The Muscular Dystrophy Campaign is launching a landmark new project in July, and it is funded by the Department of Health, which is good. The aim is to secure neuromuscular service developments in the newly reformed NHS, and we shall see how that works, because, as I say, the jury is out on how the reforms have been
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put together. However, the principle behind what the campaign is trying to do is the right one. The project is bringing together specialist commissioners, clinical commissioning groups, clinicians and people living with muscle-wasting conditions so that they can work together to improve the patient experience. However, the project is about muscular dystrophy, and I come back to the point I made to the hon. Member for Wealden: myriad organisations, individuals and trusts out there are all trying to achieve the same ends, and we really have to find a mechanism to bring them together. I hope the work the Muscular Dystrophy Campaign is doing will help to show the Government how they can do that.
In closing, I want to touch on the question raised about the trials process for drugs and treatments. I met a mesothelioma sufferer—a very brave young woman who had picked the disease up through contact with her father’s clothes. She had to travel to Germany for treatment. She lived many years longer than she was told she would, and that was, without any doubt, because of the treatment. She had a good quality of life, but we had to battle hard to get any support for the cost of the treatment. NICE was particularly difficult, even though this tried-and-tested technique was being used in Germany. The problem was that there were not enough people in the pool here to justify NICE giving the treatment the all-clear so that this young woman could use it, and we really need to look at that. When medicines and treatments are available in America or Europe, where there are high standards of testing, there should be more flexibility than currently exists.
3.18 pm
Mark Durkan (Foyle) (SDLP): I commend the hon. Member for Strangford (Jim Shannon) on introducing the debate, which is taking place just a few months after the all-party group on muscular dystrophy concluded its inquiry; I took part in some of the evidence sessions. The group expressed the concern, which has been voiced in the debate, that some of the changes that are afoot could imperil some of the good, concentrated work that has been done on rare diseases. There is a fear that the confused migration of various functions and tasks means that some of the specialist focus over the past few years has been lost.
The Government have argued that there will be new approaches, and they have said that the UK strategy would help to take care of some issues, creating a new focus on rare diseases. However, they also said that the £50 million specialised services commissioning innovation fund would be used to support work on rare diseases. Only a month after the all-party group reported with its concerns, that fund was essentially withdrawn because of other funding pressures. The statements and assurances that we get do not add up. The fears and apprehensions of many of the rare disease campaign groups and others, including Members and all-party groups, are reinforced by the apparent confusion.
The Government need to do more to give the rare disease strategy credibility and traction. In an intervention on the hon. Member for Strangford, I talked about what was needed, in addition to work at the UK level, to get better co-ordination between NHS England and the various devolved health services. Besides each responsible health service area doing its bit, there is a need for real collaboration that transcends those areas.
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Indeed, I see that happening beyond the UK; I see it spanning the whole of the British-Irish Council, which includes the Republic of Ireland, the Isle of Man and the Channel Islands. There are people with rare conditions in isolated parts of these islands, and the idea of combining our efforts on rare diseases and trying to achieve an economy of effort that would not be possible within one jurisdiction or health authority is important. The British-Irish Council is ready made to bring added emphasis and commitment to such areas.
It is important to do more than just pledge greater co-ordination and prioritisation for rare diseases; another issue to be dealt with is resources. As individual health authorities find it harder to guarantee a competent concentration of commitment to rare diseases, we must find critical mass at a higher level that transcends the health authorities and the devolved health service areas. That is why the UK strategy is an important concept. The 51 commitments are strong and sound, but there are questions about whether they will, in practice, add up to a full strategy, if they are left to the interpretation of each area individually. At times, there seems to be confusion about when NHS England is driving for the UK as a whole, and when it is in the lead simply as a matter of quantum—because it is the biggest. I am not sure whether there is a full strategy and co-ordination plan, and we need to continue working on that.
Some hon. Members have mentioned excellent work done in various locations, some of which depends on the skilled and dedicated leadership of clinicians, who may move to other posts. We should not take it for granted that the excellence achieved in some places will be sustained and maintained. That is a challenge, not least in the area of rare diseases. People progress professionally and move on, and sometimes the services that they leave are not sustained and maintained with the same quality. That is why—to return to the idea of co-ordination and co-operation across the UK, and more widely across the British-Irish Council—I argue for a central, open faculty. Then the clinicians who provide treatment for, or do research on, rare diseases may not feel that they are working on in isolation, feeling nearly as lonely as some sufferers; instead, they may feel part of a working, open faculty, in which they can connect with other professionals and patients.
I commend the Government and devolved Administrations on formulating the strategy so far, but funding is a fundamental question. We need significant challenge funds to be available, so that specialists who respond to particular patients, identifying needs better and coming up with innovative treatments, are not left trying to busk around within their local health service, trying to get a bit of funding here or there. The fact that the £50 million innovations commissioning fund was an early casualty in the reorganised NHS does not give great encouragement. More needs to be done.
The Minister with responsibility for care is responding to the debate, and as the hon. Member for Plymouth, Moor View (Alison Seabeck) said, few of the rare diseases we have been considering have outright cures or treatments; for many with such diseases, the approach is supportive therapies and coping support. My remarks have concentrated perhaps more on clinical leadership, but care and support are also hugely important. I know that the Minister will be conscious of that. Aspects of what I mean include setting good models and examples
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of practice and experience; helping individuals—particularly the young people who are sufferers of so many of the rare diseases—and their families; and thinking about improving care networks and the meshing of services, so that people who provide services, whether in education or family support, understand better what rare diseases may entail, and their possible life-cycle variation during the life of a child. People who provide social and education services cannot readily make themselves experts in the conditions in question, and often they confuse conditions whose names sound the same, although they are very different in character, and give rise to different demands and behavioural consequences. Wider support is needed.
Finally, the Government need to take account of the context of welfare reform and changes to several benefits, and the fact that every so often, people must reapply and prove their case for benefits again. That is particularly hard when people have rare diseases. Those people and their families should not have to spell out their condition again, in all the medical jargon, and explain it. They should not be made to jump through those hoops. We should find a better way in the social security system of showing understanding about rare diseases.
Jim Shannon: The time it takes to process an application is frustrating for the person concerned—and it frustrates me and other hon. Members, too. In special cases such as those involving rare diseases, I have had to go to someone at the top of the tree in Northern Ireland, to expedite the process. Does the hon. Gentleman think that people with rare diseases should be put in a fast queue, to be processed more quickly?
Mark Durkan: I think they should be put in a “not to be neglected” queue, rather than a “too difficult for us to sort out now” queue. The problem at the moment is that if an applicant’s condition is deemed very rare or complex, instead of their case being given added attention and urgency, it is allowed to silt up. That can happen with medical treatment and the opportunity for further diagnosis, which often requires travel outside the jurisdiction, and with the social security issues that I have mentioned, and on which I want to finish.
The Welfare Reform Act 2012 contained provisions that seemed to assume that many people with lifelong conditions would suddenly improve and not want to let on about being cured. It is a bit much when families who have their hands full supporting someone with a rare condition—particularly a child or young person—as well as supporting other family members, must constantly jump through hoops for a system that is supposed to support them and understand their needs.
Alison Seabeck: Will the hon. Gentleman accept that there are also issues about the way in which general health funding is distributed? In Plymouth, we have a very high prevalence of rare diseases, perhaps linked to the heavy industry that we have had, yet we get half the funding per person that is seen in Windsor and Maidenhead, for example. Will he accept that that also needs to be revisited?
Mark Durkan: I absolutely accept that point. It also came through in the earlier inquiry work on some of the concerns voiced by the all-party muscular dystrophy group. That goes back to the point that I made about funding.
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The real test of whether a strategy is coherent and effective is what happens when it comes to funding. We can have many good statements of intent. There are 51 commitments, which are very strong and sound. It all sounds great, but does it translate into money being available for support and treatment or, as happens with approving new drugs, does the finance test get in the way of support and treatment reaching people? The cost-effectiveness criteria used either by the National Institute for Health and Care Excellence or by the Joint Committee on Vaccination and Immunisation raise questions. Particularly in relation to rare diseases, if the test is almost that a possible new treatment has to throw two sixes to start, in circumstances in which people do not even have any dice, it is a serious problem. Although the rare disease strategy is a good start, it is only that—a good start. It will need more work and more resources, and will need to be informed by further research.
Hugh Bayley (in the Chair): We now come to the winding-up speeches. I remind both Front Benchers that we have just under half an hour left.
