7 July 2014 : Column 82

Anne Marie Morris: My hon. Friend makes a very good point and he is absolutely right: that was indeed what we heard. It points to the suggestion that the Government’s movement is beginning to deliver results.

The claimant commitment has now been rolled out in every job centre. It is quite a challenge, because we are saying to those who claim that benefits should absolutely be there for anybody who needs them—there are some basic things that we all believe to be the absolute right of any individual, because they are about respect for the individual—but that the taxpayer must also feel that his or her interests have been properly represented. The claimant commitment is a move in the right direction, ensuring that there is no longer any opportunity for an individual to believe that a life on benefits is a lifestyle choice. No taxpayer would believe that that is right, and I do not believe that any Opposition Member believes it is—they would say that this is about helping those who really need it: the vulnerable, the disabled and those in really difficult positions. I think we should all agree that this is an important step forward, and 600,000 claimant commitments have been signed.

By 2016-17, the vast majority will have moved to universal credit. Although that is perhaps not what we would ideally have wanted, it seems to me that it is not bad progress. However, I and my fellow members of the Select Committee have obviously been privy to a number of the issues that have already been alluded to as a big challenge, and one of them is undoubtedly the IT systems. I share the concerns, frustration and lack of understanding about how the pilot worked, about what the end-state solution will be, and about the fact that £40 million has effectively been wiped off and £91 million amortised.

I think the real issue is that as a Committee we needed context. Having worked in the private sector, I know that when very large IT systems are introduced, there will always be a write-off. When we sit in the public sector looking at a new IT system without the context of what it takes to roll out such systems and what the normal practice is for write-offs, we find it hard to judge. It would have been fair to want and to effect more explanation from the DWP. Indeed, would it not have been wonderful to have more input from my hon. Friend the Member for Warrington South who, I think, might have been able to give us the necessary language and understanding? He has explained why the two systems have to carry on in parallel whereas we, perhaps because we do not know very much about IT, naively thought that that was a waste of money and that we could just move straight to end state. I hope that the Minister will give us a little more clarity on that.

The Chair of the Committee also mentioned one of the challenges with housing benefit. Although universal credit has been rolled out and although it is right to have done that in slow steps, checking them as we went, it still does not include housing benefit, ESA or tax credits. I share the general concern about how exactly the Department will incorporate some of those more difficult pieces into the system. At the moment, as the Chair of the Committee said, the cases we have been considering have been the easy ones, but we have now moved on from single people to couples. It is a matter of communication and understanding how things will be done effectively. With housing benefit in particular, it is important that advice and guidance are produced for local authorities and that the local support services

7 July 2014 : Column 83

framework is produced in its final form earlier rather than later. Financial information, early information and the final LSSF are undoubtedly needed sooner rather than later, and I share the concerns about the current timeline.

Although some are frustrated with the slow development of the system, it seems to me that going slow and steady to ensure that we treat vulnerable people with the care they need must be right. We must get this right for the vulnerable and nothing would be worse than rolling the scheme out early and getting it wrong. That would be a serious mistake.

Despite some of the challenges, there has been a significant achievement. When we get this done—and I hope that there will be cross-party support for it—it will be the biggest transformation in the system for 60 years. It will also make it clear that there is a proper balance between society and the taxpayer and those who need proper support to enable them to participate fully in working life. The fact that the claimant commitment has been so successful in beginning to change that mindset must be a good thing.

I would question the fact that although the Opposition support universal credit as a concept, they are now suggesting that if they were in government after the next election they would freeze it, but not the pilot, I understand. It seems to me that we do more damage if we start stopping and starting programmes. If the Opposition support universal credit, as I believe they do, they should support what is being done. Of course we should hold the Department to account, but let us also consider sensible steps forward. I cannot see that freezing something is a sensible step, because all it does is stop the progress that we all agree would be a good thing in the longer term.

One can strive for the perfect, but one can never achieve the perfect. We have made good steps as a Government but there is more that can be done. Most important, the lesson I would like the Department to take away is about better and timely communication, particularly on complex issues such as IT, a subject on which I do not claim to be an expert and on which I suspect that not many members of the Select Committee would claim to be experts either.

6.46 pm

Debbie Abrahams (Oldham East and Saddleworth) (Lab): Although I have huge regard for the hon. Member for Newton Abbot (Anne Marie Morris), I must disagree with some parts of her speech, most notably because there has been a swathe of errors not just in universal credit but, as we debated last week, in the other programmes for welfare reform. My hon. Friend the Member for Hampstead and Kilburn (Glenda Jackson) remarked on the unfortunate way in which the welfare reforms have been framed and debated in the media, including irresponsible press releases that perpetuate the vilification of people on benefits and paint them as the new undeserving poor. I have found that deeply offensive and such an approach has been used in Ministers’ speeches. Many people have found that offensive.

Anne Marie Morris: The hon. Lady is a fine contributor to our Select Committee and adds a lot of intellectual rigour and brings a lot from her previous background.

7 July 2014 : Column 84

My challenge is: would it not be lovely if we could control the media? She is absolutely right, I am sure, that some inappropriate things have been said by the wrong people, but when it comes to who said what and whether what is reported in the press is true, I find it a very hard leap of faith to make to accept her other point. I do not believe that any member of the Government would wantonly wish to put out any message in the way that she describes—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The hon. Lady has already had 14 minutes. Let somebody else in—we need short interventions.

Debbie Abrahams: Language such as that about “shirkers” and “scroungers” has been used in the House by Ministers, and I reiterate that I find this deeply offensive.

If we consider welfare reforms in the round, we can see that there have been huge errors in how they have been delivered. If we consider them in the context of other reforms to the welfare state, we can see that we are experiencing a decimation of the welfare system that was set up after the second world war, with people who are sick and disabled through no fault of their own increasingly being denied access to a basic standard of living. In addition, the changes to access to health care and to justice are also affecting benefit claimants and because of the changes there has been a 20% reduction in the number of benefit claimants whose appeals are successful. We need to look at the situation in the round. I find it disappointing that a debate such as this is not seen in the context of everything else that is going on.

On the implementation of universal credit, I do not understand how the Secretary of State can still be in a job. Mistakes and errors have cost hundreds of millions of pounds of taxpayers’ money. That has been accompanied by cover-up and claims that the system has been reset.

I endorse all the positive comments that have been made about the Chair of the Select Committee, my hon. Friend the Member for Aberdeen South (Dame Anne Begg). She is a fantastic Chair, always allowing people to engage and giving them the opportunity to speak, but she has been shown such disrespect. If anybody has not seen how the Secretary of State behaved in that Select Committee meeting in February, I invite them to watch it. It was a disgrace.

Dame Angela Watkinson: I thank the hon. Lady for allowing me to intervene. I hope she will also allow that the Secretary of State was sorely provoked. If we are going to look at the behaviour of one person, we need to look at the behaviour of others who took part in that exchange.

Debbie Abrahams: I am sorry, I do not agree with that. The exchange is on record and people can watch it. It was clear that when the Chair of the Select Committee asked in February why we had not had the information that was available, the democratic role that Select Committees play in our parliamentary system was ignored. The response to the Select Committee’s report is a further justification for my comments. I am not alone in my views. There has been criticism from the Major Projects Authority and the National Audit Office.

7 July 2014 : Column 85

Mr Jim Cunningham (Coventry South) (Lab): The previous Conservative Government had form in this area, particularly in relation to benefits, although my hon. Friend probably was not in the House at the time. We heard a lot of ballyhoo about the horizon project, but at the end of the day it cost billions to put right. Again, it was the people on benefits who suffered as a result. The Conservatives have form. They come up with all sorts of excuses over the years, and claim to be compassionate. They are not. We have only to look at people with disabilities, who still have to go through medical tests.

Debbie Abrahams: I am grateful to my hon. Friend. No, I was not in the House at that time. We recognise that we did not get everything right either—I am sure there will be an intervention about that—but this Government and this Secretary of State are now in power. It is their programme that we are scrutinising and it is a categorical failure. It is a mess. I have spoken about the waste of money. The Major Projects Authority said that there have been so many changes to universal credit that it cannot be seen as the same project: it must be seen as a new project.

As I said last week, and as was mentioned also by the Chair of the Select Committee, we started off with four pathfinders, including one in my constituency, Oldham. Those were announced in 2011 and were meant to be followed by a national roll-out in October 2013. On the day that the Secretary of State was supposed to provide evidence to the Select Committee, we learned that there was not to be a roll-out. Again, he was very indignant that we were questioning him about that. It was appalling arrogance.

As we have heard, there are supposed to be 7.7 million people on universal credit when it is fully implemented. Currently about 6,000 people are on it. The Secretary of State thought it was highly amusing when I asked him last week how long it would take at the present rate for 1 million people to be on UC. It is a matter of simple maths. Perhaps he, like the Chancellor, has problems with that. The answer is 2091. The Secretary of State did not like answering that.

Last September the National Audit Office reported IT problems that the Government had known about for 18 months but had failed to tell us about. That is deceptive and dishonourable. Some £40 million spent on software has had to be written off and a further £91 million written down. Good money is being poured after bad as the Government continue to spend £37 million to £38 million on the old IT system, while at the same time spending extensive sums on an end-state solution or, as it is now called, enhanced digital—whatever.

In addition to saying that it was now treating universal credit as a new project, the MPA, together with the NAO, reported its concerns on significant issues of governance, transparency, financial controls over supplier spending, and ineffective departmental oversight. It could not get worse. How is the Secretary of State still in his job? In any other profession, he would have gone. Why is he still there?

We supported and still support the principles of a simplified benefits system and one that makes work pay, but whether that will happen is questionable. There is real concern that the aim of making work pay will not be achieved. Recent evidence has shown that by 2018

7 July 2014 : Column 86

cuts to the basic and work allowances will mean that universal credit is £685 a year less generous for a lone parent with two children, saving the Government £1.7 billion a year. There are also concerns that UC will weaken the incentive for second earners in couples to work. One in five children in poverty now lives with a single-earner couple. Ensuring that more second earners, principally women, are able to take up employment will be critical to reducing child poverty rates. Finally, the decision to leave council tax support out of universal credit means that the aim of simplicity is being undermined, with many claimants facing two rates of benefit withdrawal when they move into work or when their income increases.

The introduction of universal credit has been a car crash—a demonstration of how not to implement policy and of how the policy intention of making work pay is failing. This Government and this Secretary of State are failing to reform our welfare system. Of course, we need to make sure that welfare spending is not profligate, but in reforming our welfare system so that it is fit for the 21st century, we must remember why we developed our model of social welfare, retaining its principles of inclusion, support and security for all, protecting any one of us should we fall on hard times or become sick or disabled. It is a hand-up, not a hand-out.

6.57 pm

Nigel Mills (Amber Valley) (Con): It is a pleasure to follow the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) in what seems to have become a very large meeting of the Select Committee. We will see whether that changes by the end of the debate. It is a pleasure to be in the Chamber talking about universal credit again. I forget how many times in the past year we have done so in the course of ministerial statements, urgent questions or other debates on the same topic. We may have spent more hours debating it than people have spent claiming it, but I hope that will not continue to be the case.

When my hon. Friend the Member for Newton Abbot (Anne Marie Morris) spoke, she confirmed that there is still general support for the principle of universal credit. I took issue with the Chair of the Select Committee in a debate last week when she rightly set out how hard welfare reform is, but we have to bite the bullet. We cannot keep tweaking and expanding over-complex systems. At some stage we need to start again with a new system that meets modern needs. We must accept that the existing architecture will not last much longer without falling over in an awful heap. We need to find a new welfare system that works for the people who claim from it, works for the taxpayer and achieves the outcomes that we want.

I hope the Government will press on with universal credit. I hope they can find a smoother path than there has been so far, but the direction of travel is right. I hope we can reach the end position more quickly than we fear. It is worth reiterating what we are trying to replace. The NAO report set out that we are trying to replace six different benefit systems that have about 13 million annual claims and pay out about £67 billion a year. Those are huge amounts of money and represent a huge complexity that we are trying to sort out.

