a programme designed to help those not in education, employment or training gain the skills and the confidence to return to the world of work. Does my hon. Friend agree that such programmes are an invaluable tool in getting young people back to work?

Mr Hayes: Absolutely. Third party organisations, notably the Prince’s Trust, do an extremely good job in providing such support and good quality information, opening up opportunities and giving people a sense of what they can achieve. I congratulate them and my hon. Friend for drawing their work to our attention.

Lisa Nandy (Wigan) (Lab): The Government recently started X-raying children whose age is in dispute, despite an overwhelming body of medical evidence that this practice is unethical, exposes children to harmful doses

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of radiation and is entirely ineffective in determining a child’s age. As the Minister responsible for safeguarding and the welfare of children, will he tell the House what he is doing to ensure that this appalling trial ceases with immediate effect?

Tim Loughton: The hon. Lady is right to raise concerns. As she knows, this is led by the Home Office but which, because of our concern about safeguarding children, the Minister of State, Department for Education, my hon. Friend the Member for Brent, Central (Sarah Teather) and I have held discussions with the Minister for Immigration. It is essential that we have proper checks and controls on people coming into this country, particularly for adults who are masquerading as children in order to come into this country, but that it should in no way be seen to be damaging to those people. We have to achieve that balance. My hon. Friend and I are determined that we do that with the Home Office.

Several hon. Members rose

Mr Speaker: Order. I am sorry to disappoint colleagues but, as usual, demand outstrips supply.

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Speaker’s Statement

3.34 pm

Mr Speaker: I am pleased to be able to announce to the House that, following fair and open competition, Her Majesty the Queen has graciously accepted my recommendation that Mr Lawrence Ward be appointed to the post of Serjeant at Arms with effect from 1 May. Mr Ward has been acting as Deputy Serjeant at Arms since the beginning of November 2011.

new member

The following Member made and subscribed the Affirmation required by law :

George Galloway, for Bradford West.

16 Apr 2012 : Column 26

Points of Order

3.36 pm

Mrs Sharon Hodgson (Washington and Sunderland West) (Lab): On a point of order, Mr Speaker. In yesterday’s The Independent on Sunday, the Deputy Prime Minister was quoted as saying that he wants to recruit 65,000 new early years workers by September 2013, including 2,000 in Birmingham alone. However, the Daily Mail has reported a Department for Education source as saying that the figure will be closer to 12,000 across the country. Given that this is a significant policy matter, have you been informed that the Government intend to come to the House to set the record straight so that Members know whether the Deputy Prime Minister was right or wrong in what he told The Independent on Sunday, and have you received an apology from Ministers for once again announcing Government policy in the press before doing so in the House?

Mr Speaker: First, there are many ways in which the hon. Lady can continue to pursue this matter, but a point of order is not one of them. Secondly, she will understand that I do not want to act as umpire between competing reports in—I will not say the popular newspapers—what are apparently described as newspapers. I will leave those institutions to make their own observations. No Minister has apologised to me, but if I receive an apology in respect of this matter, I assure the hon. Lady that she will learn of it without delay.

Mr David Davis (Haltemprice and Howden) (Con): On a point of order, Mr Speaker. One of your principal responsibilities is to protect the freedom of speech and action of Members of this House. Accordingly, I draw your attention to an action taken by the Attorney-General for Northern Ireland who, on the last day before the recess, started proceedings against the right hon. Member for Neath (Mr Hain) for “scandalising the court”, a criminal action that was described in 1899 as “obsolete”. Our freedom to criticise the judiciary and the judicial process is fundamental to the operation of this House. Accordingly, have you received an application from the Attorney-General of the United Kingdom to come to the House and explain what he will do to protect our rights? If not, what will the Officials and Officers of the House, led by you, do to help us protect those rights ourselves?

Mr Speaker: I am grateful to the right hon. Gentleman for his point of order. The answer to the first of his inquiries is that I have received no such approach. I shall seek to address the second of his concerns in what I say. I have listened carefully and respectfully to what he has said. These are extremely important matters and there are issues of devolved responsibility and, possibly, of whether the case is sub judice. I will reflect on what he has said and revert to him if necessary. In the meantime—I say this with great confidence—I know that he will draw on the skills and willingness to assist of the Table Office. I hope that that is helpful to him and to the House.

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Finance (No. 4) Bill

[Relevant document: Uncorrected oral evidence taken before the Treasury Committee on Monday 26 and Tuesday 27 March 2012, Budget 2012, HC 1910 i- iii .]

Second Reading

Mr Speaker: I explain for the benefit of the House that the amendment has not been selected.

3.40 pm

The Chief Secretary to the Treasury (Danny Alexander): I beg to move, That the Bill be now read a Second time.

This year’s Finance Bill is the next step in delivering the coalition Government’s core aims of returning this country to sustainable, shared prosperity, dealing with the deficit, supporting the private sector, restoring economic growth and clearing up the mess that the Labour party made of the British economy.

Ian Lucas (Wrexham) (Lab): Will the Chief Secretary give way?

Danny Alexander: I will take interventions, but I will make some progress first.

This Finance Bill sets out wide-ranging reforms to build a fairer, more efficient and simpler tax system that supports families, rewards hard work, promotes business and ensures that everyone pays their fair share.

Ian Lucas: Will the Chief Secretary give way?

Danny Alexander: I will give way now.

Ian Lucas: On the question of fairness, why has the right hon. Gentleman allowed a VAT concession for skiers going to the piste but refused my repeated request for a VAT concession for disabled people in wheelchairs using taxi facilities run by charities such as Chariots, in my constituency?

