“We found that in many cases a full risk of serious harm analysis had not been completed by the National Probation Service, or if it had been done, the Community Rehabilitation Company had not received it.”

Therefore, the analysis is often not being done properly, the paperwork does not cover all the critical aspects and, even if it is done, the CRC does not receive it in sufficient time. He says that, as a result, offenders

“could be assigned to the wrong grade of staff and subsequently need to be reassigned.”

A junior member of staff could therefore supervise a serious offender and be out of their depth. That puts not just the general public, but that member of staff at risk.

Kate Green: On that point, my hon. Friend will be as concerned as I am—the Minister will be, too—to hear about a report passed to me by a member of staff who had heard of a colleague who had not been informed that she was supervising a sex offender. During that supervision, she was subject to a sexual assault. Had that information been provided, first, she might not have supervised that offender, given her grade, and secondly, she certainly would not have seen him on her own.

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John McDonnell: Some shocking examples are emerging. They are, admittedly, anecdotal, but we also have the inspector’s report, which says this is about more than just individual problems.

On the supply of information to the CRCs, I was interested to see that the report’s authors interviewed two offenders, who said:

“staff who had seen them did not know anything about them”.

As they said, it was not a particularly “good start” when even the probation officer they were supposed to be supervised by did not know them.

We raised the issue of IT before the reorganisation started, and we have done so since. All the evidence we have had from staff completely confirms what the inspector says, which is that the IT system is “slow running” and has “an unreliable search facility”. However, there is one issue I found extraordinary—indeed, it is almost farcical. When does the probation officer most need the IT system? Usually, when they are in court. However, under the current system, they cannot connect their laptops to the network when they are in court—there is no remote connection. That is farcical—or it would be if it were not so dangerous and we were not talking about the supervision of people who have offended and who put the community at risk.

On electronic records, the report says:

“Not all staff understood the system had the ability to upload and store a range of documents electronically”.

On the IT change process, the report says:

“the perception amongst staff we interviewed was that many of these changes were introduced at short notice and with little opportunity for formal training,”

which is exactly what we have said in several debates in this Chamber over the past six months. The management then introduced workarounds to try to get people up to speed, but the inspector says they

“were cumbersome and were not fully understood or, therefore, used by staff.”

On the links between individual IT systems, the report says:

“We found most operational staff and managers were completely unaware that the two existing systems could be linked so that each system updated the other whenever a new assessment was completed.”

What is most worrying, however, is the issue of warning flags, which are meant to go on the system to warn staff about threats relating to the behaviour of individuals being supervised by probation officers. The report says:

“We found these flags were often either not used, or carried out of date or misleading information.”

That is absolutely shocking, to be frank.

All through, the report confirms what we have heard from staff. We have heard consistently that there are not enough staff. Speaking about staff grades and allocations, the inspector—I think he is being diplomatic at this stage—says:

“Not all areas had the ideal balance of probation officers and probation services officers to cover courts”.

We now have evidence from NAPO and staff on the front line that some probation officers are being allocated cases and work beyond their training and pay grade. Again, that puts the service and officers at risk.

On resources overall, the inspector says:

“We found National Probation Service teams struggling to complete all the new tasks required”.

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Why? Because of the Transforming Rehabilitation changes themselves, which were putting staff under pressure. The report also says:

“Most areas had kept staff numbers in court teams static, but new processes meant that more resources were needed in courts.”

In evidence from the front line, we are finding that staff are focused on trying to keep up with the pattern of change, rather than on dealing with the serious issues raised by their work. That is a real worry.

Let me give an example. On domestic violence, my hon. Friend the Member for Stretford and Urmston referred to women, and domestic violence and child protection are largely about women. We are now finding that there are insufficient staff to ensure the supervision of courses, particularly building better relationships courses. The Warwickshire and West Mercia community rehabilitation company sent out a letter advising staff that there are insufficient staff to enable courses to be completed properly. It says:

“Due to these exceptional circumstances”—

that is, the lack of qualified staff—

“CRC staff will be returning some cases to court due to insufficient time left on the orders to complete the BBR programme. Where possible, we will suggest the domestic Violence Work book module”.