For the investment of £2.4 billion—perhaps the Minister could clarify whether we are expecting a higher cost for universal credit than the original estimate—we are expecting

7 July 2014 : Column 87

£38 billion-worth of savings by 2023. The Government response quoted a £35 billion benefit; I assume that that is the net of those two numbers, and not that the estimated saving has drifted down a bit. Again, it would be helpful to understand what savings we think there will be over the period. I think there is to be an annual saving of £7 billion, so there is a huge prize for making the system work. It should be better for claimants, who will understand what they will get, and better for the people administering UC, who will understand what they should be giving out. I think that we have all been in that awful situation of hearing someone ask, “Am I better off in work or on benefits?” That is not a simple calculation. It is hugely complex to work out the answer, but we need to be able to answer that clearly.

I agree with what my hon. Friend the Member for Finchley and Golders Green (Mike Freer) said when we went to see UC at work in the north-west. What sticks in my memory is the genuine enthusiasm on the part of everyone who was working with UC for the system, the ideas and the changes. However, I also remember the horribly clunky and complex IT systems that we saw, which did not seem able to talk to each other, and which required a lot of manual interventions to make the processes work. I am looking forward to going to Hammersmith in October to see the latest iteration of how UC works, and to see whether we have managed to get a much slicker and smoother system. I certainly hope that we have.

There have been two benefits from this change. We hear that the claimant commitment, which has been rolled out in my constituency, is bringing about real changes in behaviour. The contract part of that helps to make it clear to people what they are expected to do; that is working. The other area where we have seen real advantages is in the use of real-time information. Many of us, perhaps wrongly and cynically, feared that that would be the bit of the process that would fall over; we feared that Her Majesty’s Revenue and Customs would struggle to make it work, and that trying to add it to its complex systems might be a bit too much. That has actually worked fine; the data seem to work, and there are even more enhancements that we can make to the use of that in the meantime, before we get to see the whole UC in action. So there have been some positive steps so far.

Only about 7,000 people are claiming UC. We have to be honest: that is a long way short of where the Government, the Committee, and indeed everyone, were hoping the UC would be. We have to accept that that is disappointing, but it is far better than rushing on with the system only to have it completely fall over, and creating a tax credits-type fiasco of the kind that we all remember from a decade or so ago. I do not remember the person who headed the Department responsible for tax credits, or the responsible Minister, having to resign. I do not remember the then Chancellor holding his hands up and saying, “I think I’ll resign in embarrassment at this farce.” It is a bit rich to call for the Secretary of State to resign when these implementation mistakes were not his fault; as I understand it, he spotted what was going wrong and sorted it out. There is no call for him to resign at all; that was a cheap and unnecessary shot.

7 July 2014 : Column 88

I agree with the concerns expressed about the engagement with the Select Committee; that was a bit of a disappointment to us. Clearly, there had been a long period in which it was known that there were issues with UC. A lot of money had been wasted, and there had been lots of changes to the programme; the Committee was just not aware of that. I accept that the National Audit Office was involved, and that the Public Accounts Committee had various runs around this, but it would have felt a lot better for us, when we were trying to scrutinise the Department’s performance and finances, and the programme as a whole from a policy perspective, if we had had some kind of understanding that there were pretty major issues that would make the project look a lot different from how it was meant to look. That would have been a slightly more respectful way to treat the Committee. I do not expect daily updates on everything that is happening, but we are talking about something fundamental. That could have been handled a little better. Perhaps we would then have had a slightly less tense meeting with the Secretary of State earlier this year. I personally do not recall finding him offensive or unhelpful; the meeting was a little bad-tempered, but I suppose that when one is scrutinising someone, it can be a little difficult. I suspect that there was fault on all sides in that very long meeting.

I will come back to the Committee’s recommendation on how many IT systems we should be working on. My hon. Friend the Member for Warrington South (David Mowat) may have clarified something, but I am not sure that we can say that the new digital end-state solution is an enhancement of the current one. I think that we have always understood that a twin-track approach was being taken; we were working on two different systems at the same time, one of which would succeed the other. There are reports that the Cabinet Office recommended moving to the end-state solution earlier this year, rather than staying with the twin-track approach.

There is a fundamental question here: if we are working on two different systems, one of which will succeed the other, and there are only 7,000 or so people claiming on the first one, is it better to focus all resources on the final end-state system, and divert people, money and time to that, rather than trying to work on both at the same time, even if that means a slightly longer implementation period, and a slight further delay? Perhaps testing just one system may get us to the right position; I do not know. It may be that to make this work, we have to go through the first system before we can move on to the second. The answers that we have had on that are not clear. It looks to quite a lot of people as though there may be a more cost-effective way of achieving this, given the timetable that we are on.

I reiterate my view that this is a great reform; everyone should want to see it work. I ask the Government to press on and make it work.

7.5 pm

Sheila Gilmore (Edinburgh East) (Lab): Some social security commentators have described a universal credit-type proposal as the holy grail of social security thinking. It is certainly true that the idea is nothing new. It was not invented by the current Government; it has been debated and investigated by previous Governments. In an earlier debate on the subject—I think it was an urgent question —my right hon. Friend the Member for Edinburgh

7 July 2014 : Column 89

South West (Mr Darling) made it quite clear that when he was Secretary of State for Social Security, he looked at the project and concluded that without very significant time and money being invested, it would be too difficult to deliver.

There has obviously been a learning curve to which, for whatever reason, the current Government seem to have decided to pay no attention. If we sometimes seem quite cynical and sceptical about the whole process, it is because of a lot of what we have heard over the past four years. There was total confidence that UC would be the answer to all sorts of questions, and would be relatively easy. I do not think that many people present, except my right hon. Friend the Member for East Ham (Stephen Timms), were on the Welfare Reform Bill Committee in 2011. The then Minister of State for Employment, the right hon. Member for Epsom and Ewell (Chris Grayling), who responded to most of the debates in Committee, was prone to describing his proposals as an empty bookcase. The Bill was the architecture; a lot of other things would come along later. I think he spoke more truly than he thought he did, because clearly it was a rather empty bookcase; a lot of the issues had not been fully bottomed-out and talked about in the way that they should have been.

One example of that—I will come on to others—is free school meals. We discussed the issue in the Bill Committee in 2011. Various people made written submissions and proposals, and there were discussions, about how that might or might not work as part of the project. We learn now that the Department still does not know how it will deal with free school meals in the further roll-out of universal credit. Three years later, we have not made much progress on something quite important and basic.

Dame Anne Begg: Does my hon. Friend agree that anyone building a bookcase has to know the size of the books that will be displayed on it before they can get the architecture right? Perhaps that was a lesson that the Minister forgot.

Sheila Gilmore: That is a very good analogy for how we have arrived in this position. The trouble is that it is not some sort of blunder: my hon. Friends have referred to some of the other big changes going through the DWP, and the same pattern has been seen with disability living allowance and the personal independence payment. First, a straw man was erected: there was a statement about certain things in the previous system, some of which were not entirely accurate, being really bad and having to be changed. There was then a brief initial consultation period before the Department went ahead with the change, which was not properly piloted. As a result, every new PIP applicant since June 2013 is part of the testing process. That is not a pilot, unless it is a pilot on a gigantic scale. Many people who are anxious and worried while they wait for their PIP payments to come through, are being treated as guinea pigs, after a failure to analyse the problem, implement the scheme or test the proposals. The pattern is not unique to universal credit.

Had we been told from the outset that there would be a slow roll-out because of the need for testing, we might not be standing here now debating whether the glass is half full, but we have been told so often that the glass is full and everything is going well. When the Select

7 July 2014 : Column 90

Committee prepared a report in November 2012, we concentrated on vulnerable claimants. At that time we were told that all the implementation plans were on track for 2013, which was not the case. By February 2013, the Major Projects Authority told the DWP to reset the entire project—that was an internal, private report of which Members had no knowledge at the time. That information did not come out clearly until July 2013, when the Secretary of State told the Select Committee that there were major changes to the roll-out. The NAO reported in September 2013, and the Secretary of State’s response was, “Oh, I knew about all those problems all along.” Perhaps he did know about the problems all along, but he did not tell many people about them. There were further changes in December 2013.

Some speakers, in trying to support universal credit, suggested that at least we have some people on it. There are 6,000 people on universal credit, and it will be rolled out to more jobcentres, but those are the very simplest cases. In essence, for those claimants universal credit is little different from jobseeker’s allowance. There is little to say that universal credit is a big breakthrough to a different form of benefit, because until now claimants have been single people. Apparently, we are now able to roll out universal credit to some couples, but the claimants so far have been single people. Some 70% of claimants are relatively young. They are new benefit claimants who do not have complications, basically. If universal credit is to bring together various benefits successfully, the difficult cases will be the real test, not the straightforward ones.

One bit of universal credit thinking that has been rolled out is the claimant commitment, which has been rolled out to JSA claimants, not merely those who are technically in receipt of JSA-style universal credit. The Government have rolled out the stick without rolling out the carrot. One of the problems with the claimant commitment is not necessarily getting people to agree what they will do to find work but that minor breaches of that agreement can lead to loss of benefits. The carrot—the bit that is meant to help people not only to find work but to make work pay—has not yet been introduced because the vast majority of people are nowhere near being on universal credit.

Since our original debates on the Welfare Reform Act 2012, we have experienced obfuscation through the use of computerese. MPs, like many lay people, are not IT experts. Initially, concerns were raised about the size of the IT project—various Governments have run into trouble with IT in the past—and people asked, “How do we know this will be different?” Any concerns were simply brushed aside because the Government had a new “agile” way of doing things that meant everything was going to be fine. About 18 months later we learned that that way of doing things had been abandoned, so clearly everything was not fine, but that is what we were told.

Other things that were “fine” included security, establishing people’s identity and the difficulties with online transactions. Those concerns were raised from the outset. I recall an informal briefing at which the Minister, Lord Freud, was asked questions by people who were expert, such as people who had served on housing associations. They asked, “What about the verification of people’s housing claims? How is that actually going to be done?” At the moment, those claims are done fairly intensively with people having to

7 July 2014 : Column 91

produce information, although housing associations have been allowed to verify that information because they have seen the lease, and so on. Lord Freud simply ignored all that and said, “No, universal credit will have far less fraud and error, and it will all be fine.” But of course it has not been fine, and it is now recognised that the notion that everything could be done online has not only been delayed but will never happen. One reason why that will not happen is that security has been recognised as a major issue. The same Ministers who told us that security was not a problem have now told us that it is a problem. When a Department is paying out substantial sums of money to millions of individuals, doing it fully online is not practical. After Ministers initially enthused about how everything would be straightforward, and after having been told different things at different times—even when the reality was that something else was going on—we are somewhat sceptical.

As other speakers have said, we were told that a certain type of IT is being used for the very small number of current claimants but that, at the same time, the Department was working on what in February 2014 was called the end-state, open-source, web-based solution. [Laughter.] Exactly. I know the meaning of each individual word, but I have never been clear about what the phrase means. We were told that it was a digital solution—it therefore seems to be an important aspect of the whole programme—and that it would be ready to be tested on 100 claimants by November 2014. As the Select Committee report found, the system is still a long way from being viable. There is a huge difference between operating something like that for a small group of 100 claimants and operating it for far more people.

The Select Committee thought that what we were being told about was a different and digital way of doing things, and we specifically asked for more detail. The Government’s response to the Select Committee report evaded the question, and it is all there. First, the response talked about the claimant commitment, which I have already mentioned and did not have anything to do with the digital solution. Secondly, the response talked about a

“more challenging and supportive relationship between claimants and coaches.”

“Coaches” is the new name for jobcentre advisers. Again, that does not really tell us anything about the digital solution. There are concerns about how scalable those intensive relationships will be. Thirdly, we were told that there will be more online services, but many JSA claims are already made online, so again it is unclear whether that has anything to do with the end-state or digital solution.

Therefore, having gone around the houses about the claimant commitment, the things that are already happening online and the more supportive relationship, all that we have been told is that the digital solution is

“a multi-channel service that makes greater use of modern technology”—

I am glad that it makes use of modern technology, rather than ancient technology—

“to ensure the system is as effective, simple and transparent as possible.”

7 July 2014 : Column 92

Those are all worthy aims, but they tell us nothing about what the end-state solution actually is, what it does, how much progress has been made towards it, how many people are working on it, what it will cost or what the interface will be between claimants and the system. It is nothing more than an aspiration.