Danny Alexander: I am not aware of the particular issue that the hon. Gentleman mentions. He has not raised it directly with me before, but I am sure he has with my colleagues. I would be very happy to consider it. The issue of cable-powered transport systems has been raised many times by the industry, and a good case has been presented for the change.

The Bill builds on the strong foundations that we have secured in the past two years, safeguarding our economic stability, creating a fairer, more efficient and simpler tax system and driving through reforms to unleash the private sector enterprise and ambition that is critical to our recovery. We will not achieve that by returning to the model of unsustainable debt, irresponsible spending and over-reliance on one sector and one region.

We will not jeopardise the progress that we have made in tackling our debts. We will stick to our plans, because it is fair that we tackle those debts today so that we do not burden our children tomorrow.

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Mr John Redwood (Wokingham) (Con): When the Government proposed VAT on pasties, did they feel they needed to do that to protect other VAT revenue on takeaways from European challenge? Is that what is in the Chief Secretary’s mind?

Danny Alexander: No, that is not what is in our mind. It is one of a number of anomalies in the VAT system that we addressed in the Budget, although it is not actually a matter contained in the Bill. My right hon. Friend will be aware of the comments of, for example, the National Federation of Fish Friers, which makes the point that small independent fish shops, of which there are thousands around the country located in the constituency of every Member, have for many years been charged VAT on sales whereas other retailers have not. We are seeking to correct that anomaly.

Mr Russell Brown (Dumfries and Galloway) (Lab): Is the Chief Secretary now in a position—he was not in the early days after the announcement—to clarify matters on hot food takeaways, particularly pasties and pies? If a product is freshly baked and hot, but then allowed to cool down, is it sold with VAT added or not?

Danny Alexander: I will give the hon. Gentleman time to cool down, if he likes. He will know that a draft statutory instrument has been published, which goes into the matter in some detail, and the House may well have an opportunity to discuss it in due course. However, the basic answer is that food that is hot and taken away is taxed as hot takeaway food. It is as simple as that.

We will stick to our plans on the economy because financial discipline is the essential pre-condition for economic growth, even though that requires difficult and sometimes unpopular decisions, and helps provide confidence and the low and stable interest rates that businesses need to invest in growth and job creation. That confidence was shown at the weekend by the reaffirmation of this country’s triple A credit rating by Standard & Poor’s, the same agency that called it into question when the right hon. Member for Morley and Outwood (Ed Balls) was a member of the Cabinet.

We are committed to securing a recovery led by private sector entrepreneurs, wealth creators and export industries—the sort of growth that the Opposition failed to deliver in more than a decade in government. That is why we are going even further in the Bill to boost our competitiveness and ensure that Britain is again one of the best places in the world to do business, reversing our fall down the global competitiveness league tables that took place under the Labour Administration.

Mr Graham Stuart (Beverley and Holderness) (Con): This is a Budget for jobs—it lowers corporation tax and takes some people out of tax altogether. That is why it is particularly concerning that it proposes to introduce 20% VAT on static caravans, which are mostly manufactured in east Yorkshire and are deployed in coastal and rural communities throughout the country—the entire supply chain is in this country. The cost of the proposal in jobs will be thousands, and I am grateful that the Government are consulting on it. Does my right hon. Friend agree that Members of all parties are concerned? We need to get that right because the Budget will reverse the destruction of manufacturing that happened under the previous Government, and we do not want to make any inadvertent errors.

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Danny Alexander: I am grateful to my hon. Friend for raising that point. I know that it is a matter of concern to several Members, particularly in his part of the country. The change is, again, intended to equalise the VAT system for caravans that are used for leisure purposes. There will certainly be an opportunity to consider the detail, and my hon. Friend will be free to make representations, along with, I am sure, colleagues from his part of the country. We look forward to hearing what he has to say.

Mr Stuart: Will my right hon. Friend give way again?

Danny Alexander: No, I will make some progress, because, as my hon. Friend also said, and as the House knows, the Government have already set out plans to reduce the main rate of corporation tax to 23%, but this year’s Finance Bill goes even further for precisely the reasons that he gave.

Clauses 5 and 6 will reduce the main rate of corporation tax to 22% by 2014—a headline rate that is dramatically lower than that of our competitors, the lowest in the G7 and the fourth lowest in the G20.

Charlie Elphicke (Dover) (Con): On that point, it is incredibly important that the Government are reducing the rate of corporation tax. That is great news for British business. However, British business pays corporation tax. Should not we take proper action against multinationals that rip off our country and do not pay proper taxes, and ensure that they pay a fair share of tax, like every British business, so that we have a level tax playing field for all companies?

Danny Alexander: I am grateful to my hon. Friend for his support for our measures on corporation tax. The fact that they have been welcomed not just by hon. Members, but by the CBI and a range of business organisations—and, indeed, that they have been shown to increase business investment—will help this country retain its international competitiveness, which declined markedly when the Labour party was in government.

My hon. Friend is right that we must deal with tax avoidance by companies, and there are a number of measures in the Bill that are precisely aimed at ensuring that businesses pay their fair share of tax, which I am sure he would wish to support. Furthermore, through clause 180, we are introducing vital reforms to the controlled foreign companies rules, and, through clause 19, a patent box to allow UK businesses to operate in an ever-more globalised world. Hopefully, we will encourage some of the businesses to which he refers to return to the UK. The latter measure has already secured a major investment in this country by a major chemicals company.