Staff are therefore offered a manual, rather than an actual course to tackle building relationships, which is core to domestic violence cases. The letter basically says that it has not been possible to recruit sufficient staff and sessional tutors.

Also on staffing, real concerns have been raised with us about diversity. There needs to be an independent assessment of the allocation of staff with regard to ethnicity and diversity. A couple of surveys done with regard to at least two probation trusts support the view that black and ethnic minority staff are over-represented among the CRCs, as opposed to the NPS. That is not only unfair with regard to the staff, but it impacts on diversity issues in service delivery. Again, that issue must be addressed and it goes beyond what the inspector has said.

A whole range of the staffing issues set out in the inspector’s report reflect what front-line staff have told us, even to the point of managers saying:

“Several senior probation officers were not clear what appropriate tasks could be allocated to them.”

There is also a lack of overall management of some issues in the CRCs and the NPS because management have been diverted to dealing with the change process, rather than the day-to-day management of staff and casework.

It is no wonder, therefore, that the inspector comments that, in some CRCs in particular, staff morale is extremely low. The feedback we get from NAPO and its members on the front line is that staff morale is still at rock bottom, and it has not lifted, despite the Secretary of State’s decisions, which he assured us would at least give staff some security about their long-term future. That certainly has not happened.

Staff are doing a good job as best they can under intense strain, and I pay tribute to their loyalty, commitment and dedication to the service. It is a tragedy that the Secretary of State has embarked on this venture—this adventure—which will continue to have a negative impact on staff and the service. I hope that the report will lead the Government to give some thought to addressing the issues that the inspector sets out. Perhaps the system needs much more detailed long-term consideration.

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I argue again that the service should never have been privatised. However, it is totally unacceptable to include in the contracts a poison pill clause to try to prevent a future Government from introducing their own reforms. When the next Government are elected in May, I hope that those clauses will be totally disregarded.

3.17 pm

Jeremy Corbyn (Islington North) (Lab): I will be brief so that the two Front Benchers can respond in good time. I thank my hon. Friend the Member for Stretford and Urmston (Kate Green) for getting this debate, which is necessary and important.

I am a member of the Justice Committee, and we have listened to a great deal of evidence about the operation of the probation service. We have heard some very serious, deep concerns from long-standing, committed, professional people who want to deliver a good probation service. They now find themselves being hawked around to the lowest bidder, as the tendering process gathers pace. It is quite shocking that, by May, 80% of rehabilitation services of all kinds will be in the private sector, not the public sector. Whoever is elected to form the next Government in May will have to preside over a system over which they have quite limited control and where there is a real problem with communication between the different sectors of the service.

Our duty as Members of Parliament is to hold the Government to account, and the duty of members of the Justice Committee is specifically to hold the Ministry of Justice, including the Lord Chancellor and the other Ministers, to account. They have three roles that apply to this debate. The first, obviously, is ensuring the safety of the judicial system, so that those who are convicted are genuinely convicted. Secondly, there is the role of the prisons and what happens in them. Do people come out of prison more or less likely to offend and more or less well equipped to deal with the challenges of society? From that stems the problem of reoffending. I am far from convinced, however, that dividing up a service and attacking the professionals in it all the time, as well as the current Lord Chancellor’s obsession with privatising every conceivable aspect of the judicial process, helps to achieve any of that, and does not make the situation considerably worse.

We have had evidence from NAPO, which has provided briefings to the Committee and to many hon. Members, and I want to mention some of its concerns:

“Same day reports (SDRs) and oral reports at Court do not allow sufficient time to carry out checks with police and children’s services”.

That must be a matter of concern. Staff shortages have led to cancellations of sex offender programmes and domestic violence programmes, and obviously extreme danger goes with that. Because of a

“lack of fully qualified probation officers…domestic violence cases are being allocated to Probation Service Officers who are not experienced or qualified to work with these complex cases”.