Stephen Pound (Ealing North) (Lab): I am sorry to interrupt my hon. Friend, who is making some extremely pertinent points, but many of my constituents who are in work receive varying pay packets. For example, one week they will work overtime but the next week they will not. Some of them, such as school meal supervisory assistants, are employed only in term time. Does she have any confidence at all from what we have heard so far that the system could be sufficiently sophisticated and robust to take into account natural human activity, which does not consist of people earning exactly the same wage for 52 weeks of the year and with exactly the same family circumstances?

Sheila Gilmore: Again, there is the theory and then there is what happens in practice. If in all cases the information from Her Majesty’s Revenue and Customs works, it should be reasonably accurate, but when people have very variable earnings there will be considerable problems, particularly with monthly payments, because it will take a long time to adjust for somebody whose earnings vary a great deal. That will leave some people in considerable hardship.

David Mowat: To answer the intervention made by the hon. Member for Ealing North (Stephen Pound), the whole purpose of having the real-time information interface out of the HMRC systems, which was a prerequisite to universal credit, was to address precisely that point.

Sheila Gilmore: I thank the hon. Gentleman for that intervention, but obviously there are other complications for people with very variable earnings, and I am not confident that they will all be overcome.

Finally, on the IT that we are expected to believe will be in place at some point, last week the Secretary of State delivered absolutely no clarity when we debated this in the Chamber. When I intervened to ask him what the end-state solution was, he replied:

“It is universal credit completely delivering to everybody in the UK. That is the end-state solution—live, online and fully protected.”—[Official Report, 30 June 2014; Vol. 583, c. 645.]

Again, that is describing the end aspiration in a very generalised way, but it tells us absolutely nothing about whether it will work.

Any change of this sort requires a lot of thought and practice. One of the issues about which there remains considerable concern—we have not heard a great deal about this from DWP—is the direct payment of housing benefit to the claimant and then to the landlord. To be fair, DWP has been carrying out pilots for two years to see how that would work, and I think that they have now come to an end. I understand that an independent evaluation is now with the Department, although it has not yet been published—perhaps the Minister knows more about that than I do. However, the data from the organisations that have been piloting it are now in the public domain. They looked initially at some 6,700 people

7 July 2014 : Column 93

—in different small groups across the country—that it was tested on. At the end of the pilot, 4,700 were still on direct payments, but 1,993 of the original group had been returned to having payments made directly to their landlord. That is a considerable proportion of the total. That rings some alarm bells on how well it will work. The landlords involved in those pilots have said constantly that it worked only as a result of very intensive work that has been done precisely because they are pilots. There is considerable concern that that will not be scalable to the required extent. Although I certainly commend the Department for running those pilots, we need to hear what lessons have been learnt, whether any further changes to the plans are required and how these things will be made to work in the longer term.

There are many other aspects of universal credit that people have raised concerns about. In many ways we have almost forgotten about some of the downsides, such as second earners being less incentivised to work under universal credit rules, as drawn up by the Government—they could be changed—than they are under the current system, and there is the fact that some families with disabled children will receive less than they do at the moment. There was a lot of debate about those issues, and the fact that we are nowhere near including some of those people is probably why those concerns have gone off the boil, but we should not forget about them. Even if universal credit is properly implemented, it is not a case of all winners and no losers, because a significant number of people will still be worse off under universal credit.

The detailed rules for universal credit can be changed, and in some ways that is where the bookcase has its merits. Some of the concerns about the rate of tapering of income, which has been changed since the original proposals, and how we deal with school meals, child care and families with disabled children could all be addressed. I think that it is a pity that at this stage we are so far away from those people being included in the new system that we do not even need to look for the answers. Just over 6,000 people are on universal credit, and that is predominantly JSA with a few changes, so the simplest of cases and situations. That is not really a fantastic achievement. I am sorry if that is describing the glass as being half empty, but that is certainly how it appears to me.

7.27 pm

David Mowat (Warrington South) (Con): It is always a pleasure to follow the hon. Member for Edinburgh East (Sheila Gilmore). This is the second time in a week that we have had the opportunity to debate universal credit. I will focus my brief remarks on some of the comments made by Labour Members, which I think can be characterised thus: “We are doing our job. If only the Secretary of State would do his job, everything would be okay.”

I had thought that it was agreed that universal credit is a much-needed project. It is a project of national significance. I think that it is analogous to the Olympics, but in fact harder to deliver. Opposition Front Benchers might give that some thought when considering how to conduct themselves in this debate. The project might be harder to deliver than the Olympics, but it is as important to our country. I will comment on the progress and some of the issues around that, and also talk at some length about Labour’s four-point plan—it has now been

7 July 2014 : Column 94

published—to “save” the programme, and a rattling good yarn it is too. I will not repeat the remarks of my hon. Friend the Member for Newton Abbot (Anne Marie Morris), but the project is a national imperative. We are trying to make work pay, to streamline benefits and to mimic the whole process of transition to work.

Developing a set of IT applications to be used by 8 million users is quite difficult. Frankly, neither political party has shown a great deal of success in doing that over the past decade or so. If we accept that it is a hard thing to do, then perhaps Members might try to do a little more than they have today in getting behind the 1,000 or 2,000 people who are working on the programme —working weekends and doing the stuff that needs to be done to get this to happen.

Are there problems with this project? I do not know; I am not an expert on it. I hate to say this, but I do not even serve on the Select Committee. Perhaps I am here as an imposter. I have had some experience of IT. I have spent a large part of my life explaining to people why IT projects are late and why it is not my fault but somebody else’s—I got quite good at that by the end. During a quality assurance test on an IT project—in fact, we do not have IT projects any more; this is a business change project—one of the indicators of difficulties relates to the number of project managers. If the project manager has changed a lot, there will be reasons for that: it is a very clear flashing red light. This programme has been unlucky—I use that word advisedly—in that it has had a number of different project managers who have had to move on for different reasons. Of course, that creates issues about how things are done, as in this case.

I listened carefully to what the hon. Member for Edinburgh East said about roll-out. It was not clear that she thought that the Secretary of State was rolling it out wrongly; rather, she seemed concerned that he had not told her in advance, at the start, how he was going to do it. That is an entirely different matter, because sometimes things are changed for tactical reasons. When the Olympics are being delivered, things are sometimes done in a different order. That is not unreasonable and not necessarily wrong.

Sheila Gilmore: I hope that the hon. Gentleman would not want to misinterpret what I said. There is nothing wrong with changing one’s mind and trying to adjust as one goes along, but what has been wrong has been the complete confidence, with each turnaround, in everything being fine and in how we should not be worried any more. We have seen that on several occasions.

David Mowat: As I said, I have not been serving on the Select Committee and I have not heard about the confidence she mentions. My point is that decisions are made during the life cycle of a programme that effect changes, and if, every time that happens—

Debbie Abrahams: There was a two-week difference between the Department saying that everything was fine in a memo that we received and the NAO’s publication of its cataclysmic report condemning what the Department is doing. Is that the sort of time scale that the hon. Gentleman has in mind?

David Mowat: I do not know, because I was not aware of that. The hon. Lady’s intervention, like much of her speech, is along the lines of, “We’re doing our

7 July 2014 : Column 95

job; if only the Secretary of State would do his job and hurry up and get this delivered, everything would be all right.” My substantive point is that delivering this application is harder than delivering the Olympics, and it behoves all of us to get behind the 1,000 or 2,000 people who are trying to do it. That is not to say that individual mistakes have not been made. There have almost certainly been lots of mistakes; it would be odd if there had not been.

As to progress, the issue is not that things have not been done; it is what we do now and how we deal with it. I am going to be kind to the Opposition and talk about the Olympics rather than the national health service project that wrote off about £10 billion. The Olympics was a joint success—a success for our country—and yet its budget increased by a factor of four. When the right hon. Member for Dulwich and West Norwood (Dame Tessa Jowell) came to the House and announced that the budget was going up by a factor of four, Members on both sides of the House, broadly speaking, tried to understand why that had happened, accepted it, and knuckled down to get the project delivered. In the end, there was not a cigarette paper between the two parties in terms of the approach to that project of national significance—as this one is. The Secretary of State and his team are trying to do a very difficult thing in delivering this application, to be used by 10 million people, in parallel with existing systems which, every week, continue to be used by 10 million people. Of course mistakes have been made; as I say, it would be odd if they had not. The issue is whether, on the whole, it is being managed correctly and whether, structurally, we are doing the right thing.

I had thought that Labour supported the basic tenets of universal credit, but some of the comments by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) about scope implied that she has severe reservations. She may be right; I am not an expert. It seems odd that Labour Members are raising issues such as scope at such a late stage of the programme. To some extent, they are the Opposition and perhaps it is reasonable that they oppose, but there is a difference between opposing and what I would call opportunistic carping—not only that, but opportunistic carping that is destructive, not constructive.

That brings me to Labour’s four-point plan, to which Mr Baldrick would have been delighted to give his name. Point 1 is to stop the programme and think about it for three months—not to review it, not to stop rolling it out, but to stop it completely. It is not totally clear to me what they would be stopping—development, implementation, the front end, the legacy systems and interface work, or perhaps all of it. It is not totally clear to me what they would do with the 1,000 people—to take a round number—who are currently doing all these tasks. They are saying, “No, let’s just stop it, with an immediate write-off of all that.”

Point 2 is to get the NAO to have a look at the programme. That is fair enough; one cannot argue with asking the NAO to look at something. Of course, it would have to use people with expertise in programmes of this type, of whom most of the good ones are in the civil service and working on this programme. Nevertheless, let us do it anyway.

7 July 2014 : Column 96

The really interesting thing about the plan is points 3 and 4, which represent major, significant scope changes. If we make such changes to a programme right near the end, that is when everything goes wrong—when things have to be retested, budgets change, and all the rest of it. The great thing about these major scope changes is that, according to the four-point plan, they will be done at “no additional cost”. The two points propose to remove some of the onus on self-employed people and to continue to pay the primary carer.

On the train this morning, between Watford and Euston, I costed Labour’s four-point plan at £89,611,207.31. That costing—I am very happy to take an intervention on it—includes 11 new applications, 47 new screens, 190 database changes, 201 reports, a 40% test rerun, and 88 new interfaces. I may have spent only 11 minutes on the calculation to come up with that number, but that is 11 minutes more than Labour Members have spent on putting it into their plan and saying they can achieve it with “no additional cost”. I would be delighted if one of them wants to intervene on me—but intervention came there none.

Sheila Gilmore rose—

David Mowat: Ah!

Sheila Gilmore: The hon. Gentleman should be clearer about why he thinks, for example, that making payment to the primary carer would have such huge costs, especially at a point when, it is fair to say, the systems are unlikely to have reached implementation for families with children.

David Mowat: The problem arises precisely because the systems are nearing completion. Costs in the life cycle of an IT project escalate the nearer to the end we get. To repeat a couple of the estimating parameters I used, Labour’s plan would require 11 new applications and 47 new screens. If the Labour party has its own estimate and it took it more than 11 minutes to put it together, I would be very happy to accept that it is right, but all it has done is write a sentence.

Dame Anne Begg: From the Select Committee’s point of view—not that of Labour Back Benchers—the problem is that we do not know any of those things. The hon. Gentleman has made assumptions, but we do not know whether the IT has developed sufficiently to take account of families with children or whether it would cost anything to make the payment to the primary carer instead. We do not know—that is our objection. We have not been told. We have not been kept in the loop.

David Mowat: The hon. Lady makes a reasonable intervention and I understand it, but if Labour Front Benchers, whose four-point plan this is, do not know the cost of their proposed scope increases—which is reasonable, because I do not know how much they would cost, either—we would expect them to say, “We don’t know the costs,” not, “These scope increases will be delivered within the same budget as the rest of the programme.” The point I am making is that that is irresponsible. It is not indicative of Front Benchers who take what has to happen to the programme seriously or who, 10 months from now, intend to be the Government of this country. The reality is that 10 years—two Parliaments—is too soon.

7 July 2014 : Column 97

7.41 pm

Stephen Timms (East Ham) (Lab): The Work and Pensions Committee has done the House a service with its report, and the tributes to its Chair from both sides of the House are well deserved.

The hon. Member for Newton Abbot (Anne Marie Morris) is absolutely right to say that there is widespread agreement that universal credit is, in principle, a good idea, but I am afraid the universal credit project has had all the hallmarks of disaster right from the start, as a number of us pointed out at the time. Everybody hoped, as we were assured, that the lessons of previous failures had been learned, but unfortunately they had not.