3.31 pm
Mr Jamie Reed (Copeland) (Lab): Thank you, Mr Bayley; it is a great pleasure to speak under your chairmanship again. It is a huge privilege to follow the hon. Member for Foyle (Mark Durkan), who made an incredibly telling contribution to the debate as usual. He is one of the few hon. Members—I hope that he does not mind my saying this—that it is worth staying in a debate to listen to, and he always has been. There were also tremendous contributions from my hon. Friends the Members for Poplar and Limehouse (Jim Fitzpatrick), for Plymouth, Moor View (Alison Seabeck) and for Blackley and Broughton (Graham Stringer) and an incredibly insightful and welcome contribution from the hon. Member for Wealden (Charles Hendry), who reminded us yet again of what a genuine loss he is to the Treasury Bench.
I thank the hon. Member for Strangford (Jim Shannon), who spoke in a health debate in this Chamber only a fortnight ago. I commented then that his record in contributing to health debates in this Chamber is, in my experience, unrivalled—at least, he is always here when I am here. For those past contributions, for his speech today and for securing this very important debate, I cannot commend him enough.
Figures provided by Rare Disease UK show that one in 17 people will be affected by a rare disease at some point in their life. That equates to about 3.5 million people. As we have heard, three quarters of those affected by rare diseases are children and, tragically, almost one third of those children will die before their fifth birthday. As a father of four children, I can add no words to underline the stark brutality of that statistic. My heart goes out to all the families who have faced such a shocking loss.
The term “rare diseases” refers to more than 6,000 different conditions that can affect the young or old and have an impact on physical or mental health. These can be life-threatening, debilitating diseases, but the term can also refer to manageable conditions.
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The very definition of rare diseases, and how these are manifested in the statistics that I have given and that we have heard from other hon. Members, illustrate the fundamental issues that arise when we try to establish a coherent, comprehensive and useful long-term strategy through which to deal with the problems that they present. Some rare diseases will be very similar and advancements in medical sciences and research in one area can greatly benefit another, but some classes of diseases can be extremely different from others and the treatments for those can be wildly different, not sharing any empirical research base. As we have heard, economies of scale are often hard, if not impossible, to find.
That huge difference in dealing with each disease highlights a problem in trying to gear the system with the tools and resources necessary to make advances. With limited resources, any improvement in one area of research can sometimes be at the expense of another. These are difficult calculations and choices. Research and development must be rewarded. Certainty and predictability of funding for this work are essential. Some research—potentially a good deal—will yield no tangible or quick benefit at all. Supply chains, researchers and research and development environments must be identified, supported, grown and nurtured. The loudest voices will not always be the most deserving.
These are invidious choices. Can the Minister explain the Government’s priorities in this regard? How will Government ensure that the right balance is struck between all these competing pressures, and can the Minister tell us what criteria are used by Government to decide how and which areas of research are prioritised?
In 2009, before the last general election, the Labour Government set in motion a UK strategy following the adoption of a recommendation from the European Union in which member states were required to commit to better research and more resources for tackling rare disease. I think that all hon. Members on both sides of the Chamber agree that that was an important step.
It is now just a few weeks since the current Government published the UK plan for rare diseases. We welcome that plan, but I am struck by some of the apparent contradictions between what the Government say they want to do and what they are actually doing. The Minister knows full well that I respect him significantly. We will be spending a lot of time together in Committee on the Care Bill next year, and I hope that we can perhaps establish a precedent and resolve those contradictions today.
In October this year, the specialised services commissioning innovation fund was scrapped. That fund was set up, amid great fanfare, just two months earlier, with the promise that it would save lives and help patients. The fund was intended to provide finances and resources needed to expedite the synthesis of hundreds of potential new treatments for rare diseases. The Prime Minister said that it was
“becoming ever more essential to get your products tested and adopted in the NHS much more quickly”
“the newest innovations are often the lowest hanging fruit”
As we have heard, the commissioning innovation fund represented a £50 million investment. The BBC reported that the fund was scrapped due to “financial
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pressures”. John Murray, the director of the Specialised Healthcare Alliance, called the decision
“bad news for people with rare and complex conditions”.
Will the Minister tell us what those financial pressures are? I could hazard a guess, but I think that we deserve to know.
Of course, this will not be the last time that the Prime Minister says one thing and does another, but can the Minister tell us how this decision affected the interests that I mentioned earlier? Has the Department assessed how this cancellation affected the research and development supply chain, its planning, its recruitment and its work streams? If such an assessment has not been undertaken, will he commit today to doing that? More importantly, has the Department undertaken any analysis of how this chaotic mess has affected the state of the art? Have any potential treatments failed to appear as a result of the funding cut? Have any treatment delivery work programmes been interrupted as a result? It is impossible to believe that the decision has had no effect. More importantly than anything else—I know that the Minister will want to answer this question—have the funding cut and its effects had any negative effect on patients living with rare diseases?
Just one month before the cut was announced, the all-party muscular dystrophy group warned that resources earmarked for rare disease medication had been absorbed by the overall NHS budget. Will the Minister explain how the removal of significant resources that were specifically earmarked for the research and development of new treatments for rare diseases fits with the Government’s stated aims?
Let me move on to the strategy. No one would disagree that there is a need for a co-ordinated effort from all the countries in the UK when tackling the issues before us. I would be grateful if the Minister could explain, when he responds, how the new fragmented system of commissioning of services in England will be able easily to co-ordinate the commissioning of research and the commissioning of what are often expensive treatments for rare diseases and, as we have heard, orphan and ultra-orphan conditions with the NHS in Scotland, Wales and Northern Ireland. Where is the guiding mind with which to achieve economies of scale and critical mass in research, which we know is necessary for these conditions?
It is clear that NHS England has a leading role to play in ensuring that the new strategy is implemented and implemented well. The benefits of a national body taking a lead on that are plentiful, but how does that fit with the idea of creating local areas of expertise, such as the centre at Newcastle university and the centres elsewhere in the country, to steer innovation? Is the driving force behind innovation and new treatments coming from NHS England or from experts on the ground, and how will that work in practice? Of course we need to allow innovators to flourish, but we also need to co-ordinate. Where does the responsibility for that co-ordination rest?
That brings me to my final point. As in any debate on matters relating to health issues, we must always focus on the patient. If patients are not seeing improvements in their care, or they do not experience any easing of the symptoms associated with their disease, the Government —any Government—will have failed. Innovations are
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meaningless if the patients who rely on them see no benefits. Without the resources to back them up, strategies are little more than meaningless words. For any of us to claim success, patient access to treatments must improve. Many groups, as we have heard, are calling for a form of adaptive licensing to be implemented with regard to treatments for rare diseases. Have the Minister or any of his officials had any contact with, made representations to or received representations from the Medicines and Healthcare products Regulatory Agency with regard to adaptive drug licensing for treatments of rare diseases?
Access to treatments raises several issues from the perspectives of the patient and the manufacturer. First, bringing drugs to market is difficult and expensive. Encouraging drug companies to manufacture drugs and treatments that will benefit a relatively small number of patients is an important and challenging task. In the case of motor neurone disease, for example, no new drugs for the treatment of the disease have been approved since riluzole more than 20 years ago.
We must always ensure that drugs brought to the market are safe and effective. That means that even if the new UK strategy is effective in encouraging greater innovation in the field for developing treatments for rare diseases, those treatments will not be available to help patients for several years. That is not a problem that has arisen solely under the current Government—nothing could be further from the truth—but it is a difficult, sensitive issue. To that end, what are the Government doing to ensure that new treatments are available to improve the quality of life for patients with rare diseases as soon as possible?
From the patient’s perspective, the issue is often cost. Prescriptions for those with rare diseases can amount to a significant financial burden. The previous Government put in place a framework that would have resulted in those with long-term conditions becoming exempt from prescription charges. Can the Minister explain why the coalition Government chose to scrap that? Enabling greater access to treatment is essential, and I hope that the Minister can explain why that has not been given more prominence in the strategy.
As I have said, rare diseases affect millions of people. The impact on sufferers and their families is immense, so the cost of getting the strategy wrong is high. More importantly, no matter how difficult it is and whatever our political allegiances, we are morally obliged to get this right. When the Minister gets to his feet, I hope he can give those people some confidence and help to resolve the contradictions I have outlined. Finally, if the Government can produce a coherent, integrated and effective approach to resolve the problems that they seem to have caused, and to progress those issues in a meaningful and timely manner, they will have my support and that of my colleagues.