Apparently, the

“National Probation Service (NPS) in some regions is no longer sending representatives to Multi Agency Risk Assessment Conferences”

because there are not enough staff.

The whole point of a rehabilitation process is to link all the agencies. What is happening is the opposite of that—the break-up of the link between them. Instead

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of meetings of a group of professionals from different public sector organisations, there are meetings of competing private companies—some of which are inhibited by data protection law from sharing information with each other. We have reached an absurd situation and I hope that the Minister will tell us that everything is well, that things are going to get better and that he will halt the privatisation process that is going ahead with such speed.

At the Justice Committee before December, we were informed of potential conflicts of interest with the new chief inspector of probation. The Secretary of State promised us an answer by today. Today is not yet finished; there are still nearly nine hours to go, in which an answer can be given. Perhaps the Minister will tell us what action has been taken on that issue, which is of great concern to the public.

The debate is about the probation service, and it is also about the kind of society that we want to live in. I had the good fortune to go with the Justice Committee on a visit to young offenders institutions in Denmark and Norway. I have also visited quite a lot in this country. I pay tribute to the people who work in YOIs. It is not an easy job. One of the most interesting times I had was a long session with a group of young offenders in Feltham, where I went with my hon. Friend the Member for Feltham and Heston (Seema Malhotra). It was just us and the group of young offenders. Listening to their stories was very sad, and so was listening to what they had done. Listening to their lack of ambition for when they came out was even worse.

Surely, the criminal justice system must be based on the idea that, although those who have committed crimes must face a judicial process and there are occasions when it is right to send someone to prison or give them community service—there is a range of options—the primary objective is to bring them out as better people, with personal ambitions and a personal network, rather than as people facing the same issues they faced before with a high likelihood of reoffending. We all pay the price for their reoffending, in the lost skills of those who go to prison and the damage to communities.

We talked to people at the MultifunC institutions in Denmark and Norway, and the system is expensive to operate; I do not doubt that. It is much more intensive and professionally supported than our services, but the level of reoffending is below 20%. Ours is well above 50% for pretty well all categories, and well above 70% for others. Something is going badly wrong.

There is no evidence to suggest that privatising the probation service, Prison Service and all other forms of rehabilitation and support does anything but create competition in the private sector and a miasma of bureaucracy. The losers are the ex-offenders, the community, and those of us—all of us—who must pay the costs in reoffending, more prisons and more sentencing. Surely, there is a better way to go about this—one that would show some respect for those who have given their lives to the probation service and who in a decent and professional way try to improve people’s lives, rather than working solely for private sector companies whose main interest is making money out of the system.

3.25 pm

Jenny Chapman (Darlington) (Lab): It is a pleasure to serve under your chairmanship, Mr Crausby. I congratulate my hon. Friend the Member for Stretford and Urmston

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(Kate Green) on securing the debate this afternoon. We have had to contrive ways to obtain every debate that has ever been held on probation reform, since the idea was first proposed. We have had Opposition day debates, and we had to table amendments to the Offender Rehabilitation Act 2014. The Government provided no opportunity to hon. Members to debate this important issue. I therefore pay tribute to my hon. Friend, and thank the hon. Member for Strangford (Jim Shannon) and my hon. Friends the Members for Hayes and Harlington (John McDonnell) and for Islington North (Jeremy Corbyn) for their speeches, and my hon. Friend the Member for Stockton North (Alex Cunningham) for the interventions he has made.

It may seem that the horse has bolted, because the Government have signed the contracts. I know that the Minister is new to his job, and came to the post after the Act was passed, but I assure him that the concern felt by the Opposition—and, I suspect, by some Conservative Back Benchers—has not gone away. We are probably more concerned than we were previously. When the Act was going through Parliament, our concerns were hypothetical. We were told that we were scare- mongering, and not getting on the bus and showing the enthusiasm that we should, but we were proved right. It gives me no pleasure to say it, but the concerns that we raised, and that the Government were warned about, are by and large starting to come true. The Government need to take that seriously. The Minister needs to act. He needs to do something about the situation, not just sit and shake his head. What is happening is serious, and involves public safety and the morale of an organisation, or many organisations, with an important job in communities.