It started to go wrong within just a few weeks of the general election. Ministers published a Green Paper entitled “21st Century Welfare”—I have my well-thumbed copy with me—which introduced the idea of universal credit. Paragraph 7 of chapter 5 stated:

“The IT changes that would be necessary to deliver a more integrated system would not constitute a major IT project”.

There was an utter failure, right at the outset, to grasp the scale of what the Government were about to embark on. How on earth the phrase “would not constitute a major IT project” came to be written in a Green Paper, I have absolutely no idea, but I am quite sure that no official in the Department would have been responsible for writing such a ludicrous claim. I am afraid that from that moment on, things have got progressively worse.

Will the Minister comment specifically on my intervention on my hon. Friend the Member for Hampstead and Kilburn (Glenda Jackson) about this afternoon’s announcement by the head of the civil service, Sir Bob Kerslake, in evidence to the Public Accounts Committee, that the Treasury has not yet approved the revised business case? A week ago today, the Minister said in response to a question from my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Secretary of State for Work and Pensions:

“The Chief Secretary to the Treasury has approved the UC Strategic Outline Business Case plans for the remainder of this Parliament (2014-15) as per the ministerial announcement (5 December 2013, Official Report, column 65WS)”.—[Official Report, 30 June 2014; Vol. 583, c. 434W.]

The Minister said that the Treasury had agreed the business case, but today the head of the civil service told the Public Accounts Committee that the Treasury has not agreed the business case. The Minister owes us an explanation of the discrepancy between her answer a week ago and what the head of the civil service has said today.

The project has suffered from three levels of failure: policy failure, delivery failure and governance failure. I will say a little about each of them. First, policy failure is perhaps the most serious one. As the hon. Member for Hornchurch and Upminster (Dame Angela Watkinson) has rightly pointed out, the point of universal credit was to make sure that people would be better off if their income increased because they got a job or did extra hours or for some other reason. However, the difficulty involved in achieving that apparently simple goal was never understood by Ministers, and the hard graft of delivering it has therefore never been done.

Last September’s National Audit Office report, which my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) has rightly described as cataclysmic, noted:

“Throughout the programme the Department has lacked a detailed view of how Universal Credit is meant to work.”

7 July 2014 : Column 98

That has been the central failure: the Department simply has not worked out what the system is supposed to do.

More than three years after the implementation of universal credit started, we still do not know, as we have been reminded in this debate, which recipients of universal credit will be entitled to free school meals for their children. That is not a minor detail; it is a very serious problem for the aim of making sure that people are always better off if their income goes up. If the truth is that a household will suddenly lose their entitlement to free school meals if they reach a specific income threshold—that appears to be where we are heading—of, for example, £9,000 a year, their income will be a great deal less than it was before the small increase that triggered that change. The Citizens Advice briefing for today’s debate has an example of a lone parent who, if free school meals are decided on the basis of income threshold,

“will be worse off by taking on extra work however many hours she works”.

Solving that genuine policy difficulty is at the heart of what the Government are trying to do with universal credit. As my hon. Friend the Member for Edinburgh East (Sheila Gilmore) has reminded us, she and I served on the Welfare Reform Bill Committee. On 24 March 2011, the Secretary of State said:

“we have to resolve some of these issues like free school meals…You asked when. I believe that during the Committee stage we should be in a much stronger position to make it much clearer how we will do that.”––[Official Report, Welfare Reform Public Bill Committee, 24 March 2011; c. 154-55, Q299.]

The Committee stage ended on 24 May 2011, just over three years ago. When I asked the Schools Minister about the subject last Thursday, he said that an announcement would be made “shortly”. It appears that we are heading for some sort of income threshold. If that happens, it will create a huge new work disincentive in universal credit for a very large number of people that will be far worse than anything in the current system, for all its flaws.

The universal credit rescue committee—I am grateful to the hon. Member for Warrington South (David Mowat) for drawing attention to its work—submitted its report to the Labour party two weeks ago. It pointed out that the work incentives for second earners in a couple are a good deal worse in universal credit than they are in the current system. My hon. Friend the Member for Oldham East and Saddleworth underlined the importance of that point.

Leaving council tax support out of universal credit undermines simplicity, with many claimants facing two separate rates of benefit withdrawal when they move into work or their incomes increase.

The decision to pay universal credit to only one member of a couple, rather than reflecting the current system in which payment with respect for children is paid to the main carer—an arrangement with which you, Madam Deputy Speaker, are particularly familiar—raises significant risks for many women and their children.

Universal credit also creates an extraordinary new red tape burden for self-employed people and partners in small partnerships who want to claim universal credit. The Institute of Chartered Accountants in England and Wales says that about 60,000 partners in small partnerships will want to claim universal credit and that it will be virtually impossible for them to meet the proposed red tape challenge.

7 July 2014 : Column 99

It is the policy failures that are the most serious, but it is the delivery failures that are the most spectacular. As the Minister for the Cabinet Office said in a television interview, implementation has been “lamentable”. I wrote to the Secretary of State on 16 November 2010 to point out that his timetable was unrealistic, and I wrote to him again on 18 April 2011. The Secretary of State wrote a perfectly friendly response on both occasions, but simply denied that he had a problem.

In November 2011, the Secretary of State announced that 1 million people would be claiming universal credit by April 2014; in fact, there were approximately 6,000. In May 2012, he announced that new applications for existing benefits and credits would be entirely phased out by April 2014; Ministers now say that that will not happen until 2016. Even assuming that everything goes well from here, which it will not, the project is at least two years late.

Late last year, it was finally admitted that the transition to universal credit will not be complete by 2017. Everybody has known that for months. The hon. Member for Amber Valley (Nigel Mills) was right to make some very thoughtful comments about that. However, while everybody knew about the problems, Ministers flatly denied them. The Secretary of State told the House on 5 September 2013:

“The plan is, and has always been, to deliver this programme within the four-year schedule to 2017…that is exactly what the plan is today. We will deliver this in time”.—[Official Report, 5 September 2013; Vol. 567, c. 472.]

That was complete fantasy. He was still doing it on 18 November, when he said that

“universal credit will roll out and deliver exactly as we said it would.”—[Official Report, 18 November 2013; Vol. 570, c. 947.]

Everybody knew that that was untrue. Why do Ministers not simply tell us the truth about what is going on? Some £40 million has been written off so far, with more undoubtedly to come.

I was worried about achieving one universal credit IT system in anything like the proposed time scale, but we are now in the extraordinary situation of building two different universal credit IT systems. How much more will that cost? The Select Committee asked that question—surely that is what Select Committees are supposed to ask about—but the Government response simply does not provide any answers. Surely we can at least be told how much extra it will cost us to have two IT systems instead of one.

Lessons also need to be learned from another group of serious failures—the governance failures in the project. To answer the question quite rightly asked by the hon. Member for Warrington South, five different officials have had responsibility for the project since it started. However, the central problem is that the project has been managed primarily with a view to minimising embarrassment for the Secretary of State. That is essentially what decisions have been about. Problems, when obvious, have simply been denied; information that would have shed light on what was going on has been buried; and the people who have asked difficult questions have been fobbed off. Members of the public have made freedom of information requests to see the risk register, the milestone schedule and the project assessment review, but applications have of course been refused,

7 July 2014 : Column 100

and when the Information Tribunal found in favour of those members of the public, the Department simply appealed again.

Ministers are absolutely determined that nobody should know what is really happening. With this project, there is an obsession with hiding things; of pretending that all is well when it obviously is not; and, as the National Audit Office has pointed out, of only admitting to good news. That is not a culture that will deliver a successful project, and it certainly has not delivered success in this case. My hon. Friend the Member for Hampstead and Kilburn referred to a “bunker mentality”, and there absolutely is such a mentality.

Obsessive secrecy has no doubt spared the blushes of the Secretary of State, at least for a time, but it has hindered progress on the project. It has meant that it has taken longer than it should have done to recognise problems and to deal with them, and a large amount of money has been wasted. If, two years ago, the Secretary of State had put up his hands, and recognised that he and his advisers had got it wrong and that the project would take longer than they first said, much of the subsequent waste and delay could have been avoided. Instead, they just kept on denying that there were any problems, so the problems kept on getting worse—and the project is not finished yet.

The project is at least two years late, and it will have wasted much more than the £130 million already acknowledged. It is essential, as the universal credit rescue committee has argued, that the project is now paused. Central policy decisions still have not been made—Ministers cannot spend hundreds of millions of pounds on an IT system if they do not know what it is supposed to do—and Ministers have not made such decisions. As has rightly been said by the rescue committee, taking advice from the former chief information officer of Rolls-Royce, who served on it with distinction, we need a plan that is published, is audited by the National Audit Office and contains milestones with dates, so that everybody knows how the project is going. Why pretend that it going well when it clearly is not?

David Mowat: The point I made was that the review could be done in parallel with continuing the programme. Let us say that 1,000 people are working on the programme at the moment. What will the right hon. Gentleman do with those 1,000 people during that three-month review?

Stephen Timms: As I have said, the idea for the pause is based on the recommendation of Jonathan Mitchell, the retired chief information officer of Rolls-Royce, who has managed extremely large IT projects in that company—possibly even larger than those for which the hon. Gentleman had responsibility. He has said that when a project is as out of control as this one clearly is, it is essential to stop, to make policy decisions and to draw up a plan before simply shovelling in hundreds of millions pounds more.

David Mowat: Will the right hon. Gentleman give way?

Stephen Timms: I will not, because I should conclude.

Outstanding policy issues need to be decided, the work incentive design flaws need to be fixed and a hard-headed view needs to be taken about whether this project can be rescued within an acceptable time and cost. Opposition Members hope the answer to such a

7 July 2014 : Column 101

question will be yes, but we cannot assume that it will be. The question needs to be asked frankly and answered honestly. It should not be left until the election; it should be done now.

7.56 pm

The Minister of State, Department for Work and Pensions (Esther McVey): I have listened to everything that has been said and I have a hefty set of answers to give, but let me put everything in context by starting with what I hope we can all agree on. In between the doom and gloom that swept across the Chamber from Opposition Members, they seemed to agree that the benefits system needs to be changed, and this Government are bringing about the fundamental reform that is needed. The biggest reform in 60 years will ensure that we reward work, support aspiration, encourage responsibility and help those who need it most. As my hon. Friend the Member for Warrington South (David Mowat) said, this piece of work is of national importance. We cannot run away from making the significant changes that are so necessary; it is because they are so imperative that we are making them.

Universal credit is at the heart of our reform. Its aim is to make work pay by ensuring that claimants are better off in work than on benefits. It will promote personal responsibility by ensuring that people actively seek work and increase earnings. At the same time, we will continue to provide support for those who need it most. Universal credit will have a positive impact on claimants. Up to 300,000 more people will be in work, and about 3 million more households will gain from universal credit, with an average gain of £177 per month. We are investing £600 million in child care support, with about 100,000 extra families becoming eligible for such support for the first time. From April 2016, 85% of eligible costs will be covered by the child care rate. Alongside that, thousands of disabled adults and children will receive more support, including a higher rate of support for all children who are registered blind.

Sheila Gilmore: Will the Minister give way?

Esther McVey: If I may carry on for a while, I will then answer the hon. Lady’s question.

I want to thank the Select Committee for continuing to support the policy objectives of universal credit—improving incentives to work and, as has to be key, smoothing the transition from benefits into work. Public and parliamentary debate has focused on IT systems, and IT is an important enabler, but universal credit is much more than that; it is a transformational change that is building a welfare system fit for the 21st century. It is already making a difference to people and their lives: we have stronger work incentives, there is more support from work coaches and universal credit claimants are spending twice as much time looking for work because they have the extra support.

We know that 90% of universal credit claimants are claiming online. Many Members spoke about the IT system.

Sheila Gilmore: Is it not the case that very high levels of jobseeker’s allowance claimants are claiming online anyway, so that is not really to do with universal credit? Is it not also the case that the number of hours people are spending looking for work has nothing uniquely to

7 July 2014 : Column 102

do with universal credit, because the Department has rolled out the claimant commitment far beyond those who are in receipt of universal credit?