As well as creating the competitive conditions for enterprise to thrive, we must ensure that businesses have the support they need to seize the opportunities in the recovery. That is why we are taking action in the Bill to support the small businesses, the start-ups and the entrepreneurs that are critical to creating new jobs in the recovery. Clauses 39 and 40 increase the annual investment limit for enterprise investment scheme and venture capital trusts to £5 million. In that spirit, through clause 28, we are introducing a new scheme—the seed enterprise investment scheme—to encourage further investment in small, start-up companies, which are the

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kind of companies this country needs more of as the recovery continues. Those are significant steps to encouraging new growth, galvanising new sectors, and broadening access to finance for UK business, helping to rebalance our economy away from its over-reliance on one sector and one region.

We are committed to supporting a private sector recovery right across the UK. Clause 44 introduces a new, enhanced capital allowance regime for businesses in seven enterprise zones in England, three in Scotland and one in Wales.

Miss Anne McIntosh (Thirsk and Malton) (Con): My right hon. Friend might have noticed that most of the enterprise zones are in urban areas. We have heard about static caravans and churches, but there is growing concern about rural businesses, which are losing out by not being in areas that will benefit from the schemes that he is announcing.

Danny Alexander: I recognise my hon. Friend’s concern. On churches, she will be aware that, as we said in the Budget, we will increase the listed places of worship scheme by £5 million a year, precisely to enable churches that have alterations to benefit from the scheme and not to be adversely affected. However, our investment in transport infrastructure and a number of local transport schemes, and the massive investment in broadband in rural areas—we are investing £520 million to ensure that every part of the country has the latest superfast broadband—will make a major difference to rural economies. Along with the increases to the income tax personal allowance, to which I shall turn in due course and which will particularly benefit rural areas, where incomes tend to be lower than in urban areas, there are many reasons why the rural economy will benefit significantly from the measures taken by this Government. Enterprise zones will help to promote growth in every part of the UK.

The Budget included an announcement of a package of measures to ensure that we fulfil our potential to extract the greatest possible amount of oil and gas from our reserves in the North sea through a major package of tax changes. We will end the uncertainty on decommissioning tax relief that hangs over the industry by entering into contracts with companies. We will also introduce new field allowances, including a £3 billion new field allowance for large and deep fields, to open up west of Shetland, the last area of the basin left to be developed. Clause 184 gives the power to introduce new brownfield allowances as and when the industry can demonstrate the need for them in specific areas through the information it shares with the Government through the new processes that we have established. Those measures together are a huge boost for investment in the North sea.

We continue to support economic development in the devolved Administrations. Clause 189 devolves the power to the Northern Irish Assembly to set rates of air passenger duty for direct long-haul flights from Northern Ireland, which will help to protect the vital direct air service to the US, supporting tourism and businesses in Northern Ireland.

The Government will not relent as we seek to restore prosperity across the country. We are committed to promoting business enterprise, investment and exports

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across all parts of the UK. Securing sustainable growth and creating sustainable private sector jobs are the best ways to support families and raise living standards in the long run. Of course, I understand that these remain tough times for many families across the country. That is why the Bill reinforces our commitment to helping the lowest-paid in the country while ensuring that those with the broadest shoulders continue to carry the heaviest burden.

Simon Hughes (Bermondsey and Old Southwark) (LD): Some of us have been frustrated in recent weeks that that point has been obscured by bigger press reporting of changes with much smaller consequences for the Treasury. Will my right hon. Friend put on the record the relevant impacts and costs, including the number of people benefiting from the threshold changes compared with the number benefiting from the other, much more marginal changes that matter little to most of our constituents, including, I think, his?

Danny Alexander: My right hon. Friend is right that the single most significant measure in the Budget was the largest ever increase in the income tax personal allowance. I will dwell on that in detail in a moment but his point—

Rachel Reeves (Leeds West) (Lab) rose—

Danny Alexander: I shall finish my response to the previous intervention before gladly taking another one.

By far the largest measure in the Budget was the £3.5 billion tax cut for people on low and middle incomes through the largest ever increase in the income tax personal allowance—a massive support to 24 million working people across the country—and my right hon. Friend is absolutely right to draw attention to it.

Rachel Reeves: Will the Chief Secretary confirm the Institute for Fiscal Studies’ numbers showing that with the changes to the personal allowance and other changes—for example, to tax credits—the average family with children will be £511 worse off from this month?

Danny Alexander: No, I will not confirm those figures. According to my figures, 23 million individuals will be better off as a result of the personal allowance change—[Interruption.] A number of families are affected by our tax credit changes but many more benefit from our income tax changes.

Mr Russell Brown rose

Danny Alexander: I will take one more intervention from the hon. Gentleman, who has not cooled down.

Mr Brown: I assure the Chief Secretary that I have cooled down—I do not take much cooling down. In the run-up to the 2010 general election, he and his Liberal colleagues made abundantly clear what they wanted to do with personal allowances to take some people out of paying income tax. Did they honestly expect to do that off the backs of pensioners?

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Danny Alexander: I am glad that the hon. Gentleman at least recognises that we made clear in our election manifesto our ambition to raise the income tax personal allowance to £10,000. We have introduced the triple lock for pensions that provides for a more generous uprating system, and some 5 million pensioners pay no income tax at all. For those reasons, many pensioners will be better off.

It is right that the richest in the country contribute a fair and growing share to our collective effort to build a balanced and sustainable economy. Clause 209 increases the bank levy to 0.105% from January 2013 to offset the tax saving that the banks would otherwise have made from a reduced rate of corporation tax. That will ensure that UK banks continue to pay around £2.5 billion in this new tax each and every year, which is more than was raised in a single year by the previous Government’s one-off bank payroll tax.