My colleagues have spoken clearly about the catalogue of errors that has characterised the Government’s probation policy. We could have filled a much longer time, if we had been allowed to, and could have got under the skin of the issues. I am saddened that Members of Parliament have not been given a proper opportunity to debate the detail, except in debates such as this one, when we make speeches cataloguing our concerns. The Government have never given us the opportunity for proper line-by-line consideration of the proposals. If they could have got away with it, we would have had no debate on probation.

It is worth repeating that the probation service does highly skilled and challenging work, which receives little attention when it is done well, but which is crucial to keeping communities safe. Reoffending rates are still far too high, and much more needs to be done to break the cycle of repeat offending. We know that. If the Minister intends to tell us that the Government had to do something because reoffending rates were far too high, my reply is that they are still too high. I venture to suggest that they will still be too high in a year.

Probation undertakes a very difficult task. Should the Minister’s predecessor have considered asking far more of the trusts, which were without exception graded good or excellent? They were not dysfunctional, failing organisations. I would argue that their staff were some of the most entrepreneurial—probably too much so for some of my colleagues’ tastes—go-getting, ambitious people to be found anywhere in the public or perhaps even the private sector. They were very prepared to innovate, and were not doing the nine-to-five. Those

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people lived and breathed their job, and many, I am sad to say, are now lost to public service. That is a great shame. We should have demanded far more of those trusts and raised the bar. Last year’s “good” should have become this year’s “excellent”, and last year’s “inadequate” should have become “good”. We should have raised the bar. That has not happened and those organisations no longer exist, which is a great shame.

The Secretary of State rushed the changes. Many of us will never forgive him for that. The speed at which they were rushed through was appalling. He did not even manage to test the policy to check that it worked. I was amazed to hear the Minister of State, Ministry of Justice, the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), say on the “Today” programme that the proposals and changes had been thoroughly tested and piloted. Nothing of the sort happened. There were pilots, which the Labour party backed—we supported piloting the idea, because we were not ideologically opposed to it and thought that there could be some learning—but the Secretary of State cancelled them. There was no opportunity to learn or to make mistakes on a relatively small scale.

Everything was completely rushed and the Secretary of State cancelled the pilots. It would be good to hear Ministers acknowledge that that is what happened, rather than misinterpreting events and saying that the changes had been piloted. There were pilots, but they were cancelled and never got under way. Even though much time, energy and thought had gone into preparing for them, they never happened. We warned at the time that that was scrapping any opportunity for the Government to test or improve the model, or to learn from mistakes on a small scale. Instead, every single teething problem—as predicted—every dodgy bit of IT and every failure in communication is now being experienced in all areas and by all staff members on a national scale. That cannot be a sensible way in which to implement any such change.

We have heard what a shambles the transfer has been, with probation officers in some cases—Ministers have denied this, but I know for a fact that it happened—having their names picked out of a hat to decide whether they would be working for the National Probation Service or a CRC. That is a disgraceful way in which to treat members of staff in any organisation.

The problems that we are talking about, however, cannot be called teething problems any more. This is not the odd unsent e-mail; this is widespread, high-risk problems with staffing, communications and IT. An hour and a half debate is simply not sufficient to deal with those problems. I want to drive the point home about the lack of opportunity that the Government have allowed in the House for Members to contribute to and improve the proposals. Today, however, we have had a flavour of the problems.

The inspectorate found that the IT systems were a “barrier” to staff using time effectively; that new tasks had not been integrated with old systems; and that significant amounts of work were being duplicated by different programmes and processes. The new processes

“take longer and are more complex than previous arrangements”.

Inspectors reported meeting offenders who had been seen by probation staff who knew nothing about them, while other offenders were juggled between many different

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members of staff before finally meeting the officer who in theory was to manage their case. Whatever the inadequacies of the previous system, at least we knew who was responsible. It is frightening that that is not happening any more.