3.42 pm
The Minister of State, Department of Health (Norman Lamb):
It is a pleasure to serve under your chairmanship, Mr Bayley. I thank the shadow Minister, the hon. Member for Copeland (Mr Reed) for his generous offer of support, and I am sure that we will be able to deliver his preconditions for that support. I congratulate the hon. Member for Strangford (Jim Shannon) on securing the debate. He is, as the shadow Minister has said, one
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of the most assiduous attendees at health debates and a consistent contributor on a whole range of different issues. We all welcome his contributions. He always makes the case for better co-ordination and collaboration between the different nations of the United Kingdom, and I completely share that aspiration. There is great value in a bit of diversity in the development of our health systems, because we can often learn things from the innovation and experimentation taking place in other parts of the United Kingdom. In opposition, I visited Northern Ireland because I was fascinated by the way in which Northern Ireland commissions and provides health and social care together. I wanted to learn more about the experiences in Northern Ireland, good and bad. Such diversity is to be valued and we should not have a one-size-fits-all approach, but I agree with the hon. Gentleman about the importance of collaboration. The Government’s strategy is an example of where that can be really strong and effective.
Ms Margaret Ritchie (South Down) (SDLP): On the Minister’s point about collaboration, is he aware that a drug to deal with atypical haemolytic uraemic syndrome has been approved in England but the same approval has not been given in the devolved institutions, particularly in Northern Ireland?
Norman Lamb: I was not aware of that, but I am interested to hear it, and the hon. Lady makes her case powerfully. Before I respond fully to the points made by the hon. Member for Strangford, I want to deal with some of the other issues that have arisen during the debate. Several hon. Members, including the shadow Minister, asked whether the new architecture of the NHS had damaged the co-ordination of work on rare diseases. In many respects, I can reassure hon. Members. There is a danger that if one was coming into this place from afar and hearing the debate, one might think that we were moving from an idealised, perfect scenario into something more troubling. We all know, however, that that is absolutely not the case. The treatment of rare diseases historically has been far from optimal, and the greater involvement of clinicians in the commissioning of care can have real benefits for patients. Until 31 March 2013, far from being a simple matter, specialised commissioning was fragmented across a range of NHS organisations including regional specialised commissioning groups, a national specialised commissioning team and local primary care trusts, which remained ultimately responsible for the specialised health care of their populations. From 1 April 2013, under the terms of the Health and Social Care Act 2012, NHS England became the sole direct commissioner of specialised services, which provides a greater simplicity in the commissioning of services.
Alison Seabeck: Will the Minister give way?
Norman Lamb:
I will continue, because I am conscious of the time. The hon. Member for Poplar and Limehouse (Jim Fitzpatrick) made a valuable contribution. I learned something about trigeminal neuralgia, from which I think I understood him to say that he suffers. He asked whether it would be possible to meet once the report that he referred to is complete, and I would be happy to
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agree to that, diary permitting. I am sure it will be possible to do so at some point. He made some important points about misdiagnosis, and about the importance of support groups and networks. The internet now provides incredible assistance to people with rare diseases, because they can link up not only with those in their neighbourhood but with people and clinicians globally who can guide them in the treatment of their condition. He also spoke about unnecessary referrals to hospitals and the mental health implications of some rare diseases, and I completely agree with him.
My hon. Friend the Member for Wealden (Charles Hendry) made powerful points about the extraordinary work of so many families, and he mentioned in particular the work of Charlie’s Challenge and Tildy’s Trust. Such families do the most remarkable work, and they are often hellbent on producing a really valuable legacy from their experiences. His point about the Department helping to co-ordinate the work of so many such groups was well made. He also referred to the fantastic work that is going on in Edinburgh university, and I applaud all those involved.
The hon. Member for Plymouth, Moor View (Alison Seabeck) made the point that there is extraordinary variability of service around the country. That is something that the strategy can absolutely address, and I believe we will get powerful results. She referred to her constituent, young James, who suffers from Duchenne muscular dystrophy, and she talked about the importance of transition to adulthood. I focus a lot on mental health, and that transition is often a complete disaster. We need to do far more to improve it.
The hon. Member for Foyle (Mark Durkan) made some important points about collaboration. He referred to the British-Irish Council, and although I have no idea whether his suggestion is possible, I am happy to look into it. He talked about the funding challenge. We are in very tough financial circumstances and often—the contributions of many hon. Members this afternoon have emphasised this—the question is how the money is used, because it is frequently not used effectively. A misdiagnosis usually results in an inappropriate referral to hospital, and a patient goes down completely the wrong track. An enormous amount of money is wasted, and the patient receives very poor care. It is essential to improve the way in which the system works to extract better value. We recently announced integration pioneers in 14 areas of the country. None has had extra money, but they demonstrate that, by co-ordinating their efforts more effectively, they are producing much better results for patients. The shadow Minister was absolutely right that the one thing we should all focus on is the patient—the individual citizen—and their experience of the system.
It is fitting that this debate should happen so soon after the launch of the UK strategy for rare diseases. This strategy is an overarching UK-wide framework, setting out a shared UK strategic vision for improving the lives of all those with rare diseases. It is owned by each country in the UK and commits them to more than 50 actions—I think it was identified as 51—that will deliver better outcomes for those with a rare disease. It means that for the first time we are in a position to make a tangible, co-ordinated difference to those suffering with a rare disease. That is something we can all be really positive about.
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As we have heard, one in 17 people will experience a rare disease at some point in their life, with the majority of diagnoses made in childhood. That amounts to some 3 million people in the UK. A disease itself may be rare, but having a rare disease is, alas, not unusual, because there are so many of them—a point made by the hon. Member for Plymouth, Moor View. They are a major cause of illness and make considerable demands on the resources of the NHS and other care services. The strategy for rare diseases is based around the more effective and efficient use of services—a point I made earlier—with better links to research and innovation. As the NHS constitution states, no-one should be left behind because of their condition, be it rare, very rare or yet to be diagnosed. To achieve this, England, Scotland, Wales and Northern Ireland have agreed to deliver the 51 commitments that focus on five areas.
The first is empowering patients—perhaps the most significant of all—making sure that they are listened to, informed and consulted every step of the way. No one knows the condition better than the person suffering from it; too often, they are ignored in a rather paternalistic system. We will continue to work closely with patient groups and others to improve services for rare disease sufferers. We will improve access to knowledge and support networks at UK, European and international level, and we will help patients to participate in rare disease registries. We will look at how those might be developed in England to better capture the patient experience.
Secondly, we want to develop more effective methods for identifying and preventing rare diseases. Carrier testing, preconception and antenatal care, along with newborn screening, all play a part. Rare diseases are often genetic in nature, and so can affect more than one member of the family. This makes it important that testing of other family members, where appropriate, becomes more routine.
The third area is better diagnosis, which has been raised during the debate, and earlier intervention. Too many people still wait far too long to get an informed, correct diagnosis. There are several things we need to address. We need to ensure there is better awareness of rare diseases. That is important across all aspects of health care. Not everyone can be an expert, but ensuring that the possibility of a rare disease is considered when a diagnosis is proving difficult can help. We need to ensure that all doctors are alert to the possibility of a rare disease when they see patients, even if they are not able to diagnose specific diseases. This means including better training on rare diseases in university courses and in professional development at work.
The training and education of clinicians is critically important. Health professionals do not need detailed knowledge of every rare condition, but all medical specialties and multi-professional care teams should have a general awareness of rare diseases so that they can make rapid referrals to specialists in the appropriate field. Making genetic testing more mainstream, harnessing the potential of genomic technologies and focusing on what our DNA can tell us will also help us to reduce the time to diagnosis.
Perhaps the most important commitment is to develop clearly defined care pathways between primary and secondary care and regional and specialist centres. Health
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care professionals, especially GPs who are likely to be the first point of contact, need to know how to access the pathways for those at risk of rare disease.
Fourthly, we want to see better co-ordination of care. Building on the fantastic NHS genetic services that already exist—this country is well recognised internationally for that—we want to see the development of centres of excellence in rare diseases, providing one-stop-shop services to patients through co-ordinated consultation and treatment schedules. The centres should also be knowledge and skills hubs—concentrating the skills together—that support local delivery of services and facilitate clinical trials and other research projects.