Esther McVey: Obviously more people are going online because that is key to all our changes. When we were providing support during the roll-out, we were enabling people to get online and use IT. That was part of the system. Obviously it is working and more people are using IT and getting online. As for the claimant commitment, that is an integral precursor of universal credit. We had to ensure that all of our 26,300 members of staff knew how that worked. Of course they are working with JSA claimants, but that is one of the changes towards universal credit that we have put into place.

Members have spoken about the IT system. My hon. Friend the Member for Warrington South, who has worked so ably on such systems, spoke with much knowledge on this matter. I am afraid that there was no knowledge from Opposition Members on this matter. We all agree that it is a complex IT system. I believe that there is a logic that we can all follow in what is happening. We are ensuring that it is slow, it is steady and it is working. The IT system is probably best described as a series of component parts. Some of it will stay—that is known as the legacy system—some of it will be built on, some of it will be plugged in and other bits will be newly built and form part of the enhanced digital solution. As we are rolling out the system, we will constantly be learning and working on it to inform the enhanced digital solution. It is like a pincer effect: we are rolling out what we have and learning as we go along to inform the enhanced digital solution.

Bob Stewart (Beckenham) (Con): I am not au fait with IT systems, but I am au fait with very complicated plans. This is a very complicated plan, so the expectation must be that it will go wrong and require tinkering and adjustment right to the end. That is what we should expect; not some blueprint that will be perfect all the way through. We know where we want to go. We have to be prepared to make adjustments as we get there.

Esther McVey: I thank my hon. Friend. That is why we are learning as we are rolling the system out and using that to inform what we are doing.

We have a multi-disciplinary team of 90 people, 30 of whom are digital specialists. They are developing the digital system as we go along. It is not a twin-track approach. We are continually learning and informing. We have one system. That is what we are doing. I hope that that goes some way towards answering the questions that have been asked about IT. One thing that we can all agree on is that it is complex. We will learn as we go along and we have the right person doing the job.

Stephen Timms: Is it the case, as the Minister said in her written answer on Monday last week, that the Treasury has approved the universal credit business case—yes or no?

Esther McVey: I have just had the answer that I gave last week checked. It stated:

“The Chief Secretary to the Treasury has approved the UC Strategic Outline Business Case plans for the remainder of this Parliament (2014-15) as per the ministerial announcement

7 July 2014 : Column 103

(5 December 2013,

Official Report

, column 65WS)”—[

Official Report

, 30 June 2014; Vol. 583, c. 434W.]

That was the response and I have just had it verified.

Stephen Timms: Will the Minister tell us, then, why the head of the civil service today told the Public Accounts Committee that the Treasury has not approved the universal credit business case?

Esther McVey: I will look into that additional point and get back to the right hon. Gentleman. On his last point, I have had the answer checked by my officials and it was correct.

On the roll-out, the new service is now available in 24 areas across England, Wales and Scotland, where it is providing people with stronger incentives and support to get into work, stay in work and increase their income. On 23 June 2014, we began rolling out universal credit for single people to jobcentres across the north-west of England, starting with Hyde, Stalybridge, Stretford, and Altrincham. Last week, it went live in Southport, Crosby, Bootle, Bolton and Farnworth. I am pleased to say that today, Wirral, Birkenhead, Bromborough, Hoylake, Upton and Wallasey began accepting claims for the new benefit. Once the north-west expansion is complete, 90 jobcentres—that is one in eight jobcentres in Britain— will be offering universal credit.

From 30 June, we expanded the service to couples in five of the existing live areas: Rugby, Bath, Inverness, Hammersmith and Harrogate. That meets our commitment to expanding the new service to more areas and to more claimant types from this summer. We will continue to roll out universal credit carefully in a safe and secure manner—starting small, testing and learning from delivery. That remains the right approach. Later in the autumn, it will be expanded to include families.

My hon. Friend the Member for Warrington South answered the question about whether somebody will be able to feed in information about how many hours they work per week. Such real-time information is another part of the programme that we had the foresight to put in place. That is working well and the roll out of it is nearly 100% complete—it is more than 99% rolled out.

I have just received a quote from a claimant in Warrington who is working 20 hours a week:

“I’m currently working 20 hours a week but am able to pick up extra hours when overtime is on offer because UC is flexible in that way and I don’t have to worry about my benefit just stopping if I work more than 16 hours. I know I will still get support until I earn enough to completely pay my own way”.

That is what we always intended to happen. There is a cushion of benefit to support people, but they are able to take extra hours and to progress in work without being stopped from working by the old-fashioned rules and regulations that Labour Members allowed to continue for so long. That is what we are trying to change. We all agreed, including the Select Committee, that those changes were needed. That is an example of a claimant saying what is happening to them right now under this system.

Sadly, I come to the questions that were asked by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams). One thing on which we agree is that the media must talk about people and depict people carefully

7 July 2014 : Column 104

and sensitively. Nobody wants to point the finger at anybody. Nobody on the Government Benches has used any inflammatory language, because that is not right. I have always been very careful about the words that I use, because we all know people who have fallen on hard times and have needed the support of the state. It is imperative that each and every one of us checks our language, because it means a lot, whether it is on the internet, in newspapers or on the radio. I totally agree with her about that.

However, I totally disagreed with the hon. Lady—I am sure she will understand this—when she asked how the Secretary of State is still in his job. I had to smile at that rather absurd comment, given what he has delivered in four years. We have a record number of people in work. We are delivering on youth unemployment: it has gone down consistently for nine consecutive months. It is now 100,000 lower than when Labour was in office. Under Labour, youth unemployment went up by 45%. We have had the biggest fall in long-term unemployment, which doubled under Labour, since 1998. There is not just a record number of women in work, but a record rate of women in work too. All of those things are why the Secretary of State is still in his job: he has changed things around fundamentally.

The hon. Lady talks about a £40 million write-down. Projects of this size usually have about 30% write-down rate—this has a 10% rate. Labour’s track record of IT failure is £26 billion written off with no scope whatever, so we can move on to why universal credit is so important. Even the Joseph Rowntree Foundation is very clear about the benefits of universal credit, recently stating:

“Universal Credit is a once in a generation opportunity to reform a failing and overly-complex system. It will revoke the worst work incentives of the current system, smooth transitions in and out of work and make it easier for people to access all the support they are entitled to.”

Those are the reasons why we are correct in pursuing universal credit.

Geoffrey Clifton-Brown (The Cotswolds) (Con): My right hon. Friend is absolutely right. She and the Department have simplified the system, making it easier for recipients to understand what they can do to claim benefit. Above all, if they are capable of working, they should be in work. In contrast, the Labour party made the system so byzantine that our constituents had to appeal constantly to get the answers they wanted.

Esther McVey: My hon. Friend is spot on. Not only was it complex, but people sometimes did not know whether to take a job. People were locked into a life of benefits because they did not know if they would have been better off working. We are changing that.

I have listened to the points raised by hon. Members and I hope I have provided more clarity. I believe that we are making a transformational change. Yes, it needs to be slow and steady—[Interruption.] I am afraid that the hon. Member for Bishop Auckland (Helen Goodman) is laughing. We are putting people into work. We are getting them off benefits. We are helping them to progress and supporting them into work. That is what those on the Government Benches are about: support and reforming the benefit system to the benefit of all of the UK.

Question deferred (Standing Order No. 54).

7 July 2014 : Column 105

Department for Environment, Food and Rural Affairs

Common Agricultural Policy

[Relevant documents: Seventh Report from the Environment, Food and Rural Affairs Committee, Session 2013-14, Implementation of the Common Agricultural Policy in England 2014-20, HC 745, and the Government response, HC 1088.]

Motion made, and Question proposed,

That, for the year ending with 31 March 2015, for expenditure by the Department for Environment, Food and Rural Affairs:

(1) further resources, not exceeding £968,601,000 be authorised for use for current purposes as set out in HC 1233 of Session 2013-14,

(2) further resources, not exceeding £371,350,000 be authorised for use for capital purposes as so set out, and

(3) a further sum, not exceeding £1,308,388,000 be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.—(Gavin Barwell.)

8.13 pm

Miss Anne McIntosh (Thirsk and Malton) (Con): I welcome the opportunity to debate the implementation of the common agricultural policy in England. I welcome the Minister to his place and look forward to his comments.

Looking at the estimates for the forthcoming year, it appears that there will be a 2% increase in the overall budget against last year’s final position in the 2012-13 supplementary estimate. It appears that the £43 million increase in programme spend is largely due to the £124 million increase due to the transfer of the CAP disallowance funding from 2013-14 to 2014-15, in line with a Treasury agreement to allow flexibility in disallowance funding between years. There is also a £38.4 million increase to the Environment Agency’s flood management budget, which is extremely welcome and includes the £20 million announced in the 2014 Budget. It would be helpful if the Minister, in his response, reassured us that this is new money and that we are not being asked to make savings from, for example, the EA’s Yorkshire and Humber budget to transfer to other parts of the country. That leads to the question, since I understand that the National Audit Office is not in the position to provide figures for the debate, of what the projected figures for disallowance, and any quantifiable fines from the new CAP reform coming into effect next year, will be.

Against that backdrop, the Select Committee on Environment, Food and Rural Affairs was extremely pleased to consider the Department’s proposals. When we reported last year, we found much to like. We support the Government’s intention to raise the minimum level of claim threshold to five hectares, and to move money uphill. It is extremely important to state at the outset, however, that that money must go to active farmers and not simply to those who own the land. I would like to go into some detail in that regard, and the Minister cannot help but be aware of our particular concerns.

I would like to record my particular thanks to the previous Minister with responsibility for farming, my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice), who was mindful of our concerns about areas where common land is prevalent. The

7 July 2014 : Column 106

Committee supports the Government’s position that England should adhere, as closely as possible, to the greening measures set out in the direct payments regulation, and not adopt a national certification scheme approach to greening. In our conclusions, we recommend that the Government maintain the 9% rate of transfer from pillar one to pillar two, and only move to 15% in 2017 if they can demonstrate that additional funds are required and that there is a clear benefit from the projects proposed. Clearly, a compromise of 12% is less than 15% and more than 9%. Perhaps the Minister will share the Government’s thinking in that regard, but we are pleased that the farming voice, and that of the Committee, was heard.

The Committee recommends that the Government take steps to ensure that those actively farming receive the direct payments and that those farmers who have responded to the call to diversify are not captured inadvertently on the “negative list” of business types ineligible for CAP funding under pillar one. We recommend that the Government update the commons registers and allow commoners associations to claim on behalf of all those who actively farm commons, so that the commons attract the share of pillar one money intended for them. I am aware of the position in North Yorkshire and Cumbria, and that the register will be updated from October. I believe that in County Durham and other parts the situation might be slightly different. My concern, which I am sure the Committee shares, is that the update to the register cannot take place before 1 January 2015, so a number of eligible claims will be excluded. What will happen to specific claims that are relevant and should be awarded, but may not be in place by 1 January 2015? It would be extremely helpful to put the minds of those farmers at rest.

The Committee supports the continuation of dual use under pillar two, but we think that Natural England must display a lot more rigour in arranging agri-environment contracts to ensure that payments under those schemes go to those who do the work and whose income is forgone. We make a specific recommendation that I hope will be echoed across the House this evening—that Natural England must be in a position to give advice. It should not be seen just as the policeman; it must be there to provide advice to farmers who seek it.

One of the central recommendations—it is certainly close to my heart, given the area that I represent—is that where there is a dispute between landowners, tenants and graziers, they must have access to a dispute resolution mechanism, set up along similar lines to that suggested by the tenancy reform industry group. In this day and age, it is worrying that those whose interests are sometimes ignored or trodden on should not have access to arbitration or a simple, swift dispute resolution mechanism along the lines we propose.

The Select Committee highlights the risks associated with the Government’s plans to develop a new single IT system for CAP funding through which all agencies would be able to administer the CAP. We do not wish to rehearse the grief from previous Administrations, but we are aware of recent history and we do not wish it to be repeated. An undertaking and some assurance from the Minister that that is not intended would be most welcome this evening.

We support the Government’s ambition to encourage and support as many people as possible to apply for CAP funding online, but that approach will simply not

7 July 2014 : Column 107

be available to some farmers. We received an assurance from a DEFRA Minister in our recent deliberations that a paper-based application process would be retained and that guidance will be provided in paper format in the run-up to the new scheme. It was thus of some concern when the chief executive of the Rural Payments Agency, in giving evidence to the Committee in April this year, told us that there is absolutely no way that a paper format application can be made. That will send shockwaves through rural areas.