Things are not running as the Justice Secretary had guessed they might—it was a guess—and the allocation of staff and resources to the NPS and the CRCs is not working out as expected. There are staff shortages across the system, with many people having left. A greater number of cases are being transferred to the NPS than was originally expected, and NPS teams are struggling to manage the high-risk case load alongside the other new duties demanded by the fragmented service.

As we have heard from colleagues, there are now perverse incentives in the system around risk allocation. On top of everything else, the new risk assessment tools are taking time to bed in, as everyone said they would. We know it takes time for practitioners to understand how to use new risk management tools effectively and get used to them, but no time was allowed. Why introduce a new risk management tool at the very time that so much turmoil is being inflicted on the system? It seems to be the worst possible way in which to implement even a good idea—not that it was a good idea.

Extremely worryingly, officers are reporting that lower-grade staff are working with cases way beyond their training, experience and even pay grade, including complex domestic violence cases, life-sentence prisoners and cases involving child protection. That is a huge safeguarding problem. Will the Minister commit at least to investigate those cases urgently, because they will be of huge concern to the public? I am realistic: probation and management of offenders is not the No. 1 concern of voters in any of our constituencies, but they get completely exercised about domestic violence and child protection not being dealt with properly by the right people—by people who are trained and qualified appropriately. The Minister needs to commit to investigating that as a priority. The Minister has a responsibility to verify and reassure us on that.

Staff are telling me that they are having to replace one-to-one supervision with group supervision, or to cancel or postpone offending behaviour programmes, which includes treatment for sex offenders. When I worked in the Prison Service, such programmes were very special and considered to be most effective. They were rigorously validated and academically robust, which I think is probably still the case, but if those programmes, which we know are effective, are being cancelled or delayed due to a lack of facilitators, that is most concerning to Opposition Members. Is the Minister investigating the extent of that problem? He might not be able to answer today, but perhaps he can commit to writing to the Members present in the Chamber to let them know the answer to some of our questions, although he has been asked rather a lot.

What is troubling is that most of the issues are not short-term problems that one might expect with a new system or process, so it is not good enough to say, “Okay, we realise that there are difficulties. These will be ironed out. Please be reassured.” In this case, the problems have been built into the service by the Government’s reforms. The Government have created a host of problems that they will have to live with if they

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persist with their model. In essence, the problems have been created by the service being split needlessly in two. At the end of the day, when we look back on the reforms, that will be identified as the key mistake. Changes took place because the Justice Secretary had a gut feeling that it was the right way to proceed. That will be regretted.

The fragmentation of the service has, unfortunately, done the harm that many Members of the House saw coming. The inspectorate put it like this: it said that

“splitting one organisation into two…has created process, communication and information-sharing challenges that did not previously exist. Many of those issues will remain a challenge for some time to come”.

The inspector puts that very clearly. I have a huge amount of respect for Paul McDowell. Whatever the circumstances of his appointment and whether the Justice Secretary knew about them and informed the Select Committee—he clearly did not inform the Committee, but he has to answer to the Committee for that—the inspector, to his credit, has done a very good job with his report.

In reality, fragmentation means that work is being duplicated and information is not being shared on time, which makes supervision less responsive and puts public safety at risk. Not only are there problems with information sharing between probation organisations, but staff are reporting poorer communication with partner organisations, which includes the police and child protection agencies. When things go wrong we take time to look at why, and inevitably there are recommendations. Almost every serious case review I have read has highlighted problems with information sharing, especially with partner organisations. It is deeply concerning that staff are raising concerns that information is not being shared with the police and with child protection agencies.

We know what helps probation to work better: we need partnership working and good relationships with other agencies—we know how important those are. A good relationship between the offender and the probation officer is crucial. Quick response times matter, as do seamless communications. Those things are not luxuries but a basic necessity, and they have been put at risk by the reforms.