The last area of the strategy, but by no means the least, is recognising the absolute importance of research, which several hon. Members have touched on today. The Government are committed to supporting research into rare diseases. Such research holds the key to improved personalised and targeted approaches to health care. These have the potential to improve the effectiveness and safety of treatments, the speed of diagnosis and patients’ quality of life.
In the UK, we are lucky to have some of the best academic and clinical research in the world. It was no coincidence that Earl Howe launched the strategy at Great Ormond Street hospital last month. The hospital itself hosts a National Institute for Health Research biomedical research centre that continues to lead on experimental medicine, including the discovery of diagnostics and new treatments for childhood diseases. The shadow Minister—if I can briefly divert him from his iPad; I am sure he is catching up on important stuff—made the point about how we ensure that we make the right decisions on research priorities. Ultimately, it comes down to the quality of the proposition that is put forward, but I will write to him and other hon. Members on the issues raised that I have not touched on.
We also want to see more collaboration between patients, health care professionals and researchers, and for that to become normal custom and practice. At that same event, Earl Howe also announced that the National Institute for Health Research is establishing a rare diseases translational research collaboration to translate research into actual practice. As part of the NIHR rare diseases translational research collaboration, researchers will share their considerable resources and world-leading expertise to increase research collaboration and improve treatment and care.
Some £20 million over four years is being invested by the NIHR to fund the NHS research infrastructure focused on deep phenotyping—the gathering of information on the physical characteristics of people with rare diseases. The TRC will build on our British heritage as a world leader in genomics. It will provide national co-ordination to bring those with significant relevant NIHR-funded infrastructure in the NHS together. That will speed up the development of new diagnostics and treatments. That is also why rare diseases is one of the three priority areas for the Government’s initiative to sequence 100,000 whole genomes over the next three to five years. We want to see innovative research and cutting-edge technology translated into real patient benefit.
The strategy for rare diseases will increase access and lead to a more patient-centred, co-ordinated approach to care and treatment, clearly focused on the needs of
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patients and families. Each country in the UK will develop its own implementation plans over the next few months. We will ask a reconstituted UK rare diseases stakeholder forum to maintain an overview of the implementation of the strategy. The original forum was established earlier this year and comprises policy officials from the four UK countries, service users, industry, regulators and service providers. The forum played an invaluable role in the development of the UK strategy and will now have an ongoing role in monitoring the strategy’s implementation and reporting back on progress.
In England, our key delivery partner is NHS England. The recommendations of the UK strategy for rare diseases that relate to NHS England’s responsibilities for specialised commissioning will form part of the scope of NHS England’s five-year strategy for specialised services—an £11.8 billion plan to co-ordinate specialist services.
I want to thank all hon. Members for their contributions to a very useful debate. On all the other points that I have not been able to deal with, I will write to hon. Members.
Hugh Bayley (in the Chair): I very much look forward to seeing some of the Front Benchers when we scrutinise the Care Bill in the weeks to come.
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Sixth-Form Colleges (VAT)
4pm
Lisa Nandy (Wigan) (Lab): My constituency is home to two excellent sixth-form colleges, St John Rigby college and Winstanley college. Like so many of the 94 sixth-form colleges in the country, they do an excellent job, not only for their students but for the wider community. It is deeply unfair that they must pay VAT while school and academy sixth forms do not. In other types of free 16 to 19 education provision, funding is diverted to the front line. Why not for students in sixth forms?
Following recent changes to the funding formula, the anomaly has become unjustifiable. That view is shared by at least 74 other Members of Parliament, including the Chairman of the Select Committee on Education and my hon. Friend the Member for Barrow and Furness (John Woodcock), who wanted to highlight the case of Barrow-in-Furness sixth-form college but unfortunately cannot be here due to illness.
This unfair situation is exacerbated by the cuts made to sixth-form colleges in recent years. In 2010, enrichment funding was reduced from 114 to just 30 hours a year. Subsequently, the new 16 to 19 funding formula cut their budgets further—the average was 6%, which masks much more serious cuts for some. Last week, out of the blue, sixth-form colleges were told that 18-year-olds would no longer attract the same level of funding. Ministers argued that it was because those students have already received two years of funding, which completely misses the point that they are often the young people who most need and benefit from the additional help that we can provide.
Caroline Lucas (Brighton, Pavilion) (Green): The hon. Lady is making a strong case. On behalf of the three sixth-form colleges in my constituency, I absolutely agree. Will she comment on the fact that the sixth-form colleges in Brighton disagree with the Government’s position that VAT costs are taken into account in the up-front funding allocation made to colleges? If she agrees, will she join me in saying to the Minister that surely that means schools and academies are effectively being double-funded, because they are getting that as well as the VAT rebate?
Lisa Nandy: Absolutely. Issues of a level playing field are at the heart of this debate and I hope that the Minister will respond to that in his closing remarks.
Taken together, in the worst cases, the funding cuts have left some sixth-form colleges reeling from a staggering 30% overall budget cut. We should consider the issue against that backdrop.
Civil servants originally estimated that creating a level playing field for sixth-form colleges in relation to VAT would cost £20 million. They have since revised that upwards on several occasions, arriving most recently at a figure of £150 million, which includes other institutions. I say to the Minister that it seems completely the wrong approach, given that the Government have accepted in principle that treating sixth-form colleges differently is wrong, to refuse to right that wrong for them because they do not want to do so for others.
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The problems for sixth-form colleges are exacerbated by the fact that, unlike school sixth forms, they cannot cross-subsidise their 16 to 19 work with funding from pre-16 provision, which is more generous. Principals and teachers across the sector are taking agonising decisions about dropping courses, cutting staff or reducing activities. A survey last year found nearly half of colleges had had to drop courses, eight out of 10 had had to cut staff and an astonishing 71% had removed or reduced enrichment activities such as sport, music, drama and dance. That is a loss for all young people, but it is devastating for young people who have never had such opportunities open to them.
Mr Mark Spencer (Sherwood) (Con): I congratulate the hon. Lady on securing this debate, but will she acknowledge that sixth-form colleges are often able to offer courses that school sixth forms cannot, because they have the ability to draw in expertise? Ultimately, we need a level playing field, so that all those offering sixth-form education are playing by the same rules.
Lisa Nandy: Absolutely. The issue of the level playing field has come up time and time again. The hon. Gentleman is absolutely right about courses and the staff that sixth-form colleges can use. I am concerned that that loss of staff has also meant a loss of expertise. If the sector is hit by anything else, we will struggle to get it back.
Kerry McCarthy (Bristol East) (Lab): This issue has certainly been raised with me by St Brendan’s sixth-form college in my constituency. Another issue is the fact that the VAT situation does not allow adults to use the building for more than a short amount of time. Otherwise, that incurs VAT as well. The academy schools in my constituency lobbied me about that in the past, but thankfully we managed to overturn the situation for them. In terms of community engagement, does she agree that not being able to use the buildings in the evenings is a wasted opportunity?
Lisa Nandy: Absolutely. I am grateful to my hon. Friend for raising that point. There is also a wider point: sixth-form colleges benefit not only their students but the wider community. I know from my constituency that they are institutions rooted in the wider community, and they play a much more beneficial role across our town than it would appear from looking only at their core activities.
It is galling for my sixth-form colleges that while they are struggling with the impacts of the cumulative funding cuts, the Government are creating new free schools and academy sixth forms, with which they are required to compete but which are VAT exempt. Many people contacted me before the debate to point out, rightly, that a market does not function if competition is not fair. Many new free school sixth forms are struggling to fill their places, yet those places are funded too. Ministers are paying for places in new institutions to lie empty while successful and established sixth-form colleges are struggling to afford the students that they have.
Nic Dakin (Scunthorpe) (Lab):
I congratulate my hon. Friend on securing this debate and putting the case so strongly. She puts her finger on it: new institutions are being funded for phantom students who are not
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there, while existing institutions are not only not being funded for this year’s students but taking a 17.5% cut in funding for next year’s students, based on an existing 20% difference in funding. VAT is yet another anomaly. Does she not agree?
Lisa Nandy: Absolutely. I pay tribute to the work done by my hon. Friend and many of the other Members present. The fact that there are so many Members here for such a short debate should tell the Minister that there is huge strength of feeling throughout the House on this issue.
All of this would make more sense if the sector were failing, but taken as a whole, sixth-form colleges are not only lean and efficient institutions, according to the National Audit Office; they are also among the best existing provision for 16 to 19-year-olds. Some 80% of them are rated as good or better, and they consistently rate higher than other types of provision in terms of added value. I know that St John Rigby college in my constituency does tremendous work with young people from deprived backgrounds and outdoes almost every other type of provision in getting those young people to university.