In my own constituency, I had a briefing from NYnet, the county council’s regime that is working in tandem with BT to try to roll out broadband in the area. By 2015-16, however, only 78% of my Thirsk, Malton and Filey constituency will be covered. That means that 22% of Thirsk, Malton and Filey will have no access—I repeat, no access at all—to fast-speed broadband. That 22% is where all the farming communities live, and it means that they will be severely disadvantaged. We are all familiar with those trying to apply online who find either no access or receive internet access that is so slow that all the information that has been entered can be lost just as people are trying to press the send button.

I say to the Minister that it is no comfort to farmers to be told that they should seek a satellite connection, as they simply cannot afford the prohibitive cost. I repeat the Committee’s recommendation to the Government that the BT money that is being rolled out—particularly the element coming from the BBC licence fee and the next round of licensing—should go to those rural communities across England that have the slowest speed and the weakest broadband coverage. We cannot expect the farming community to go digital by default from 1 January, yet have no access to broadband.

Ms Margaret Ritchie (South Down) (SDLP): I, too, am a member of the Select Committee on Environment, Food and Rural Affairs. Does the hon. Lady agree that throughout the UK and particularly in isolated rural areas, farmers are being marginalised because of lack of proper access to broadband, and that the Minister should use his good offices to make representations to BT about that problem? That issue was highlighted in our rural communities report. Does the hon. Lady further agree with me—on a compelling point that she made—that there is a need for proper guidance and form filling to be available in paper form?

Miss McIntosh: I thank the hon. Lady for her sterling contribution and excellent work on the Select Committee. I agree that this goes to the heart of how applications will be made from 1 January. We need clarification, because we cannot have the Minister saying one thing and the RPA saying another. If, as the RPA assured us, paper forms will not be available to submit, intensive tuition must be made available to those required to go digital from 1 January.

I want to raise one or two more points before putting some questions to the Minister. Another issue that the RPA shared with the Committee during the evidence session in April is that the reality will be less than was first hoped and more complex, even without the known unknowns such as the disallowance or fines. The cost to

7 July 2014 : Column 108

implement will, according to the RPA, be between 15% and 40% higher than previous schemes and, possibly, than previously thought. I shall ask the Minister a couple of direct questions about that.

The impact of flooding on farmland is another important issue that cannot be underestimated. Thousands of acres in Yorkshire and the Humber area were under water in 2012-13 and 2013-14, and thousands of acres were under water in Somerset and the south-western parts of Scotland at the time of flood incidents. The impact on the productivity of farming has been severe.

Will the Minister confirm whether farmers will be eligible for parts of the CAP, perhaps under pillar two, and the rural development fund, if not agri-monetary schemes, for storing water on land? How long would it take? Will such storage constitute reservoirs? When will DEFRA be in a position to publish the reservoir safety guidance, for which we have been waiting for some months, if not two years, because it will have a direct bearing on this matter?

Is it a source of disappointment to DEFRA that the CAP reforms have in many respects become more complex and less simple in an already complex system? Is it indeed the case that the CAP schemes are likely to be between 15% and 40% higher than previous schemes, and how has the Department budgeted for that in the estimates? Is the Department seeking to simplify and minimise the administrative cost in the new schemes, even against that backdrop?

Will the Minister respond to a question that has been asked by me and by the hon. Member for South Down (Ms Ritchie)? In April, the RPA told our Committee:

“It is not actually possible to submit by paper to the new scheme, because of the way that it is structured.”

That completely contradicts what Ministers told us in their evidence. I repeat that farmers in areas with no broadband service face considerable problems. Will the Minister assure us that making access to CAP funding digital by default will not cause problems for farmers in areas that lack broadband coverage or significant speeds? Will he also assure us that the new digital support centres, which form an important part of the assisted digital service, will be accessible to all farmers, including hill farmers in relatively remote locations such as mine? Will he confirm that there will be a certain degree of privacy, and that farmers will not be expected to sit in a public place, such as a library, sharing commercially sensitive information with members of the public? The Committee believes that that would not be appropriate.

What makes the Minister think that the United Kingdom’s allocation of pillar two funds, which was much less than had been predicted, will not adversely affect the competitiveness of English farmers, especially in view of the fact that the Government now say that they will modulate 12% and that the proportion will increase to 15% if they believe that to be necessary? What will be the criteria for the move to a 15% rate of transfer from pillar one—direct payments—to support in the final two years of the pillar two rural development programmes? As I have said, we are pleased that the Government listened to the views of the farming community and those of the Committee before reaching their decision, but it would nevertheless be helpful to know what those criteria will be.

7 July 2014 : Column 109

In June, the Secretary of State unveiled the details of how the Department would implement the greening rules in England, and referred to a specific problem relating to hedges. He said that the need to validate all claims and map digitally every hedge to EU standards might significantly increase the risk of delayed payments to those who adopted that option. What progress has DEFRA made in talking to banks to ensure that farmers who receive late payments as a consequence of the inclusion of hedges in ecological focus areas will be treated sympathetically? What guidance will it give farmers in regard to how hedges should be measured? I am sure that the Minister will want to allay our concerns, and those of farmers who have contacted us, about any change in the date on which farm payments will be made. What effect will the inclusion of hedges as an option enabling farmers to comply with EFA requirements have on disallowance risk? Will the Minister tell us how the Department will forecast what that risk will be?

During the evidence session, when asked about the level of disallowance that the agency expected to incur under the new CAP, the chief executive of the RPA told the Committee

“we would be doing incredibly well if we can hold disallowance to 2% of future scheme expenditure”,

which is calculated to be in the order of £40 million. From that, it would be reasonable to infer that the UK’s disallowance risk will be increased. We are at a disadvantage this evening because we are debating the subject without the figures from the National Audit Office.

The proposal to move money uphill is obviously welcome, but, as I said earlier, we must ensure that it is those who are actively farming, particularly on common land, who will benefit. DEFRA announced in April that farmers in England who operate within the moorland line would receive approximately £26 more per hectare in direct payments under the new CAP, an increase of about 90% in the moorland rate. That is great news, and a victory for commons, given that 96% of upland commons are above the moorland line. I repeat, however, that we must ensure that the money goes to the commons and the graziers. I hope that the Minister will respond favourably to our request for a dispute resolution mechanism. It would be great if he could also assure us that commoners and graziers who wish to claim payments under the new CAP schemes will not be disadvantaged by the poor state of the registers in North Yorkshire, Cumbria, County Durham or elsewhere.

The new environmental management schemes which are open to all upland farmers are obviously welcome, but I hope the Minister will assure us that those farmers will not be left worse off overall by the changes introduced under the new scheme if, as a result of the comprehensive area assessment, the new environmental land management schemes are not open to farmers who are currently operating the uplands entry level stewardship schemes.

I would like to end by highlighting how current payments have worked least well: in respect of rewarding active farmers and graziers on the common land. It is crucial that those who are actively involved in the commons—those active farmers and graziers, or at least those who perform an active part in managing the commons—receive payment timeously, whereas people who do nothing with the commons should not receive a payment where that is not appropriate. Therefore, I urge the Minister to agree that lessons must be learned from

7 July 2014 : Column 110

how the existing direct payment scheme—the single payment scheme—was implemented in relation to common land, and to ensure that those who till the land on our behalf are indeed the beneficiaries of the new proposals.

With those comments and questions, we await with great interest the Minister’s response.

8.35 pm

Helen Goodman (Bishop Auckland) (Lab): I congratulate the Environment, Food and Rural Affairs Committee and its Chair, the hon. Member for Thirsk and Malton (Miss McIntosh), on producing a very pertinent report.

On previous occasions I have found the Minister to be a very reasonable, intelligent and empathetic person, and I hope those qualities are going to be on display at the Dispatch Box tonight. I was slightly disappointed when I initiated a debate about the hill farmers in Teesdale that he was not able to respond, but I am going to put the points again in the hope of getting a slightly more sympathetic response than I received previously.

In my constituency, there are a large number of hill farmers who are very much affected by these CAP changes. It is an unusual area, because they are almost entirely tenant farmers farming on common land. They have been farming in the same way for about 500 years, and they have produced a very special way of life and a very special and valuable ecology, so I applaud the remarks in the report and from the Select Committee Chair on common land.

When I went to see the Upper Teesdale Agricultural Support Services, it was particularly concerned because it felt that the European Union had not understood the way commons operate in this country and that the rules at European level were not very sensitive to the needs of English hill farmers for that reason. There was also concern about the change in the payment times in the underlying reforms: payments had previously been made on a six-monthly cycle but people were going to have to wait much longer—sometimes 18 months and in one case as long as nine years. That is a significant problem.

Miss McIntosh: I am most grateful to the hon. Lady for giving way, and it allows me to refer to the register, which is out of date. My brother and I have shared a farm in Teesdale, of which the hon. Lady is aware. Does she realise that Teesdale is often cited as the area whose farmers earn the lowest income of any hill farmers in England and Wales?

Helen Goodman: The hon. Lady is right. Newcastle university estimates that the average income of a farmer in my constituency is £11,000 a year. Many of them are on working tax credits—or were on them under the previous Government, but I am not sure how many of them are still getting the working tax credits.

The Select Committee report is excellent on the major problem such hill farmers face, which is to do with delivery: the totally inadequate service that the farmers receive from the Rural Payments Agency because of the requirement to apply for money online and because the system is constantly collapsing. The Select Committee report states at paragraph 34 that

“farmers can be heavily penalised for a genuine mistake but not appropriately compensated when it is the Rural Payments Agency who is in error.”

7 July 2014 : Column 111

What has happened repeatedly in recent months is that the farmers have gone to upload their data and information, and the RPA computer system has been down, necessitating the farmers to go home and come back another day. That is absolutely absurd. Sometimes they have a round trip of 20 miles to access the computer in the UTASS centre in Middleton in Teesdale. When the system is down, they have wasted several hours and have to go back another day in the vain hope it will be up again. I wrote to the Minister about this, and I really think he should not be penalising the farmers when the RPA is at fault.

The next extremely pertinent recommendation from the Select Committee is recommendation 36, which states:

“The IT system remains, however, one of the standout challenges of this round…Given the lessons of the past we question whether this is the right time to be introducing a new IT system.”

How very right the Committee is. It is not just about a new IT system, with all the risks, complexities and problems that a new system always seems to entail in this country; one of my local farmers calculated that because DEFRA’s systems are so complex, and because he has to apply to so many different things and for each system he is meant to have a different authentication, he is supposed to remember 27 different personal identification numbers. This is absurd. This is grotesque. This is Kafkaesque. I find it difficult to remember my bank number and the number to get into the House of Commons, so how can these farmers, whose real job is farming up on the hill, be expected also to run the sort of complex IT system that would make a banker blench?

The Select Committee’s next point, which is absolutely right, was about the importance of encouraging and supporting people to apply online but realising that

“there will be some for whom such an approach is not appropriate. A paper-based application process must be retained”.

That is absolutely essential. Once upon a time, the farmers got the forms through the post, sat at their kitchen table, had a cup of tea, filled the forms out, put the stamp on the envelope, shoved it in the post box and, boom, the whole thing was done. Now that is not possible and the farmers have to drive to the library or the UTASS centre to get help with the uploading.

The whole thing is completely inefficient because, as recommendation 38 indicates, the rural broadband programme has not succeeded so far. We know that 5 million people in this country do not have access to broadband. Until 100% of people have access to broadband, how can it make sense to have a totally online approach and not have a paper-based approach alongside it? In my constituency, 40% of the farmers have no access to rural broadband, so DEFRA and the RPA are taking an absurd approach. It is essential to maintain a paper-based system. It is not reasonable for the Government to make public spending cuts through a digital-by-default process and pass all the burden back to the farmers for delivering the Government’s own administration system. The farmers experience that as oppressive and nerve wracking; it raises anxiety levels to a completely unreasonable pitch, given the significance of what the Government have to do.