Reoffending rates are far too high, and we would have gladly worked with the Government—indeed, we still would—to test ideas and find ways to bring. out the best in public, private and voluntary expertise. All three sectors have a role to play in reducing reoffending. I would have put a lot more pressure on trusts not only to work with a greater number of agencies and to commission more, but to hold the ring and be accountable for performance. That would have been a far better and safer way to proceed, but the Justice Secretary had no interest in evidence or in testing his ideas, and the service is now paying the price of this hurried upheaval.

A recent survey of probation staff showed that 98% had no confidence in the Government’s plans, 97% had no confidence in the Justice Secretary and 55% were looking to change job. The expertise of those staff is the one thing holding the whole flipping experiment together! They deserve absolute credit for that, but the Government and the public should be exceptionally worried if experienced senior officers continue to leave the service. We heard on the radio this morning about the concerns that prison officers have about their safety at work.

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I do not want to think of probation workers having the same kind of anxieties as their colleagues in the prison service.

The Minister has an awful lot of questions to answer. I feel for him in many ways—this problem has been landed on him and is not, I know, one of his making. However, he is the one in the job now so it falls to him to answer the questions. How much does he think the reforms will cost? In Committee on the 2014 Act, his predecessor, the current Attorney-General, resisted every opportunity we gave him to provide us with numbers on what he intended to spend on the programme.

What will the Minister do about staff morale? Morale is very important in this line of work—it really matters. Staff need to be supported to understand the new processes, particularly given the findings of the inspectorate. Many staff do not even understand the rationale behind the changes, and I can understand that. He needs to do something about that, so I want to hear from him what he intends to do.

I also want to know about payment by results. It has been used as a bit of a fig leaf, with Ministers saying that all will be well because we will pay only for outstanding results. That is not true, but we have not been told how much of the payment will be dependent on the results and how much will simply be paid anyway. It is important that we know the answer.

What is the Minister going to do about the communications and IT failures? Is this an issue with resources, with management or with training? Is it an issue with all three? We need to understand that.

Will the Minister guarantee funding for women’s centres? That is an issue of massive concern. Women’s centres can do a lot to reduce reoffending, as they are very effective at cutting it.

We know that the contracts contain clauses promising companies millions of pounds of taxpayers’ money if they are terminated early, and that we are unlikely to be able to afford to buy ourselves out of them, as we might wish to do. Will the Minister outline what break clauses exist in the contracts, so that we can at least be assured that we will not have to pay those companies for failure? What plans does he have in place should a company fail? We have seen health care companies such as Southern Cross fail; what will happen if companies in the probation sector fail?

We are committed to extending freedom of information so that we can find out exactly what is happening in the companies. Does the Minister have any thoughts on that? Do the Government have any intention of allowing FOI to apply to community rehabilitation companies?

Lastly, I pay tribute to the loyalty of the staff, who work so hard and are dedicated to rehabilitation, in both the NPS and the community rehabilitation companies. It is not true that the most experienced and the brightest and best went to the NPS, and everyone else went to the CRCs. There are outstanding, long-serving staff in both organisations who do a tremendous job in very difficult circumstances. I want to make it clear that the Opposition opposed the reforms from start to finish and we will be crawling all over the contracts to ensure that whatever break clauses there are will be applied, and quickly, in the interests of public safety.

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3.45 pm

The Parliamentary Under-Secretary of State for Justice (Andrew Selous): It is a pleasure to serve under your chairmanship, Mr Crausby. I congratulate the hon. Member for Stretford and Urmston (Kate Green) on securing this important debate. I have known her for a long time. I have a great deal of respect for her and know she takes a serious interest in these issues.

I am going to prioritise answering the various points raised by Members during the debate and come to my prepared remarks afterwards. I will deal as quickly as I can with all the matters put to me.

All the existing expertise of our fantastic public sector probation staff is still there in the system. Most people are working at the same desk, doing the same job as before. That is highly valuable. I should point out that the report of Her Majesty’s inspectorate of probation goes up to September last year, and there have been significant improvements since then on a lot of the issues that Members have quite properly raised. To give just one example, the rate for completion of the risk of serious recidivism report within two days is now at 80%, which is a significant increase. We have every confidence that that figure will carry on increasing, and I hope that that reassures Members. [Official Report, 21 January 2015, Vol. 591, c. 1MC.]