Clause 211 introduces a new higher rate of stamp duty land tax of 7% on properties worth more than £2 million. That is why next year’s Finance Bill will cap the use of tax reliefs that some wealthy people currently use to reduce their income tax rate to single figures. As we made clear on page 59 of the Budget document, however, we

“will explore with philanthropists ways to ensure this new limit of uncapped reliefs will not impact significantly on charities that depend on large donations.”

Our consultation on the detail will be published in the summer.

Mr David Ruffley (Bury St Edmunds) (Con): Many charities, including the Suffolk Foundation, estimate that the cap on tax reliefs will lead to a 20% reduction in their charitable donations. Will the Chief Secretary consider exempting charitable donations to UK charities? It would be comparatively inexpensive but terribly important to the charitable sector.

Danny Alexander: It is important that the House is clear about what is being proposed. What we are proposing is a limit, on what are currently uncapped tax reliefs, of £50,000 or a quarter of someone’s income, whichever is the higher; so someone earning £10 million a year can still receive tax relief on donations of £2.5 million to charity each and every year. However, as I say, we will discuss this with philanthropists and charities—indeed, those discussions are ongoing. Some features of the American system, for example, may be attractive, which we will certainly examine and consider as part of that process.

The basic principle that the wealthiest in the land should pay a fair proportion of their income in income tax must be absolutely right, not least because last week we published data showing that last year some of the wealthiest people in the country had reduced their tax bills to below the basic rate of income tax. That is the system that was in place when Labour was in power. I think Opposition Members should have a bit of humility about that, because it means that some millionaires are paying a lower rate of income tax than people earning £20,000 a year. That is why it is fair that we cap tax reliefs, and, in the same way, it is right that we cap benefits. It is right and proper to ensure that the wealthiest in the country should pay a fair share of their income in tax, and that is exactly what we will do.

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Penny Mordaunt (Portsmouth North) (Con): Can my right hon. Friend confirm that the measures in the Budget will raise five times more than changing the 50p rate?

Danny Alexander: My hon. Friend is absolutely right about that. The figures in the Budget book, certified by the independent Office for Budget Responsibility, show that in each and every year, money raised from the wealthiest in the land will dwarf by five times at least the cost of reducing the 50p rate to 45p. In doing that, we are also, for example, clamping down on the avoidance of stamp duty—something that was left as an open door by the previous Government. They seemed to be in favour of a tax system that encouraged avoidance, rather than clamping down on avoidance, ensuring that everyone pays their fair share and thereby raising five times as much money overall, which we can use, for example, to fund the massive cost of the substantial reductions in income tax for people on low and middle incomes in this country.

Mr Andrew Love (Edmonton) (Lab/Co-op): How does the right hon. Gentleman square the policy that he has just enunciated with the objectives of the big society, which the Prime Minister is so keen on?

Danny Alexander: With this measure we are trying to strike the right balance between having a proper system of tax relief for charitable donations and ensuring that the wealthiest in this country pay a fair proportion of their income in tax. I would have thought that the hon. Gentleman would support that measure rather than oppose it, particularly when he considers it in the context of the many other measures that we have taken to encourage and support charities and voluntary organisations. For example, we have introduced for the first time gift aid on small donations received by small charities—from shaking tins on the street corner, holding coffee mornings and that sort of thing—which was not done when his party was in office. That will benefit thousands of small charities all around this country, and it is the sort of thing that he should welcome. Likewise, Big Society Capital has been created to help charities and voluntary organisations to raise funds.

Owen Smith (Pontypridd) (Lab): Before the right hon. Gentleman moves off the 50p rate completely, can he explain to the House why the numbers revealed by the Treasury this morning seem to show that at least 75% of top-rate taxpayers were paying the full rate of tax? How can he explain to his hon. Friend the Member for Portsmouth North (Penny Mordaunt) that so little money—the £100 million that is ostensibly in the Budget—was being raised by the 50p rate?

Danny Alexander: First, the hon. Gentleman should study the figures based on the tax system from 2010-11, under the tax rules put in place by his Government. They show, for example, that 6% of those earning over £10 million a year were paying tax at under 10%, that 3% were paying it at 10% to 20%, that 8% were paying it at 20% to 30%, that 12% were paying it at 30% to 40%, and that 72% were paying it at above 40%. The figures do not say that they were paying at the 50% rate. The fact is that the independent Office for Budget Responsibility and the HMRC study, which I am sure the hon. Gentleman has reflected on in great detail, show the most reliable, reasonable, central estimates.

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Rachel Reeves: Will the right hon. Gentleman give way?

Danny Alexander: No, I want to make some progress, and the hon. Member for Pontypridd (Owen Smith) has already intervened on this point.

Owen Smith: Will the right hon. Gentleman give way?

Danny Alexander: No, I am going to press on and address the question of the 50p rate. When I have done so, the hon. Gentleman and the hon. Lady will be free to intervene on me again.

Before discussing the 50p rate, I will refer briefly to clause 8, which will remove child benefit from the highest earners. We will withdraw child benefit from those in households earning more than £50,000 in a way that is gradual, so that only those earning more than £60,000 will lose all their child benefit. The measure will help to ensure that the burden of deficit reduction is fairly shared, and by implementing it as we propose, we will deal with the anomalies that have been highlighted.

Mark Field (Cities of London and Westminster) (Con): I perhaps have more sympathy than many of my colleagues with the idea of the charity tax that is being introduced. Will my right hon. Friend confirm that, in regard to that tax and to child benefit, it is the Government’s intention to try to restore those benefits once the deficit has been paid down and we no longer have to service a debt of £126 billion a year?

Danny Alexander: I thank my hon. Friend for his support, but I cannot confirm that intention at this stage. We have a major ongoing problem with the sustainability of our public finances. We set out in the spending review last year, and reaffirmed in this year’s Budget documentation, the need for further spending—

Sheila Gilmore (Edinburgh East) (Lab): Will the right hon. Gentleman give way?