Mr Mark Spencer (Sherwood) (Con): I hope that the hon. Lady is not painting a picture of the old system through rose-tinted spectacles. As I am sure she will

7 July 2014 : Column 112

recall, when the right hon. Member for Derby South (Margaret Beckett) was in charge of DEFRA there was a paper-based system whereby farmers were not paid for years, never mind weeks. At least under the current regime the majority of farmers are paid on 1 December, allowing their cash flow and business to flourish.

Helen Goodman: We will see whether the hon. Gentleman’s picture of the current system turns out to be right—I do not think it is accurate. I do not think that my right hon. Friend the Member for Derby South was particularly happy with the criticisms I made of the system in the previous Parliament—they were also significant—but the fact is that this Minister is in the DEFRA hot seat now and it is his responsibility to run a system which is usable and farmer friendly. That patently is not happening at the moment. I am extremely concerned to hear the Chair of the Select Committee say that the head of the Rural Payments Agency is considering not having a paper-based system when we know that the rural broadband roll-out programme will take another three or possibly four years. It is absolutely plain that we need a paper-based system for another five years, and I hope that the Minister will be able to stand at the Dispatch Box, allay all the fears of our farmers and tell us that that is what he will ensure happens.

8.45 pm

Sir James Paice (South East Cambridgeshire) (Con): May I start by reminding the House of my interests, which are in the Register of Members’ Financial Interests?

It fell to me as the then Minister to start the negotiations for what is now seen as the reform of the common agricultural policy. I never know why we use the word “reform” because that is the last thing that we actually have. We have ended up with a complete mish-mash, which is really unacceptable in today’s world. The CAP is about to be implemented. The subject of tonight’s debate bears all the relevance and the power of initiation by the Commission and reflects the impossibility of 27 Ministers managing to agree on any suitable alternative. For the Commission to claim that it represents a stroke of common sense is clearly nonsense. We have ended up with a very complicated system that will not help farming move forward and that does not face up to the changed realities of the world in which we live—a world in which, in the next 30 or 40 years, the supply of food may well not meet demand. European agriculture will not reform as it should to meet those challenges.

I welcome the fact that the Prime Minister negotiated an overall reduction in the CAP spend—the first for many years. I am sorry that it necessitated what can only be described as “handsome bungs” to France and Italy to get their agreement to the cut, and that we therefore ended up with a reduction to pillar two funding, which is unfortunate.

The Government are absolutely right in the way that they have gone about implementing much of these reforms. I particularly welcome the measure to help young farmers. I suspect that deep in the belly of Government, particularly in the Treasury, there is some resentment that that decision has been made compulsory. It is something that I have always believed should be part of British policy, and it is something that has been commonplace elsewhere in Europe. I am delighted that it is now part of the system.

7 July 2014 : Column 113

The Government are also right to continue the same entitlements and regions, and I strongly support the moving of support uphill—the increased funding for moorlands—for all the reasons that we have heard. Of course I entirely support the move towards simplicity and the way that the Government have tried to reduce some of the burdens. Getting rid of the soil protection review, for example, is one measure I strongly welcome. None the less, I have a few comments to make.

My first comment relates to the three-crop rule that has now been imposed. I understand why it arose. I believe that it originated from the problems in Germany where there has been constant mono-cropping of maize for anaerobic digestion, which has been damaging to the environment. But what we have will achieve nothing. We have not achieved a rotation. There is nothing to stop farmers growing the same crop in the same field year after year as long as they grow the right percentages overall on their farm. Whereas farmers who actually practise a rotation by block-cropping with another farmer—the whole farm goes into wheat in year one and the next door farm goes into oilseed rape or beans and then they swap the following year—will not be allowed to do so under the new rules. They will have to grow a bit of each on each farm, which will add considerably to their costs. As it is not creating genuine rotation, it is a pointless and bureaucratic exercise that will achieve nothing for the environment.

Secondly, there are the environmental focus areas. Again, a broad-brush arbitrary figure of 5% has been decided on at European level. There is ample evidence now from a number of research bodies, including work the Department for Environment, Food and Rural Affairs has done, that what really matters is not the area of land we manage for conservation but the way that we manage it, ensuring that it is properly managed and not neglected year after year. This plan makes no reference to that, and that is a major error in the system.

I welcome the decision to include hedgerows in the ecological focus areas. It is right that they should be included, but I am concerned about what that will mean not just for mapping, which has been mentioned, but for entitlements. The Minister might want to reflect on that. The areas of land that farmers farm—that is, the area that they claim against—might not include their hedgerows, but when those areas are taken in, as they need to be in order to be within the 5%, farmers might not have enough entitlements for the overall amount of land that they will then be considered to farm. I hope that the Minister will look into that.

Contrary to what the hon. Member for Bishop Auckland (Helen Goodman) said, I pay tribute to how the Rural Payments Agency has made dramatic strides since the days when her party were in government. When we took office, every farmer in the land was incensed by the performance of the RPA and it is now, as my hon. Friend the Member for Sherwood (Mr Spencer) rightly said, delivering the vast majority of payments on day one of the window, at the beginning of December. That is a considerable achievement by the present management and I think they should be rewarded and recognised for what they have managed to achieve.

The challenges of implementing the new system are huge. It is far more complicated and, as the Chairman of the Select Committee, my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) said, will cost a

7 July 2014 : Column 114

considerable extra amount that the Government can ill afford. It is also an absolute waste of money given the bureaucracy that I have described. For the hon. Member for Bishop Auckland to suggest that the present system should be continued and that now is not the time to change systems belies belief. The present system is, metaphorically, held together by string and sticky tape. It is completely obsolete, even for the process it currently tries to operate, and it is a tribute to the RPA that it has managed to improve performance even using such an obsolete system. To suggest that it could somehow manage the new process is ludicrous.

I also wanted to mention appeals. I hope that under the new system the Government will ensure a satisfactory appeals process. I must confess, even though I had to judge those appeals for a time, that the current system is not satisfactory. Individual responsibilities, the responsibility of the RPA and the whole background of penalties and EU disallowances are not clear. Let me use one of the most ludicrous cases I saw as an example to demonstrate what has to change. Somebody had sent all the forms in to the RPA by registered post and yet the claim was rejected on the basis that it had never arrived. When the farmer submitted the registered post docket to the RPA to show that the letter had gone, he got a letter back saying that that proved that an envelope had been received but did not say what was in it. I felt that that was ludicrous, but there was no absolute proof that the RPA had received the forms and it was impossible to allow the claim. The new appeals system must cover such situations.

I strongly support the points that have been made about digital by default. I hope that the Minister will reconsider it and ensure that farmers are entitled to continue to use paper at least until they can access broadband. I am trying to be constructive, so if he concludes that that is not possible I suggest that he finds a way of ensuring that farmers who employ land agents—as many do, of course—solely because they cannot access broadband themselves should be recompensed in some way, perhaps by a small discrete sum within pillar two.

That leads me to pillar two and the rural development programme. I take issue with the Government over how the funding has been split, because they seem to have fallen for the line that if one spends more, one gets more. That does not always work. Even though we all know that the pot is not as large as we would like it to be, I regret the Government’s decision to increase the share of the pot going to the environment, not because I do not care about the environment—I strongly care—but because it has been abundantly clear over the past 10 years or so that simply spending money on the environment does not necessarily produce results. What really matter are outcomes and far more should be directed at those. We could have ensured that a greater share of the rural development pot was used for other purposes, in particular the economy and innovation in farming, to enable farmers to face the inevitable decline in the basic payment, as it is to be called, and no doubt its eventual disappearance. Farmers need to be able to invest and face up to that day. Just £140 million out of £3.5 billion to assist farmers is not a good deal.

On the new environmental land management scheme, my hon. Friend the Minister will know what I am about to say. I recognise that there is a £2.2 billion overhang from the current system of entry-level schemes and

7 July 2014 : Column 115

higher level stewardship, which must clearly be allowed for, but I am concerned about the way the new scheme will operate and the potential for cherry-picking. The implication is that funding will go only into schemes where it is likely to do most good. There are vast areas of the country, including much of my constituency in the north, in the fens and further up into northern Cambridgeshire and Lincolnshire, which nobody will pretend are the most beautiful areas, or that they contain a massive abundance of wildlife, but if such areas receive no funding and are completely outside the new scheme, the situation will get worse. We might end up with biodiversity deserts, because the funding has been concentrated on the hotspots. I hope the Government will look at that carefully.

Our land is precious. The report that came out two weeks ago from Cambridge university about agricultural land use over the next few decades makes salutary reading. It demonstrates that in the worst-case scenario we could be 7 million hectares of land short in the next 30 or 40 years. Clearly, that cannot be made up. It demonstrates that all policies must address the use of our land in the most effective way to combine looking after the environment with food production, its primary purpose. There is a great deal more to be done to achieve that. These reforms are not the right way forward, but I commend the Government on the way they have tried to implement an impossible task.

Several hon. Members rose—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. May I suggest that we aim for around 10 minutes each? That way we will get everybody in nicely, including the Front Benchers.

8.58 pm

Roger Williams (Brecon and Radnorshire) (LD): I, too, draw the attention of hon. Members to my entry in the Register of Members’ Financial Interests regarding agriculture.

The debate tonight is on the CAP in England, and my farm is in Wales so it is not covered, but the common agricultural policy and the way it is delivered in the United Kingdom have implications for all the devolved nations as well. The important word is “common”. While the UK farmers continue to compete within the European single market, we need a common policy. It is important that we remain within the single market: 40% of all lamb produced in the UK is exported. Although we welcome some of that lamb going to the middle east, and some, we hope, to China in the future and perhaps even to the United States, the bulk of the lamb goes to the continent.

We have a single market there, a market that is open for every second of every minute of every hour of every day throughout the whole year. I can remember when we did not know whether that market was open or not. We could take lambs to market and one day they were worth £10 less because the market was closed; the next day they were worth £10 more because the market suddenly opened. That was no way to do business.

The original purpose of the common agricultural policy was to lift incomes in rural areas, and that is as important now as it was then; incomes in rural areas

7 July 2014 : Column 116

are still lower than in urban areas. A reduction in the European Union budget naturally resulted in lower pillar one and pillar two allocations. I am particularly concerned about upland areas, where incomes are very low. Hardly any farm businesses would show a profit without the single farm payment, and those that did would generate no cash for investment, yet in his written evidence about food security to the Select Committee on Environment, Food and Rural Affairs, the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Camborne and Redruth (George Eustice), said:

“Farm subsidies can allow inefficient farmers to continue to operate a farm rather than exit the industry.”

Giving oral evidence to the Committee, he said:

“we can support farming better through Pillar 2”.

I can tell him that that causes considerable apprehension in farming communities, particularly in the uplands.

The family farm remains the foundation of the rural community and the rural economy. Money received by farmers gets recycled among many local businesses—garages, shops and other tradespeople. The single farm payment enables farmers to invest, become more efficient, and be more market-facing. It gives farming businesses the resilience to come through periods of poor weather when outputs are reduced and costs soar, as in spring 2013. Any suggestion of moving away from direct payments would devastate many rural areas, break down the cohesion of rural communities, and have a drastic effect on traditional production chains and, indeed, total food production.

I turn to the thorny issue of voluntary modulation, which turned into an almighty row between farming organisations and environmentally focused charities—and one can understand why. Those on both sides of the argument were going to receive less money. Pillar one was reduced by 2.7%, and pillar two by 5.5%. One might ask why there is not this row in other countries. Only five other countries of the 27 in the European Union even engage in voluntary modulation at all, and two do it in the reverse order, moving money from pillar two to pillar one. The Flanders area of Belgium modulates by 5.5%, Germany by 4.5%, France by 3.3%, Latvia by 7.4%—we have to remember that it had a 50% increase in its pillar two allocation—and the Netherlands by 2.5%.

Of course, as we have heard, in England the modulation is 12%, probably rising to 15% in 2018. In Wales, there is 15% modulation. In Scotland I believe it is 9.5%, and it is zero in Ireland. Why is the UK such an exception to all this? The answer probably lies in the UK’s pillar two allocation. The UK receives €2.3 billion for pillar two in this financial period, whereas Poland receives €9.7 billion, Italy €9.2 billion, France €8.8 billion, Spain €7.3 billion, and Germany €3.3 billion. Why does the UK have such a poor allocation for pillar two? I will not go into the suggested reasons, but there is common cause to be made. The farming unions could combine with the environmental charities to review our pillar two allocation fundamentally, which would be good for farmers, the environment, rural communities and the UK as a whole. Our pillar two allocation is low, which I do not understand. I cannot find any reason why we have such a poor allocation. Increasing the allocation would be good for our farming community, but it would be good for our environment, too.