We were accused of bringing in the reforms on the basis of ideology, not evidence, but given that we have all agreed that reoffending rates are too high—it is a serious problem, as every Member who has spoken has said—I gently say to the Opposition that it would be wrong not to take the best expertise within our brilliant public probation service, the fantastic expertise in the voluntary and community sectors, of which no mention has been made by Opposition Members this afternoon, and the expertise that exists in some private companies. We want to have the best of all three working to tackle these issues.

Jenny Chapman: Will the Minister give way?

Andrew Selous: I will make some progress. I will not succeed in answering the questions already put to me unless the shadow Minister allows me the little time I have left to do so.

The hon. Member for Stretford and Urmston asked why we did not simply get probation companies to deal with the under-12-month group. Frankly, on the financial model we were operating on before, that would not have been affordable. The previous Government tried to do it under their “custody plus” plans but had to scrap the attempt before implementation. We believe that the reduction in reoffending that we expect to see will enable us to extend provision by the companies to that important group.

The hon. Lady and one or two other Members mentioned the random allocation of staff to the National Probation Service and to CRCs.

Alex Cunningham: Will the Minister give way?

Andrew Selous: If the hon. Gentleman will allow me, I want particularly to respond to the people who made speeches in the debate.

Random allocation of staff happened in a very small number of circumstances when other objective methods

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of allocation were not available, and was used specifically to choose between staff who were otherwise similarly qualified to be assigned to the relevant organisation.

The hon. Member for Stretford and Urmston quite properly raised the important issue of how we will deal with diversity. We believe it is most appropriate for a detailed diversity assessment to be carried out after allocation, as that can then inform the detailed sentence plans compiled by the offender manager. That fits with the sentencing approach introduced by the Offender Rehabilitation Act 2014.

The hon. Lady also—again, quite properly—raised the issue of what we are going to do as far as the specific needs of women offenders are concerned. I visited Peterborough prison last Thursday and saw the excellent work there—not least in the mother and baby unit; she is absolutely right to raise the issue, as is the shadow Minister. More than 1,000 organisations have registered to play a part as either tier 2 or tier 3 providers in the supply chain, many of them with specific expertise in delivering specialist support to women offenders.

To go further on that point, we are including three gender-specific outputs in contracts with the community rehabilitation companies, meaning that, where practical, providers will have to give female offenders the option of a female supervisor or responsible officer, of attending meetings or appointments in a female-only environment, and of not being placed in a male-only environment for unpaid work or attendance requirements. I could go into more detail on that, but I hope that I have given some reassurance that we have thought seriously about the issues that the hon. Lady was quite right to raise.

The hon. Lady also raised the escalation of low and medium-risk offenders. We are keeping escalation rates under close review, but so far the indications are that the numbers are relatively small. The decision on escalation is always one for the National Probation Service, which, of course, remains wholly within the public sector. We supported both the NPS and CRCs to bed in the new processes so that they are working effectively.

On the issue of freedom of information requests to community rehabilitation companies, the CRC contracts set requirements on providers to give information to the Ministry of Justice if it receives relevant requests under the Freedom of Information Act. That is not completely as hon. Members suggested.

Jenny Chapman: Will the Minister give way on that point?

Andrew Selous: In the nine minutes that I have left, I want to move on to the speech made by my hon. Friend the Member for Strangford (Jim Shannon). He was generous enough to say that he thought that the reforms could be worth while if done correctly—I may be paraphrasing him slightly, but I think that he made remarks along those lines. He asked, as did one or two other hon. Members, why we did not pilot the reforms. I refer him to the pilots undertaken at both Peterborough and Doncaster, which the shadow Minister mentioned.