Danny Alexander: I am just responding to the previous intervention, if the hon. Lady will just hold her horses for a second.

We confirmed in the Budget document the need for further fiscal consolidation in the years 2015-16 and 2016-17. We cannot simply promise to reverse measures, although that is the policy of the Labour party, which seems quite happy to return to its old habit of high spending and introducing measures that would return this country to the mess that Labour has already put us in.

Sheila Gilmore: Over the Easter recess, did the right hon. Gentleman have a chance to reflect on the question that I asked him during the Budget debate? Why, having listened to people’s concerns about child benefit, was he not prepared to make any concessions to the much poorer group of people who were going to lose their tax credits?

Danny Alexander: I explained in the Budget debate that reforms to tax credits were necessary to deal with the rapidly growing cost of a system that had started out costing £18 billion a year and was now costing £30 billion. It will still cost about £30 billion, but that money will be more focused on those on lower incomes.

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When we first came into office, we inherited a tax credit system that could pay tax credits to people on £50,000 or £60,000 a year—

Sheila Gilmore rose

Danny Alexander: Let me answer the hon. Lady’s point. Reform of the system was necessary. It was one of the hard decisions that we have had to make in dealing with the massive budget deficit and the huge mess that her party left the British economy in. Recognition on her part that that has to be dealt with would be a welcome way in which to start her next intervention.

Sheila Gilmore: This is a matter of fairness. I am not talking about the tapering off of tax credits at the top end, although I might have a view on that as well. I am talking about the changes that came into force the week before last, which are hitting the very lowest earners—people at the very bottom end, who will not benefit from the changed tax thresholds as they already earn too little to pay income tax. Has the right hon. Gentleman reflected on why he is prepared to make concessions on child benefit to the much better off taxpayers when he is not prepared to reconsider the hit that some of the very lowest earners are taking? Those people might end up having to give up work as a result.

Danny Alexander: I notice from the matters for debate selected by the hon. Lady’s Front-Bench colleagues for the next two days’ consideration of the Bill that restoring child benefit for this country’s highest earners and multimillionaires is a major priority for her party. As for the tax credit changes, in a system where we expect a lone parent to work 16 hours in two days a week to qualify for tax credits, it is reasonable to ask more from a household that has two earners working 24 hours a week in three days. I view that change as reasonable.

Several hon. Members rose

Danny Alexander: I shall return to the subject of tax avoidance and I want to make some progress, as I know many hon. Members wish to contribute to the debate. We are taking decisive action to clamp down on avoidance. It is utterly abhorrent that a minority of the population seek to avoid paying their full and fair share of tax, distorting the tax system to the detriment of the vast majority who pay their fair share of taxes in full. Whereas the previous Government allowed avoidance to grow and spread, we are putting a stop to it.

In total, this Finance Bill contains 15 measures to close loopholes and tackle avoidance. For example, clause 212 introduces a new stamp duty rate of 15% to deter those seeking to put their high-value property into a corporate structure to avoid tax—so-called enveloping. In a future Finance Bill, we will put in place an annual charge on properties that are enveloped in this way. Residential properties should be within the stamp duty system, full stop. It is shocking that the previous Government did so little on this matter. We are not being so complacent about the tax position of the most expensive properties in the country.

Julian Smith (Skipton and Ripon) (Con): Will the right hon. Gentleman give way?

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Danny Alexander: I will, but then I am going to make some progress.

Julian Smith: The Yorkshire Posthas recently established that the police chief constables’ body ACPO—the Association of Chief Police Officers—has been paying money to ex-chiefs of police forces through special purpose companies. Will the Chief Secretary confirm that the rules on this process will be tightened up under Government proposals?

Danny Alexander: I certainly can confirm that, and I shall bring some proposals before the House in due course. The hon. Gentleman may recall that it was the case of the chief executive of the Student Loans Company that brought this issue to light. We have conducted an investigation into this practice in and across government, which has highlighted the fact that this process is far too widespread. As I say, I shall announce the details in due course, but the hon. Gentleman can rest assured that the Government take this issue very seriously indeed.

Debt buy-back measures announced last month will raise more than £500 million from banks that tried to avoid paying their due tax. In addition, the introduction of the UK-Switzerland agreement into legislation will help to ensure that we can tackle the tax loss from those who put their money into Swiss banks to evade paying tax.

Through the anti-avoidance measures in this year’s Finance Bill, we are already increasing revenue over the next five years by around £l billion and are protecting a further £10 billion that could have been lost. Going even further, we will consult on the potential for a general anti-avoidance rule—a new rule that will at last put the Government one step ahead of the tax avoiders. It is because of these far-reaching reforms that we will raise £500 million more each and every year from the wealthiest in our society. That is five times more than we lose by cutting the ineffective and uncompetitive 50p tax rate.

The 50p rate raised just a fraction of the amount that the previous Government said it would raise, but by cutting the rate to 45p, the direct cost to the Exchequer is only £100 million—a figure certified by the independent Office for Budget Responsibility, which I thought the Labour party welcomed, which described the figure as “central and reasonable”. Instead, the measures we have announced in the Budget will raise considerably more from the wealthy—five times more in total—allowing us to help millions of people on lower incomes to keep more of their earnings through the largest ever increase in the income tax personal allowance.

Rachel Reeves: Figures released by the Treasury today show that of those people earning more than £10 million, 72% pay the full top rate of tax, so can the right hon. Gentleman confirm that they will be receiving on average sums amounting to tens of thousands and in some cases hundreds of thousands of pounds because of the cut in the top rate of tax?