Caroline Nokes (Romsey and Southampton North) (Con): I congratulate the hon. Lady on securing this important debate. Does she agree that 16 to 19 provision in further education colleges—outside a school setting—can sometimes provide the impetus that 16-year-olds who might not have done well at school need to enable them to achieve their GCSEs and then go on to A-levels?
Lisa Nandy: The hon. Lady is absolutely right. I am grateful to her for raising that issue. The culture in sixth-form colleges is enormously beneficial to such young people, and the staff are obviously passionate and determined to ensure that those young people reach their potential.
In conclusion, Ministers have accepted that this situation is unfair, so will the Minister who is here in Westminster Hall today take steps to create a level playing field for sixth-form colleges?
Kelvin Hopkins (Luton North) (Lab): My hon. Friend may be interested to know that my very first debate in Parliament, 16 years ago, was about sixth-form colleges and took place in this room, but that is beside the point. At that time, I described sixth-form colleges as the geese that lay golden eggs; I think she has made that point today. Of course, one other thing that sixth-form colleges do is to bring together young people from different schools and different communities. They are often situated in areas of diversity and they are a tremendous force for social cohesion. Does she accept that point?
Lisa Nandy: My hon. Friend is absolutely right, and his expertise on sixth-form colleges is well known; not only does he sit on the governing body of a local sixth-form college but he is chair of the all-party group on sixth-form colleges, which has done so much good work on this issue. I have to say to him that when he was first raising issues about sixth-form colleges in this place, I was actually at a sixth-form college in the constituency of the hon. Member for Bury North (Mr Nuttall). That shows that nothing changes.
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As I was saying, Ministers have accepted that this situation is unfair, so will the Minister take steps to create a level playing field for sixth-form colleges? Will he make this important sector a promise that there are no more of these cuts to come? And will he join me in paying tribute to the extraordinary contribution that sixth-form colleges, such as my local one, make to young people and communities across the country?
Mr Graham Stuart (Beverley and Holderness) (Con) rose—
Hugh Bayley (in the Chair): I have not had a note—
Mr Stuart: Yes, in both cases.
Hugh Bayley: If it is yes and yes, I am glad to give the floor to the Chair of the Select Committee on Education.
4.11 pm
Mr Graham Stuart (Beverley and Holderness) (Con): Thank you very much, Mr Bayley, for calling me to speak. It is a great pleasure to serve under your chairmanship, and to confirm that both the Minister and the hon. Member for Wigan (Lisa Nandy), who secured the debate, had agreed to my speaking in it. I am sorry if I should also have informed you, Mr Bayley, but I think my bureaucratic resources ran out after contacting the Minister and the hon. Member.
Given the short time available, I will try to keep my comments brief. In October, I wrote a letter to the Secretary of State for Education. It is a shame, notwithstanding the great respect that I have for my hon. Friend the Exchequer Secretary to the Treasury, who is a deeply distinguished member of the Government, that we do not have a Minister from the Department for Education here to answer questions about what is essentially an education matter. That letter was co-signed by 73 MPs from across the House, and it made the point that the unfair treatment of sixth-form colleges as far as VAT goes made no sense and was, in fact, untenable. The good news is that the Government agreed, fundamentally, that they could not defend that treatment. The bad news is that they do not plan to do anything about it. That is a shame, because Government policy is to create a level playing field for 16 to 19 provision, and they are right to do so. If anyone wants to play party politics, I will point out that the Opposition were wrong to leave the position uneven when they were in power. However, the Government have set out their aim, but now they are not fulfilling it. They have moved in that direction, but there is a real opportunity to take action on this issue. In the overall scheme of things, it would not be that expensive to do so; for sixth-form colleges, it is estimated that it would cost no more than £30 million.
There are reasons why sixth-form colleges could be treated differently from further education colleges, if one wanted a stepped programme. To say, “This is wrong, but we can only afford to rectify some of it, so we will rectify none of it” is illogical. It would be better to do the right thing by sixth-form colleges, not least because, as has been said, they are the most successful 16 to 19 providers that we have. If the Government’s education policy is about anything, it is about raising
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standards across the board and, of course, closing the gap between rich and poor. Well, guess which the most successful institutions are in the 16 to 19 sector at doing both those things? You’ve got it—sixth-form colleges.
I have no sixth-form colleges in my constituency; I am not banging a constituency drum here. The sixth forms in my local schools will probably be cross with me for speaking up for sixth-form colleges so often. However, the whole point of the Education Committee is that we look at the evidence and try to work out what is the best thing to do. Well, guess what? Sixth-form colleges are peculiarly successful in addressing the Government’s two key aims on education, so it makes no sense to penalise them in the way that is happening now.
The VAT penalty that sixth-form colleges face is worth an average of £250,000 per college, and as has been said, the problem is worsened because, unlike other institutions, they cannot cross-subsidise. If that money were to be provided to sixth-form colleges, it would help them to save courses that are being lost, including less popular courses such as further maths. Ministers are quite right to identify the need to encourage science, technology, engineering and maths subjects. Sixth-form colleges can play a positive part in doing that, if they are provided with the wherewithal to do so.
Mr Robin Walker (Worcester) (Con): I am grateful to the Chairman of the Education Committee for giving way; he is making a very strong speech. He talked about investment in STEM subjects. Worcester sixth-form college has received money from the Government to invest in a new science centre. However, does he agree that that money would go further if we were able to take action on VAT for colleges?
Mr Stuart: I absolutely agree with my hon. Friend, and I think there are feelings across the House on this subject. I said that I would keep my remarks brief, so perhaps I will bring them to a close. The big point is that sixth-form colleges have for years consistently been the most successful providers at delivering the Government’s key educational aims for 16 to 19-year-olds, but time and again, they appear to be on the front line of cuts in funding. That cannot make sense, in terms of having a rational, coherent approach to this issue.
Jason McCartney (Colne Valley) (Con): I congratulate my hon. Friend on the great work that he is doing. He said that he has no sixth-form colleges in his constituency; I have no schools that provide sixth-form education in my constituency. However, there are three colleges there that provide sixth-form education: Huddersfield New college, Greenhead college, and Kirklees college. I also congratulate the hon. Member for Wigan (Lisa Nandy) on securing this debate, and I will continue to support this campaign.
Mr Stuart: I am grateful to my hon. Friend for saying so.
There is another aspect that it is worth pointing out briefly. At the moment, because of the freedoms for schools that I think are broadly supported across the House—there is certainly support for them on the Government Benches—there is a danger that we are sleepwalking into the creation of more small sixth forms, which we know, from sustained evidence gathered over
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time, perform poorly. At the same time, we are undermining institutions that have a long track record of success in raising standards for all, and in closing the gap between rich and poor. We cannot allow that to happen, so we need the Government to wake up and recognise the jewels that they have in the form of sixth-form colleges.
Far from seeing sixth-form colleges cut back, sliced and reduced in capacity and capability, I would have thought that, having found a delivery system that works better than others, we should desperately look at expanding and supporting it in a way that is fair to other providers. I do not want in any way to be prejudiced against sixth forms, but I would like a level playing field, because we have the exact opposite: we are seemingly strengthening those with the weakest record, and weakening those with the strongest record.
Mike Thornton (Eastleigh) (LD) rose—
Mr Graham Stuart: I had better give way to the hon. Member for Luton North (Kelvin Hopkins) first, and then I will sit down.
Kelvin Hopkins: I congratulate the hon. Gentleman on his speech; I agree with every word of it. However, does he agree that the Government ought to be looking to create many more sixth-form colleges across the country?
Mr Stuart: I agree. If a system is most successful and cost-effective, establishes high standards, particularly for the poorest, and closes the wealth gap, I would think people would be delighted to see it expand. I will give way to my hon. Friend the Member for Eastleigh (Mike Thornton), and then I will draw to a close.
Mike Thornton: I thank the hon. Gentleman for giving way; I very much appreciate it. With the reduction in spending caused by VAT and the need to provide for those over 18, does he agree that it is very strange to cut money for colleges that aim specifically to get people good A-level results and other results at that level, when they are trying to educate people, including those who perhaps missed out earlier, but who are now able to catch up on their education between the ages of 18 and 19?