7 July 2014 : Column 117

9.5 pm

Neil Parish (Tiverton and Honiton) (Con): It is a great pleasure to take part in this debate and to follow my hon. Friend the Member for Brecon and Radnorshire (Roger Williams), who made a good case for Welsh farmers. I pay tribute to my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice). He referred to the Rural Payments Agency and how much it has improved, much of which was down to his stewardship when he was a Minister. He worked very hard, and payments are getting out on time. We inherited quite a mess, which leads me on neatly to my first point.

When the single farm payment was introduced in 2003-04, there was no doubt that the Beckett formula was complicated. It took years to sort that out, and we paid more than half a billion pounds in fines to the EU for the mistakes that were made. We do not want to repeat those mistakes, and I appeal to the Minister to ensure that we do not do so. I have been sold on the idea that the maps are best done digitally, especially because of the hedgerows and everything else, but if farmers do not have access to broadband, they either have to have somewhere to go—not just a library but somewhere where they can access broadband securely and privately—or they have to be able to use agents. Farmers do not expect to be given a fortune, but they need money to do that. We are working hard to deliver rural broadband, and I am certain that we will get there, but we are not there now. If we make a mess of introducing the reform in the first year, it will carry on year in and year out. That is precisely what happened with the previous system, and it took years to sort it out. In fact, there are some cases that have never been sorted out.

I hope that people who were not able to register under the old system for various reasons—some people pursued their registration for years—are able finally to register their land under the new system. I also pay tribute to the idea that young farmers should be helped, because the population of this country and the world is growing and we need to produce more food.

Jesse Norman (Hereford and South Herefordshire) (Con): I share my hon. Friend’s views on the importance of supporting young farmers. On the question of broadband, does he share my view that there is scope for supporting wireless broadband to reach rural areas that are hard to reach by wired means, as it were?

Neil Parish: I could not agree more with my hon. Friend. Wireless broadband will reach parts of my constituency in the Blackdown hills that fibre optics will not, but wireless broadband will not necessarily get there in time to ensure that applications for the single farm payment can be made online. That is why we must take care to get the payment right in the first year.

Ensuring that it is the working farmer who receives the payment is a good idea, and I am interested in what the Minister has to say about that, but we do not want to create the biggest bureaucratic nightmare to prove whether someone is or is not the farmer. If we are not careful, we will make the system increasingly complicated.

I spent rather a long time—some might say too long—dealing with the CAP in another place, and I think that one of the overall problems is that across

7 July 2014 : Column 118

28 countries, from Finland to Greece, from Poland to Germany and right through to Great Britain and Ireland, there are so many crops that can be grown, so many soil types, so many temperatures and so many amounts of rainfall, with some areas getting very little and others being flooded, that if we try to come forward with a common policy, we will end up with the biggest mess known to man and woman. There is no doubt about it. We cannot have a common policy unless there is much greater flexibility.

Are we to have a policy that demands three rotational crops, because Germany grows solidly maize, maize and maize? This country has very diverse farming and lands, with uplands and grasslands, but many countries have hardly any grassland. Somebody driving from Calais to Berlin will see hardly a single hedge the whole way there, because they have all been ripped up over the years as a result of a different policy on the way they farm. We have great hedges, and it is good that they have become ecological focus areas. In my view, the hedges are probably the most important part of a field, because they are home to wildlife and birds. That, above all, is what we need to concentrate on.

Mr Spencer: I wonder whether one of the unexpected outcomes of trying to apply that policy across the whole of Europe is that we will end up supporting the least efficient farmers and those that are economically challenged, perhaps because they farm in arid areas or small alpine villages, whereas we should actually be supporting the most efficient farmers, many of whom are in France or the UK.

Neil Parish: My hon. Friend is right to a degree, but is it right that the most productive land across the whole of Europe, including in East Anglia, should get the highest payments, given that farmers there can make the most from that land? We must have some balance in the process. We have talked about the uplands tonight, and there is no doubt that upland livestock farmers struggle. In my view, it could be argued—my right hon. Friend the Member for South East Cambridgeshire will probably jump out of his seat—that some of those farmers in East Anglia, Cambridgeshire and elsewhere across the country who can grow very good arable crops, perhaps 10 tonnes of wheat per hectare, could see just a little bit of those payments move uphill. That is what we are trying to do, but I think that we probably need to do a little more. There is an argument there, but I think that we need to ensure that we support farming in those marginal areas, which is more difficult.

We must also ensure that in the end we deliver a policy that encourages food production. It is great to support the environment, but we must remember that in the uplands and on a lot of the permanent pasture on the hills it is the cattle and sheep that will keep farming as it is. It was not put there by God; it was put there by farmers. We must remember that it is the farmers who look after the countryside. We must remember that in order to support them, we must ensure that they have an income. We have to spread that as far and wide as we can.

Bob Stewart (Beckenham) (Con): On this, my 65th birthday—

Hon. Members: Hear, hear.

7 July 2014 : Column 119

Mr Spencer: Retire!

Bob Stewart: Certainly. Will my hon. Friend enlighten me as to whether we have any control over how we allocate the CAP in England, or is that decided in Brussels?

Neil Parish: First, I congratulate my hon. Friend on reaching that great age. There are—dare I say it?—others in the House who have reached an even greater age. He asks a difficult question. We are limited by how much of it we can decide ourselves, as a lot is decided by the European Commission and, finally, the Council. As my right hon. Friend the Member for South East Cambridgeshire said, it is very difficult to change things at that stage. We can tweak some of the environmental schemes a bit—there are the odd things we can do—but in the end we have to go along with much of what is in the policy.

Overall, the CAP overall should be moving towards a simpler system, but we are not getting that. We should be weaning farmers off more and more public support, but I want that to happen across the whole of Europe. As the hon. Member for Brecon and Radnorshire said, there are many different types and levels of payment. Margaret Thatcher said, “Don’t buck the markets”, but that is exactly what we do. We have all sorts of different levels of payments across the whole of Europe and then expect farmers to compete in a single market, which is almost impossible. More and more of the subsidy should be phased out, and farmers should increasingly stand on their own two feet. We should make sure that we get a decent price for food and use biotechnology to produce even more food so that in the end we can feed the growing population.

9.16 pm

Mr Mark Spencer (Sherwood) (Con): I start by drawing Members’ attention to my declaration of interest in the register.

As my hon. Friend the Member for Tiverton and Honiton (Neil Parish) said, the countryside we see today is the result of many generations of farmers who have managed it and created the landscape that we hold so dear. For many generations, they did that without any support from politicians or Governments because they cared for the countryside and wanted to farm for many generations to come.

The common agricultural policy is probably the single most successful policy ever dreamt up by a politician in that it was designed to keep Europe well fed. For three generations, our nation has enjoyed supermarkets and shops full of food, and people have become used to having food on the shelves when they demand it. During the war, my grandmother would go to the shops to buy lamb chops and be told, “You can’t have lamb chops—you’ll have beef dripping”, and she would have accepted that. We have now had two or three generations of consumers who have no concept of what food insecurity is like. We should be very grateful not only to the common agricultural policy but to our farmers for giving us this period of being well fed.

Many changes are coming in the common agricultural policy shakedown, and not all of them should be welcomed. There are large implications for how the UK’s food will be produced in future. We should bear in mind that

7 July 2014 : Column 120

food production and our being well fed as a nation is the fundamental point of this policy. Putting that at risk would be a great disaster.

Jesse Norman: The National Farmers Union has said:

“A modulation rate of 9%”

on pillar two

“would have been able to fund all current DEFRA rural development programmes, renew all agreements expiring within the funding period and have a further £1 billion to spend on new commitments.”

Does my hon. Friend agree that makes it harder for UK farmers to compete, and has this not worked out as well as well as he would have liked?

Mr Spencer: As I was saying, a number of challenges are coming up. UK farmers are particularly skilled at competing. For at least two generations, they have competed on an uneven playing field and managed to continue their business in doing so. I accept my hon. Friend’s point. It is also worth bearing in mind that the taxpayer is putting an enormous amount of cash into the system and so has to get not only food security but a benefit to the environment that they are not getting at the moment.

It is very easy to stand up in this Chamber, be critical of Ministers and say that they could have done this or that. What we do not hear about, however, is the stuff that the Secretary of State and the Minister block—the ideas from Europe that did not make it into the final agreement. If the Minister has time during his summing up, it would be interesting if he could indicate some of the things he was able to stop happening that would have had us jumping up and down in the Chamber if they had made it through and some of our near neighbours on the continent had got their way.

Many Members have referred to the need for broadband in order to deliver the documentation required to make an application. There are farmers in Nottinghamshire who are based within 5 miles of the city centre of Nottingham whose current internet speed is 3 megabits. It is almost quicker to drive to Nottingham to collect a form than it is to try to dial-up on the internet to download it. They are very close to a major urban population, but BT has no plans to take them out of that not spot. Nottinghamshire county council has a programme to roll out broadband across Nottinghamshire, but unfortunately those farmers are not part of that programme. We have to find a way to help them.

Richard Drax (South Dorset) (Con): The other day, I took an entrepreneur to see another Minister about setting up a private system of wireless connection. In north Dorset over a period of weeks, he has got hold of some very big names to establish a system of up to between 30 and 50 megabits. The point he made was that BT needs to be far more transparent with the public and tell all of us what exactly it will be able to achieve and, if it cannot do that by a certain time, entrepreneurs should be given far more encouragement by our Government to get in there and sort out this problem.

Mr Spencer: I recognise that new technologies may be able to assist, but there will always be not spots—those little black holes—where people are left out of the system. We need to find a way to help those farmers.

7 July 2014 : Column 121

I think that the three-crop rule is one of those well-intended European Union rules that will have unintended consequences. My right hon. Friend the Member for South East Cambridgeshire (Sir James Paice) has referred to the fact that many areas are block-farmed. Large contracting companies that help their neighbours with farm contracts and that block-crop from farm to farm will no longer be able to do that, which will lead to a number of extra road miles, inefficiency and environmental damage as a result of the amount of fuel burned and road traffic. That is not a desirable consequence and it will not benefit the environment at all.

Geoffrey Clifton-Brown (The Cotswolds) (Con): I draw attention to my declarations in the Register of Members’ Financial Interests. Does my hon. Friend agree that a solution to this problem would be that every single piece of land eligible to claim should grow three crops in three years, which would eliminate the problems of the mono-cropping of maize in Germany and, as I saw last week, between Paris and Strasbourg?

Mr Spencer: If I could extend my hon. Friend’s proposal to three crops in five years, that would allow for a normal cropping rotation of two weeks for oil seed or pulse, followed perhaps by a spring crop. We do not recognise some of the challenges that face UK agriculture today as we take more and more agricultural chemicals out of our toolbox. The rise of resistant black grass, certainly in the midlands and East Anglia, is a real challenge and we are going to have to allow spring cropping to deal with it.

On the 5% greening, I am glad that the Government are allowing hedgerows to be used. We must, of course, move as quickly as we can to incorporate stone walls and other environmentally beneficial margins at the same time. If the mapping has to be digital, I remind Members of the challenges the previous Administration faced while trying to move to a mapping system. If I may use a Sherwood expression, the Minister must make sure his ducks are in a row and that, when we get to that system, farmers can get their payment as soon as possible. If there are delays, and if the system is complicated and farmers have to wait for their single farm payment, will the Minister engage with the banking sector to make sure that the banks support farmers through that break in cash-flow and that there is other such support?

In summary, three things matter to this nation: that we are well fed; that the environment is maintained and protected; and that, in order to deliver those things, we have profitable farmers. At the end of this monumental process of CAP reform, I hope that we can deliver all three of them.

9.25 pm

Julian Sturdy (York Outer) (Con): It is a privilege to follow my hon. Friend the Member for Sherwood (Mr Spencer). I will not detain the House for long, but as a farmer by trade—I make hon. Members aware of my declaration of interests—I could not let this opportunity pass without commenting on CAP reform and its implications in England, and without congratulating the Environment, Food and Rural Affairs Committee on its report.