Danny Alexander: As the report from Her Majesty’s Customs and Excise, certified by the independent Office for Budget Responsibility, showed, the cost of reducing the rate was small, precisely because the tax did not yield the amounts we were promised by the previous

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Government. Instead, by putting our measures in place—the cap on uncapped tax reliefs, clamping down on stamp duty avoidance, the general anti-avoidance rule and many other measures I have mentioned—we will get more money from the wealthiest, who are precisely the people the hon. Lady talks about—

Rachel Reeves: Will the right hon. Gentleman give way?

Danny Alexander: No, I want to make some progress. The hon. Lady has intervened twice on this subject, and her colleagues intervened once, and they have not said anything new.

Stewart Hosie (Dundee East) (SNP) rose

Danny Alexander: I will give way to the representative of the Scottish National party who might have new light to shed on this question.

Stewart Hosie: As a result of the 5p tax cut, the next four years will see a loss of revenue yield amounting to £350 million. About 10 minutes ago, the Chief Secretary himself said that the sustainability of the public finances was a major ongoing issue. Why are the Government prepared to forgo £350 million over the next four years in order to deliver a millionaires’ tax cut?

Danny Alexander: Very simply, for the reason that I have given several times today. We are raising five times more from the same group of people, which helps us to deliver the policy which we firmly believe is the best way to support working people on low and middle incomes and help them to keep more of what they earn.

Frank Dobson (Holborn and St Pancras) (Lab): Will the Chief Secretary give way?

Danny Alexander: No. I have been speaking for a long time, and I am going to make some progress now.

We have set ourselves the goal of raising the personal income tax-free allowance to £10,000. Clause 3 increases the personal allowance this year to £8,105. Together with the previous increase, that will lift more than a million low-income earners out of income tax completely. Moreover, we are going further and faster. In the Budget we announced the largest ever increase in the amount that people can earn tax-free—an increase, from next April, of £1,100 to £9,205. That tax cut will be worth £3.5 billion every year to working families. It will benefit more than 23 million people, and will be worth £220 in cash terms and £170 in real terms to every basic rate taxpayer. That is the biggest income tax cut for a generation. Taken with the previous increases, it means that this coalition Government will have halved the income tax paid by someone who works full time on the minimum wage, and lifted 2 million people out of tax altogether. We are living up to our commitment to support hard-working people and families across the country.

We are also reforming the age-related allowances available to those born before 6 April 1948. We recognise that pensioners need additional help, which is why we introduced the triple lock on pensions. The basic state pension will increase by 5.2% in April 2012, which is

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£127 more than was planned by the last Government and which constitutes the largest ever cash increase. Under our plans for age-related allowances, no pensioners will lose out in cash terms. Instead, given the huge increase in the personal allowance and the reduced difference between it and the age-related allowance, we will simplify the system. Those born before 6 April 1948 will benefit from the age-related allowance or the personal allowance, whichever is greater. That change will remove, in time, the complicated taper which the Public Accounts Committee called

“complex and hard to understand”.

This is a substantial Bill. It demonstrates the ambition that we need to secure a tax system and an economy that are built on fairness, that reward hard work, and that restore our private sector’s competitiveness. Even with that scale of ambition, however, the Bill makes substantial progress in simplifying our tax system and living up to our commitment to improving the way in which the Government develop tax policy. More than 75% of the measures in the Bill were announced in the 2011 Budget, with more than 400 pages of legislation published for consultation and more than 450 comments received in return. Through that openness, transparency and consultation, we are committed to building a simple and stable tax system that is easy to understand and easy to comply with. That is why we are addressing a number of loopholes and anomalies in the VAT system—introducing an anti-forestalling charge in clause 195—and why the Bill cuts large swathes of the tax code by implementing recommendations from the Office of Tax Simplification. I thank John Whiting and his team for their excellent work in that regard.

The Government are taking decisive action to restore our stability and return the country to prosperity. Our No. 1 priority remains dealing with the last Government’s legacy of crippling deficit and debt in a fair and sustainable way. Through this Finance Bill, we are continuing to ensure that the richest carry the heaviest burden. We are supporting businesses so that they can restore our global competitiveness, and we are supporting hard-working families on low and middle incomes. I commend the Bill to the House.

4.19 pm

Rachel Reeves (Leeds West) (Lab): This Finance Bill is so flawed, so unfair and so inadequate a response to the problems now facing the country that I am surprised that the Chief Secretary does not show a little more embarrassment in presenting it to the House this afternoon. This Government are presiding over an economy beset by rising unemployment, a slump in private sector investment and billions of pounds of unplanned extra Government borrowing, yet he comes to this House with a Finance Bill that does nothing for growth, nothing to get more young people back to work and nothing to help small businesses struggling to stay afloat, and which instead asks millions of hard-pressed families and pensioners to pay more so that millionaires can pay less.

It is less than two years since this Government took office, yet they have already sent our economy into reverse. Business and consumer confidence have drained away, and growth has sputtered and stalled with no net increase in our national output over the past 15 months, and with wages and incomes stagnant or falling even as

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the cost of food, fuel and fares rise and rise. The Office for National Statistics confirms that last year saw the sharpest annual fall in real disposable income for 35 years. The private sector has been unable to fill the gaping hole left by deep and painful public sector cuts, and as a result overall redundancies have been running at a rate of one a minute since this Government took office.

Mr Redwood: What tax cut does the hon. Lady think would do most to promote economic recovery?

Rachel Reeves: I believe that a temporary cut in VAT back down to 17.5% and a national insurance holiday for all small businesses taking on new workers are the way to put the economy back on track to recovery.