Mr Stuart: My hon. Friend is right. Perhaps that is the danger of making political promises that are nice and neat. His party might want to look carefully at the way that the protection of schools has left very few areas where we can cut in order to deliver reductions in spending. It could be that a series of measures that were positively meant have eventually led to this cut.
Those who are 18 at the start of an academic year and who are still at a sixth-form college are likely to be those clinging on to education, having struggled in post-16 education, and they may be at risk of becoming NEET—that is, not in education, employment or training. Again, it does not make sense for a Government who are rightly using the pupil premium and other measures to try to close the gap to finish up looking to make reductions at the end of the period—at the time when pupils need help to get over the line, and to get themselves
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on the first rung of the employment ladder—rather than looking to put in place additional support. The sixth-form college sector is not looking for special treatment; it is simply looking to be treated fairly, compared with other providers.
4.19 pm
The Exchequer Secretary to the Treasury (Mr David Gauke): Thank you, Mr Bayley, for calling me to speak. It is a great pleasure to serve under your chairmanship. I congratulate the hon. Member for Wigan (Lisa Nandy) on securing this debate, and on making her case so strongly. Indeed, it is noteworthy that this is a well-attended debate, as she has mentioned.
In the light of the remarks made by my hon. Friend the Member for Beverley and Holderness (Mr Stuart), I should mention that I am here as a Treasury Minister, as the debate relates to the VAT system. In respect of House of Commons workings, this is a Treasury matter, and this week the Treasury, rather than the Department for Education, was up for debates, although the hon. Member for Wigan has been most ingenious in getting a debate on sixth forms in a week in which Department for Education Westminster Hall debates were not occurring.
The hon. Lady has highlighted how sixth-form colleges interact with the VAT system. Let me say a little bit about that. VAT can be a rather complex matter. It might help if I provided some background, before turning to the specific issue of sixth-form colleges. One basic feature of VAT is that businesses are able to reclaim the VAT that they pay on their inputs. However, this does not apply to purchases, acquisitions or imports made in relation to non-business activities, such as the provision of free education. This means that bodies such as schools can end up with VAT costs on the goods and services that they buy in.
Clearly, it is always an option to meet these costs by increasing the funding made available to schools, for example. However, there is a risk of the burden of that funding falling on local taxation, as the state education system in England and Wales has historically been delivered by local authorities. To deal with that, in 1973 the Government introduced a scheme, now under section 33 of the Value Added Tax Act 1994, allowing local authorities to recover the VAT incurred on goods and services purchased relating to non-business activities. Local authority maintained schools are able to recover VAT under the umbrella of the local authority.
Since then, there have been extensions to that scheme, in particular to cover the position of academy schools. The Finance Act 2011 introduced a new VAT refund scheme, under section 33B of the 1994 Act, to ensure that funding for academy schools’ non-business VAT costs was consistent with that for local authority maintained schools. The specific purpose of the scheme is to ensure continuity in the funding of institutions that are leaving local authority control to become academies, so that they are not put at a financial disadvantage.
I hope that this slight historical excursion has made it clear that there is clear logic to the VAT treatment of local authority schools and academy schools making the move out of local authority control. That logic is rooted in the nature of the service being provided and the relationship to public sector local authorities.
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Let me turn to the campaign by sixth-form colleges, of which hon. Members in the Chamber are well aware. The campaign has gained the support of 74 Members representing constituencies that contain, or are serviced by, sixth-form colleges, and the likes of my hon. Friend the Member for Beverley and Holderness. They wrote to the Secretary of State for Education, expressing their concerns.
Hon. Members have welcomed the introduction of the new 16 to 19 funding formula, which will mean that all 16 to 19 education providers are funded in the same way, and which is reducing the historical disparity between school sixth forms and colleges. However, the 74 hon. Members feel that the way that sixth-form colleges interact with the VAT system leaves them at a disadvantage, compared with local authority or academy schools. In particular, as we heard today, they have asked for their differential VAT treatment to be recognised in the way that they are funded.
Kelvin Hopkins: My memory goes back to when sixth-form colleges were grouped—by mistake, I think—with further education colleges and put into the FE sector. That is why the VAT mistake was made. Had sixth-form colleges been kept in the schools sector, this would not have occurred. Does the Minister agree?
Mr Gauke: I think that is probably a fair description, historically. Schools have been treated one way, in part, because of the relationship with local authorities and funding at local authority level, whereas other elements of the public sector do not get funding for VAT in the way that local authorities do. Sixth-form colleges and further education colleges are examples of that.
Mr Gauke: I give way to someone who knows a lot about this subject.
Nic Dakin: The Minister and I have exchanged words on this matter many times. The historical record is quite interesting. When colleges were incorporated, they had the same VAT rights as schools, because they came from the same part of the womb, as it were, but that was changed at the point of incorporation. Given the way that the landscape of education has changed, it is odd that new provisions, such as university technical colleges or 16 to 19 free schools, are entitled to the VAT, whereas sixth-form colleges are not. That anomaly was created on this Government’s watch. It would be better if it were not so.
Mr Gauke: It should be acknowledged—and it was, in earlier interventions—that notwithstanding the points that the hon. Gentleman makes, this is a long-standing issue.
Let me turn to the Government’s position. The academies VAT refund scheme is set up for a specific policy purpose, which is to remove a financial disincentive for maintained schools to convert to academies. As the purpose is specific, the Treasury has no plans to extend the scheme to colleges. Many other providers of public services are
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expected to cover their VAT costs from their funding allocations. This funding model is applied to bodies delivering—
4.26 pm
Sitting suspended for a Division in the House.
4.36 pm
Mr Gauke: I am grateful for the opportunity to complete my remarks. The academies VAT refund scheme is very specific. The Treasury has no plans to extend that scheme to colleges, and many other providers of public services are expected to cover their VAT costs from their funding allocations. That funding model is applied to many bodies delivering public services, and to some spending by Departments and non-departmental public bodies.
The Department for Education, however, has considered whether adjustments could be made to funding for 16 to 19 education to recognise the differential VAT treatment of different types of providers. In particular, the Department for Education has considered whether it could additionally fund sixth-form colleges by an amount equivalent to their typical VAT costs. The Department for Education has concluded that that is not affordable in the current fiscal climate. The £20 million estimate applies only to sixth-form colleges; extending extra funding to further education colleges, which have a similar case to sixth-form colleges, would cost some £150 million.
Kelvin Hopkins: I echo the Chair of the Select Committee on Education, the hon. Member for Beverley and Holderness (Mr Stuart), by saying that the amounts are small in the scheme of things. They are piffling amounts compared with the volume of the Government’s public spending. One penny on the standard rate produces £4 billion, and we are talking about £30 million for sixth-form colleges. It is a tiny amount of money.
Mr Gauke: I am not entirely surprised by the hon. Gentleman’s comments. I have no doubt that he would not hesitate to put up income tax by 1p. In the context of the current fiscal situation, we have to be very careful with public expenditure. The Department for Education will, of course, keep the sector’s funding under review.
Although I recognise that colleges have concerns, the reform of 16 to 19 education is one of the Government’s priorities. The Government remain committed to moving towards fairer funding of 16 to 19 education by levelling the rate of funding for schools and colleges by 2015.
Sir Peter Bottomley (Worthing West) (Con): I am sorry that I missed the earlier remarks about 18-year-olds and the £700 cut in funding, which will mostly affect people in poorer postcodes. Does my hon. Friend the Minister accept that if the schools budget was increased by 0.8% rather than 1%, there would have been no need for a 17.5% cut in 18-plus funding to Worthing college and other sixth-form colleges?
Hugh Bayley (in the Chair): Order. Minister, you have two minutes.
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Mr Gauke: Department for Education Ministers have decided to make savings in the academic year 2014-15 by reducing the participation requirements for 18-year-olds in full-time education. It is worth pointing out that most 18-year-olds will have already benefited from two years of post-16 education. We are of course in a situation where difficult choices must be made about public finances; my hon. Friend the Member for Worthing West (Sir Peter Bottomley) is well aware of that.
The Department for Education is introducing a series of reforms in partnership with the sector to help drive up standards and improve the quality of provision by implementing Alison Wolf’s proposals for 16 to 19 education, by introducing new traineeships for school leavers, and by reforming the apprenticeships programme to route funding directly to employers.
To conclude, while the Government recognise the concerns raised by sixth-form colleges, this position is not unique to such colleges. The Government have no plans to make any change in this area in the near future, given the fiscal climate.
Hugh Bayley (in the Chair): Order. The Minister having sat down, I am bringing this debate to an end.