Charlie Elphicke (Dover) (Con): How would the hon. Lady pay for those pledges, and how much they would cost?

Rachel Reeves: This Government are borrowing an extra £150 billion because of the costs of their economic failure. The reality is that, with more people out of work and therefore claiming benefits, and with fewer businesses succeeding and paying taxes, this Government are ending up borrowing more, because their risky gamble with their economic policies has failed.

Instead of continuing on the downward path begun under the previous Government, total unemployment has mounted to new highs. It is now at the highest level since 1997. Some 2.67 million people are out of work. More than 1 million young people are out of work. We have the highest level of youth unemployment on record. That is a cruel fate to be inflicting on people leaving school, college and university. Instead of going on to get a job or training, they are being left to rot on the dole queue. The truth is that—just as we on this side of the House, along with numerous independent economists, warned—the Government’s attempts to cut too far and too fast have choked off the economic recovery, squeezing households and businesses and sending unemployment soaring, with the result that, as I said to the hon. Member for Dover (Charlie Elphicke), the Government are now forced to borrow £150 billion more than they had planned.

This lesson is being learned around the world, as over-ambitious austerity plans founder. Last year the OECD warned credit rating agencies which press for rapid fiscal consolidation but

“react negatively later, when consolidation leads to lower growth—which it often does.”

Sure enough, Standard & Poor’s decision earlier this year to downgrade nine of the eurozone’s 17 member states was accompanied by the warning that

“fiscal austerity alone risks becoming self-defeating.”

The International Monetary Fund’s sharp downward revisions of its global growth forecasts—including for the UK—for 2012 was accompanied by a call to “reconsider the pace” of fiscal consolidation. Indeed, the IMF’s chief economist has said:

“Substantial fiscal consolidation is needed, and debt levels must decrease. But it should be…a marathon rather than a sprint”

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and cited the proverb

“slow and steady wins the race”.

Our economic performance did not have to be this way. We need only look across the Atlantic to see the benefits of a more balanced approach to deficit reduction, with the US now enjoying steady falls in unemployment and accelerating economic growth. Let me quote the opinion of Adam Posen of the Bank of England’s Monetary Policy Committee. His forensic comparison of the US and UK experiences concluded:

“Fiscal policy…played an important role as well. Cumulatively, the UK government tightened fiscal policy by 3% more than the US government did…and this had a material impact on consumption. This was particularly the case because a large chunk of the fiscal consolidation in 2010 and in 2011 took the form of a VAT increase, which has a high multiplier for households.”

In other words, by hitting households as hard as they did, sapping confidence and sucking demand out of the economy, the Chancellor and his ready accomplice, the Chief Secretary, have got the UK stuck in the slow lane while other key players in the global economy are overtaking us.

Mr Graham Stuart: On the subject of others overtaking us, the hon. Lady will be aware that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) became Finance Minister at roughly the same time as the Finance Minister in Australia, but whereas at a certain point the right hon. Gentleman lost the plot and spent money that this country could not afford, Australia paid down its national debt. Thus, when the financial credit crunch came, Australia was able to stimulate its economy, whereas this country had overspent in the good times and was not able to do so.

Rachel Reeves: Between 1997 and 2007 this country’s debt ratio fell from 42.5% to 36% of GDP, so the debt burden fell; in 2007, our debt-to-GDP ratio was lower than when we came to power in 1997.

What hope did the Chief Secretary and the Chancellor offer in this Budget for the future of our economy? The answer is precious little. The Government’s own Office for Budget Responsibility predicts another year of low growth ahead; it predicts just 0.8% growth in 2012, followed by 2% growth in 2013. That is well below what was promised when the Government took office. According to this morning’s forecasts from the Ernst and Young ITEM—Independent Treasury Economic Model—club, even those dire outlooks now seem optimistic. Ernst and Young predicts just 0.4% growth for 2012, followed by 1.5% growth the year after. Meanwhile, on any prediction, including the Government’s, we will still have at least 2 million unemployed people by the end of this Parliament.

Even those figures conceal deeper failures and more disturbing trends. Some may remember the Chancellor’s promise of a new economic model for Britain, based on lower levels of borrowing, and higher levels of saving and investment. In reality, the promised renaissance of business investment has been repeatedly postponed. An 8% increase in investment was promised for 2011, but investment actually fell by 2%. A further 10% increase was predicted for this year, but an increase of less than 1% is now forecast. The role of investment in driving

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growth for future years has been significantly revised down, too. Ernst and Young said this morning that business spending

“has picked up nicely in the US”

but that UK plcs remain “extremely reluctant” to invest. It continues:

“Consequently, the economy is bleeding cash into company coffers at an alarming rate…This haemorrhage is sapping the strength of the economy, keeping it on the critical list.”

They are not my words, but those of the Ernst and Young ITEM club.

Meanwhile, figures from the OBR reveal that the Government have increasingly become reliant on household consumption for their growth forecasts. That consumption is not being financed by growth in real disposable incomes, which, as I said, have stagnated and which the OBR confirms are set to stagnate for at least another two years. The household consumption growth is being funded by a fall in savings every year from now until 2016 and by a rise in total personal debt of almost 50% over the next few years; it will reach a staggering total of £2.12 trillion by the end of this Parliament.

Jacob Rees-Mogg (North East Somerset) (Con): If the hon. Lady is so doubtful about an increase in consumption leading to economic growth, why does she advocate a cut in VAT, which would serve only one purpose: to increase consumption growth?