I want to put on record—an unadvisable thing to do to any statement from the Chair—that more than 20 Members were present for a half-hour debate, which is extremely unusual and indicates the importance that many hon. Members attach to the subject. I apologise to the Minister and the hon. Member for Wigan (Lisa Nandy) for the manner in which the debate was interrupted by a Division in the House.
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Housing and Related Jobs (Greater London)
4.42 pm
Simon Hughes (Bermondsey and Old Southwark) (LD): I thank Mr Speaker for choosing this subject for debate today. I welcome the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Keighley (Kris Hopkins) to the first debate that I have had with him on such issues and to his new responsibilities.
For the 30-plus years that I have had the privilege of being a Member of Parliament in Bermondsey and Southwark, housing has been at the top of the political agenda for my constituents. It is what they come and see me most about—they need more and better housing. We need more affordable housing of higher quality to meet the demands in a community such as ours. It is not that the local authority has not played a fundamentally important part; we have the largest local authority housing stock in London and one of the largest in the country. There is also significant housing association housing, and we have one of the highest proportions of shared ownership in the country. We have also seen considerable growth in owner-occupation over the years. It was only 2% when I was first elected and is now well into double figures.
As the Minister and everybody in London knows perfectly well, however, the legacy that this Government inherited has meant that we have seen relatively less housing being provided to meet the need in London. I am happy to give credit where it is due. More local authority housing was built under the Governments of Mrs Thatcher and John Major than thereafter, but we then had a period when, although money was spent by Government on bringing homes up to a decent standard, we did not build new local authority housing. We therefore have an accumulative deficit in housing need.
The other self-evident factor is that London has the greatest gap in the country between average family income and the average cost of a home. Both rental costs and purchase costs are far greater relative to income in London than anywhere else. We have a real crisis that the Government, to their credit, have sought to address. I am here to urge the Government to do more and to come up with specific proposals. In particular, I am here to place on the record in Parliament some of the recommendations of a report, which the Minister has now seen, commissioned and worked on by my colleagues in the Greater London assembly, who put forward proposals for how we can increase not only the number of properties built, but also the number of jobs created as a result. There is no better way to increase jobs and apprenticeships than through the construction industry. My constituency, like all others, will benefit from that upturn in jobs, and there are many who would want to work in the construction industry.
At our party conference in September 2012, my colleagues made housing a priority and specifically asked for various things. People can look up the full motion that was passed, but we wanted the Government, the Mayor of London and local government to
“stimulate a major programme of house building, increasing the rate of construction until we reach at least 300,000 houses a year”—
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“using untapped sources of finance and giving more freedom to social landlords, local authorities and local communities”,
“to improve land supply, through releasing public land with ‘build now, pay later’ deals.”
I persistently return to this issue.
I initiated an Adjournment debate in the summer on foreign purchases of properties in London. We have seen growth in the number of people purchasing from abroad and in the number of properties built and offered for sale abroad before they are offered for sale at home. That has caused particular anger and frustration. It has driven up prices, because if properties are opened up to the global market—Malaysia, Singapore and other places—and advertised to people who see London as a good place to invest in housing, the general price goes up because sellers can get higher prices for sales abroad. If local people cannot even get access to bid for properties until after they have been sold—on-plan or off-plan—to someone far away, that is a double frustration. That has been a real cause of grief and frustration to my constituents, in particular around the Elephant and Castle, where a huge development is ongoing, and elsewhere.
I am pleased that the message has got through and that local developers are now making commitments to offer property for sale locally. I am still frustrated that my local council, which Labour still runs, does not insist that the planning conditions that are meant to be applied, specifically that all developments should contain 35% affordable housing, are adhered to. That condition is regularly opposed or not fulfilled when planning permission is granted. I was particularly pleased, however, that the Chancellor responded specifically to the issue in the autumn statement as a result of, I hope, my debate, but also the propositions of others, and announced that, in the following financial year, any non-UK purchaser of residential property who sells a property will pay capital gains tax on that sale, as everybody else does. That has corrected a real injustice where residents in the UK felt that they were being penalised when those who came in from outside were not.
In October, against this background, my colleagues at the London assembly, Stephen Knight and Caroline Pidgeon, produced a report entitled “Affordable Homes & Jobs for London: A Seven Point Plan”. I thank them for their work and the Secretary of State for Business, Innovation and Skills for launching the report in Southwark. I will not repeat the history of difficulties, but I want to highlight one or two things before I concentrate on the proposals for how we get out of the difficulties and increase the Government’s current plans. We have a
“historically low cost of public borrowing”,
“high economic multiplier for investment in construction”,
“high level of spare capacity in the construction sector”,
which is again a plus. At the moment, we are placing
“13,000 homeless households into temporary accommodation”
in London every year, for which the best estimate of cost
“is £408 million every year”.
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The best estimate for the cost to the taxpayer of poor housing is
“£17.5 billion a year in crime prevention, health costs and the loss of children’s future productivity”.
There are still lots of people in emergency temporary accommodation and in overcrowded homes, huge numbers on waiting lists and, as I indicated before, a multiple of 12.5 times the median income for London property prices. Furthermore, private rent levels have risen by more than 11% since June 2012.
The Mayor has his policy, and a draft housing strategy is out for consultation, so I encourage people in London to respond—the deadline is in February. I hope that people who read and hear our debate will look at the consultation and respond. Slightly, if not very frustratingly, when the report was compiled only 737 homes had been started by the Mayor in London this year, and only 5,225 homes had been built on GLA land, although the commitment was to build nearly 40,000. He therefore has a long way to go.
The Government have introduced policies that have certainly initiated significant new development of affordable housing. I hope that we are on target to deliver by the end of the Parliament much more affordable housing England-wide than in the previous Parliament—although the definition was changed—but we are still falling badly behind comparable countries. The report gives a table of the increase in housing completions since 2010 in the UK, Belgium, Finland, France, Switzerland, Poland, the Netherlands, Denmark, Sweden, Germany and Norway: all the others have achieved many more housing completions than we have. We have to be more ambitious. I remember, though I was not politically alert at the time, one of the great legacies of Harold Macmillan was building “homes fit for heroes”. We had a huge housing building programme after the war, as we did after the recession in the ’30s. I am clear that we need that sort of action now.
There are proposals for the Greater London authority to increase investment in and use much more GLA land for affordable homes, but I will speak about matters that the Minister and his colleagues in the Department for Communities and Local Government can deal with specifically. One thing is already on their agenda, which I welcome. This very week, the Minister sent me and colleagues a letter announcing the allocation for the new homes bonus; my local authority has received £10,845,251, according to the letter—I do not doubt the figure. This is a good initiative of the Government, and we welcome it. I am conscious that the GLA has experienced some top-slicing, which is controversial; none the less, the new homes bonus is allowing us to build many more homes and I am positive about it.
I want to propose, however, that the Government could usefully look again, and more boldly, at the housing revenue account and the way in which local authorities can deal with it. I ask the Government not only to take the welcome steps in the autumn statement—allowing shared spend of money up to the housing revenue cap—but to scrap the housing revenue account borrowing cap, allowing London boroughs to invest in affordable housing under prudential borrowing rules.
I want, too, the Government to increase their investment in affordable homes, shifting the balance of spending from housing benefit to bricks and mortar. We are in a
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nonsense position in this respect at the moment: for the four financial years of the current affordable housing programme, £4.5 billion is being invested by the Government to support the creation of affordable homes; over the same period, however, the Government are also spending an estimated £95 billion on housing benefit. In London, in 2011-12, £5.9 billion was spent on housing benefit alone; about half of that, or £2.6 billion, would provide 111,000 extra affordable homes.
I appreciate that we have to have the homes first, before we can move people from privately rented accommodation, where the rents are high, into much cheaper accommodation, which is their own. Of course there is a cycle, but it cannot be beyond the wit of Government to think of ways in which to forward finance that, so that we can build more quickly, move many more people into affordable housing and reduce the housing benefit bill, which I am sure that colleagues in the Department for Work and Pensions would wish. Only 11% of the annual housing benefit spend in London for four years would seem to be enough to fund 111,000 extra affordable homes.
On the benefit for jobs in London, the reality is not only that all the house building would produce extra jobs in the construction sector, which has the capacity—housing associations, too, have capacity, because I have spoken to them and they have confirmed it—but that there is opportunity for full-time employment and for apprentices. Eighteen per cent. of all small and medium-sized enterprises in London are in the construction sector. In the first quarter of 2013, however, the balance of construction employment in SMEs fell faster in London than anywhere else in the UK. Less than 20 years ago, more than two thirds of homes were built by companies employing fewer than 500 people; by 2012, only 27 companies were responsible for 70% of the housing starts in London. SMEs in construction have been squeezed, therefore, and some have left the market altogether.
The last benefit of such a programme is the apprenticeships. The Government have done a huge amount on apprenticeships, which I welcome, as the Minister would expect, but he knows about the capacity to recruit and retain other people as apprentices, who would then go on to the construction industry as a whole. In Southwark, we are bidding to have a university technical college in Bermondsey to specialise in construction skills, as well as in health service-related skills, because we believe that the market is there.
I will end with one encouragement to the Minister. I understand that the Treasury rules always make such issues difficult, because the Treasury counts local authority borrowing as public sector borrowing. I have, however, talked to the housing associations in London, which have been extremely helpful—there are 16 big ones and more than 300 smaller ones—and they are beginning to find ways of expanding the amount of social building. By and large, they are not simply building conventional, rented affordable homes; they are building homes that they sell at market rates and that they rent at market rates, allowing them to use private finance in their associations and so to cross-subsidise the affordable rented accommodation—so much so that associations such as London & Quadrant are now beginning to be
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able to relet and let their new affordable housing not only at the Government’s affordable rent—up to 80% of market rent, or even 60%—but even at target or social rents, which really meets the need.
As my last Christmas proposal to the Minister, I ask him to take back to Government the request that they should look at liberating local councils to do the same sort of thing, so that they can access not only the Treasury and public money, but the private sector, and lead in the regeneration of London’s housing. If we could get house building going in London, the land accumulation is waiting and ready. If we could add more incentives to the tax system so that people do not sit on land, but develop it, there would be huge benefit socially, to family life, relationships and mental and physical health, and economically. I hope that the Minister can be encouraged, but also encouraging, and go back to his Department to say, “We must do more, and we will find ways of doing so.”
4.58 pm
The Parliamentary Under-Secretary of State for Communities and Local Government (Kris Hopkins): It is a privilege to serve under your chairmanship, Mr Bayley. I thank my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) for his generous comments, which are much appreciated.
I came into the Chamber towards the end of the previous debate, and saw many Members enthusiastically contributing to a half-hour discussion on VAT and sixth-form colleges. My right hon. Friend and I see housing as an important issue, so it is somewhat sad that only he and I are here now to contemplate the matter. I am sure we will not agree on all the issues that he raised, but I acknowledge the spirit in which he has approached the debate.
I also want to acknowledge the comments my right hon. Friend made about Margaret Thatcher and John Major, which are appreciated, as well as his recognition of the interventions that the Chancellor has already made to address concerns about foreign investors. I intend there to be a strong relationship between housing associations and the Department, so if my right hon. Friend has ideas for specific interventions in that sector that he would like to see developed further I encourage him to write to me with them.
I appreciate the opportunity the debate gives me to consider the document that my right hon. Friend mentioned, “Affordable Jobs & Homes for London: A Seven Point Plan”, and I am pleased to respond to the debate on behalf of the Government. In doing so, I must stress that the Government are fully committed to seeing the supply of all types of housing increase, not just affordable housing. Through a balanced package of measures targeting both supply and demand, we want everyone to be able to access the home that best meets their needs.
London is experiencing rapid growth. Although that is good for its economy, it puts massive pressure on its housing. However, we are responding to that pressure. Over the Mayor’s two terms, more than 100,000 low-cost homes to rent or buy will be built, providing quality homes for around 250,000 Londoners. That represents the highest number of low-cost homes delivered in the GLA’s history. Around 67,000 have already been delivered.
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My right hon. Friend suggested that the Mayor should borrow against the GLA’s annual revenue stream to increase investment in affordable housing in the capital.
5.1 pm
Sitting suspended for a Division in the House.
5.11 pm
Kris Hopkins: Increased borrowing would only be a short-term approach and would not be sustainable year on year. The GLA already receives substantial capital grants to invest in affordable homes. The Government have provided £1.1 billion to the GLA from 2012-13 to 2014-15 to deliver affordable housing in London.
However, the Mayor recognises that more needs to be done. In his draft housing strategy, the Mayor has set out ambitious plans to double output, including an annual target to deliver at least 42,000 market sale, private rented and affordable homes, which is more than at any point since the 1930s; new funding of £1.25 billion to support the delivery of 45,000 low-cost homes from 2015 to 2018; and £160 million for a London housing bank to speed up building on large sites.
My right hon. Friend mentioned the use of GLA land. In 2012, the GLA inherited 625 hectares of land from the Homes and Communities Agency, and it is vital that a significant part of that is used for new house building. The GLA is already utilising land and property assets to drive economic growth and housing supply of all tenures. Much of that land has already been developed. Around 130 hectares have been released so far, with a gross development value of £3.6 billion. For instance, in recent months, contracts have been exchanged in the Silvertown quays and Royal Albert dock area, with a capacity for 1,500 homes and 29,000 jobs.
The GLA is also driving regeneration schemes through grant funding and infrastructure investment at Greenwich peninsula, Barking riverside, Kidbrooke in Greenwich and Woodberry Down in Hackney. Those four developments will provide in excess of 30,000 homes of all tenures. The GLA is using, and will continue to use, its public land holdings to deliver new homes in London.
My right hon. Friend suggests that the Government should scrap the housing revenue account borrowing cap, enabling London boroughs to invest further in affordable housing through prudential borrowing rules. I must stress that the Government’s first priority is to reduce the national deficit. Allowing councils unlimited borrowing would increase that. With the introduction of self-financing in April 2012, London boroughs collectively had about £1.4 billion extra headroom to invest in housing if they chose to do so. We recognise that some councils may need additional borrowing, which is why we announced in the autumn statement an additional £300 million of borrowing capability, which individual authorities may use on housing if they so choose. We expect that to support around 10,000 affordable homes over 2015-16 and 2016-17. The provision will be allocated through a competitive bid process.
I reiterate that the Government are committed to building more affordable housing. More than 170,000 new affordable homes have been delivered in England
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over the past three and a half years. In comparison, between 1997 and 2010, under the previous Administration, the number of affordable rented homes fell by 420,000, as my right hon. Friend pointed out. Our affordable homes programme is making almost £20 billion of public and private investment available to deliver 170,000 new affordable homes between 2011 and 2015. Some 98,700 affordable homes have been delivered through the affordable homes programme since it started in 2011, which is more than half way towards delivering the 170,000 new affordable homes we expect by 2015.
Up to an additional 30,000 homes will be delivered by March 2017, supported by a share of the £10 billion housing guarantees scheme and grants of £450 million. Around £23 billion of additional public and private funding will deliver another 165,000 new homes over three years from 2015. That will be the fastest annual rate of building of affordable homes for nearly 20 years.
We are also committed to boosting the supply of all tenures of housing and are investing in expanding the wider supply of housing. Housing supply is now at its highest since the end of the unsustainable housing boom in 2008, with 400,000 new homes built over the last three years.
I agree with my right hon. Friend that it is vital that Londoners—and everyone else around the country—are equipped to respond to the housing demand and to take advantage of the new jobs created by an increase in house building. That is why the Government have a range of measures and schemes in place to ensure that that happens.
My right hon. Friend talked about small and medium-sized enterprises. We have a shared desire to increase the number of homes built. Part of that will be to get all builders—not just the big six but small and medium-sized enterprises—developing new homes. The Government are playing their part in improving demand through schemes such as Help to Buy equity loans. Some 87% of builders out of the 939 registered with the scheme are small builders building 40 units or fewer. We are working with the Department for Business, Innovation and Skills to ensure that small builders are aware of the business bank, which includes schemes to provide lower levels of development finance guarantees.
We have introduced a range of measures to support apprenticeships. The Government introduced the apprenticeship grant for employers in February 2012, which pays £1,500 per apprentice to support employers of up to 1,000 employees taking on a new young apprentice aged 16 to 24. The Government fully fund the training costs for 16 to 18-year-olds to provide an incentive to employers to take on a younger person. For apprentices aged 19 and over, the Government will pay 50% of the assessed cost of the framework.
In conclusion, I acknowledge the scale of the challenge in London, which we and the Mayor are dedicated to tackling. Our housing strategy adds to a balanced package of support for both supply and demand.