Rachel Reeves: The point I am making is that the consumption growth forecast for this Parliament is being funded by increased indebtedness. A VAT reduction would boost the spending power of households without their having to take on extra debt. With incomes stagnating and, in many cases, falling, many families are resorting to taking on more debt because they cannot afford to make ends meet—that is the point I am making. That is why a reduction in VAT would help put money into the pockets of ordinary families, who are struggling so much with rising gas, electricity, train, bus and petrol prices.

Simon Hughes: Has the hon. Lady seen the OECD reports, which make it clear that raising tax thresholds is a far more effective way of getting money back into the economy than changing VAT? Such an approach benefits poorer people much more, whereas VAT changes benefit the rich just as much as the poor.

Rachel Reeves: The right hon. Gentleman would do well to look at the analysis by the Institute for Fiscal Studies, which shows that the increase in the personal tax allowance most benefits those who are in the second highest income decile. Increasing the income threshold is not a progressive policy; in fact, pensioners do not benefit from it at all, and nor do people who are on such low incomes that they do not pay income tax—[ Interruption. ] The right hon. Gentleman says something from a sedentary position. I am happy to take another intervention if he wants to dispute the analysis of the IFS.

Simon Hughes: Of course some pensioners will not benefit, but some will. Some pensioners receive an income on which they pay tax and the rise in the threshold will benefit them. The hon. Lady has avoided

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my question about the OECD study, which makes it very clear that if one is choosing between reducing VAT and increasing the threshold and if the aim is to help people on lower incomes and to get money into the economy, one should go for the increase in the threshold.

Rachel Reeves: That is just not true and it is not accurate. A reduction in VAT helps people who do not pay income tax, which includes the poorest people, and benefits pensioners. The increase in the personal tax threshold does not benefit pensioners one jot, nor people who are not earning enough to benefit from a change in personal allowance. A cut in VAT helps all those people, however, including the lowest paid who will not benefit from the changes to the tax threshold. The right hon. Gentleman is just wrong.

Charlie Elphicke: The hon. Lady can correct me if I am wrong, but my reading of the IFS’s analysis is that it says that increasing the personal allowance just like that would benefit the most well-off, but it does not take into account the fact that the threshold at the 40% rate is reduced down so that the most well-off do not benefit. That is a slight flaw, by my reading, in the IFS analysis.

Rachel Reeves: The analysis of the measures in the Budget shows that the changes to the personal threshold are not a progressive policy, as hon. Members seem to be claiming. In fact, they benefit those dual income households on higher salaries much more than they benefit the poorest people in society, many of whom do not pay tax. Of course, the changes do not benefit pensioners at all as they are seeing their tax allowance frozen. As a result, many pensioners will lose out by up to £83 whereas people who are coming up to retirement will lose out to the tune of more than £300 a year.

The Chancellor of the Exchequer’s new economic model—this idea that we will have a rebalanced economy with lower borrowing, more saving and more investment—has failed to materialise. Indeed, the precise opposite is predicted. Their plan has failed: the policies are hurting, but they are not working. This Finance Bill, which was a chance for the Chancellor and the Chief Secretary to learn the lessons and to start to repair some of the damage that they have done, has been a huge missed opportunity.

Julian Smith: Does the hon. Lady agree that at the moment business confidence is key? I was surprised that at the start of her speech she did not welcome GlaxoSmithKline, Nissan, Sahaviriya, Jaguar and the other international investors that have made a commitment to Britain because of this Government’s policies. Is she not pleased that those companies are bringing jobs and investment to Britain?

Rachel Reeves: The hon. Gentleman said that investment is coming to Britain, but business investment fell by 2% last year, whereas a year ago the OBR predicted that it would grow by 8%. The reality is that the economic data show that investment is falling and the OBR says that nothing in the Budget will materially affect the economic forecast. The proof of the pudding is in the eating and the numbers show that things are moving in the wrong direction. I find it incredibly out of touch for Government Members to try to speak about the economy as if it is booming and creating jobs and as if businesses

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are investing when all the economic data show just the opposite. Jobs are being shed and investment is falling, rather than rising.

Mrs Anne McGuire (Stirling) (Lab): Does my hon. Friend recognise that although the investments mentioned by the hon. Member for Skipton and Ripon (Julian Smith) are welcome, increased growth in jobs will come from the small and medium-sized enterprise sector, where there is a complete depression in confidence and job growth? It is all very well to comment on the large investments, but the stimulation should come from those small and medium-sized enterprises, and they do not feel at all confident.

Rachel Reeves: I thank my right hon. Friend for that intervention. It is good to hear from a Member who is a little more in touch with the realities facing businesses up and down the country. As she points out, many small businesses are being starved of cash because the Project Merlin agreements for bank lending were not worth the paper they were written on, and at the same time the Government have done nothing in this Budget to help small businesses. The Opposition have proposed a national insurance holiday for all small businesses taking on new workers. That would go a long way towards trying to relieve some of the pressure on the small businesses that are struggling so much right now. The Opposition hope to see measures in the Finance Bill and the Budget to get the economy moving again, to give hard-pressed businesses and hard-working families a break and to give young people who are looking for work some hope for the future. We would be cutting national insurance contributions for small businesses taking on new workers, we would be cutting bills for hard-pressed families by reversing the Chancellor’s badly timed VAT increase, and we would be funding new jobs for young people and new investment in affordable house building by taxing excessive bank bonuses.

Hon. Members do not have to take our word for it—the damning judgment of the Government’s own Office for Budget Responsibility should really worry Members on the Government Benches. Box 3.1 on page 46 of its latest economic and fiscal outlook, headed “The economic effects of policy measures”, says that the only policy measure with a measurable economic effect is the cut in corporation tax, which it says will lead to an