It is worth putting on the record that in Peterborough there was a reduction of 8.4% and in Doncaster a reduction of 5.7%. I fully recognise that that is not the same as the Transforming Rehabilitation programme, because we are bringing to bear further measures that

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will help with the under-12-month group and so on, but those two pilots show that where we have allowed innovation and new initiative, and where investment has come in from outside the public sector, we have brought reoffending down.

Jenny Chapman: Will the Minister give way?

Andrew Selous: No. The hon. Lady will want to hear this because she made allegations about safety and so on. I know she will be reassured that the number of serious further offence notifications between 1 June and 30 September 2014 was 151. That was a reduction compared with same period of the previous two years, when the figure was 181 for both 2013 and 2012.

All hon. Members will know—not least the two distinguished members of the Justice Committee who are present, the hon. Members for Hayes and Harlington (John McDonnell) and for Islington North (Jeremy Corbyn)—that the level of serious further offences is an important indication of how well a probation service is doing. I hope that that reassures hon. Members.

John McDonnell: Will the Minister give way?

Andrew Selous: I give way to the distinguished member of the Justice Committee.

John McDonnell: I am not sure that I am distinguished.

Safety was absolutely key to the legal action taken by the National Association of Probation Officers before Christmas. The Secretary of State gave assurances in court that action would be taken by 1 February to address a whole range of issues of which we are unaware because the union is subject to a gagging clause. Will the Minister give us an indication—now, because the time is here—of the actions that have been taken, on a point-by-point basis, to address the concerns raised in court, therefore showing that there is no need for the gagging order to be in place at this stage?

Andrew Selous: In the six minutes that I now have left, I will try to put as much information on the record as possible. There is certainly no gagging going on here because I want to inform hon. Members as much as I can.

I move on to the speech made by the hon. Member for Hayes and Harlington. First, I thank him for his very kind remarks about me. Along with one or two other Members, he mentioned the position of the chief inspector of probation. First, as the CRCs are within the public sector, there is currently no conflict of interest. Secondly, I refer back to what the Secretary of State said in the Chamber not so long ago: the issue is under discussion and must be addressed. I cannot say more at this moment, but I reiterate the assurance given by the Secretary of State.

I was pleased to hear the hon. Gentleman praise probation staff. I, too, will take the opportunity to do that now. As the shadow Minister rightly said, they are a group of public sector workers who are often forgotten. They are not the first group of public sector workers who come to mind, but they do an absolutely vital job in the criminal justice system. I pay huge tribute to the important work that they do in keeping us all safe. The hon. Gentleman was also absolutely right to discuss

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the need to raise offenders’ ambition. We will not succeed unless we manage to do that; the issue is very close to my heart.

On the issue of voluntary termination clauses, raised by both the hon. Gentleman and the shadow Minister, I should say that they are standard Government clauses. When the Labour Government were introducing the flexible new deal, they used exactly the same clauses. We would not have had the healthy level of interest and attracted the expertise and commitment that has come in to bring down reoffending had we not used those clauses.

The hon. Member for Islington North talked about a race to the bottom on price. I make no apologies for the fact that value for money is an important consideration in the spending of taxpayers’ money, but I can absolutely assure the hon. Gentleman that we were highly rigorous about the quality of the bids. Every organisation that has bid has previous experience in the service area; that was extremely important to us.

The shadow Minister asked why we had not piloted the reforms. I say to her that the problem across the UK is so significant that we were determined to address it across the country. Conducting a number of small pilots would not have given us the opportunity to do that. She referred to a staff survey; unfortunately, in one of the staff surveys undertaken by NAPO, only about 10% of the eligible staff participated. We are dealing successfully with those issues as they come forward.

It is a good thing to have opened up the market to a diverse range of new rehabilitation providers. We are determined to continue to get the very best out of our public sector workers. We are extremely grateful for the expertise that has been introduced by the voluntary and private sector providers.

Hon. Members asked about the new payment incentives for market providers. They will be there so that we can focus relentlessly on reforming offenders, giving providers freedom from bureaucracy and the flexibility to do what works, but paying them in full only for real and significant reductions in reoffending. For the first time in recent history, virtually every offender released from custody will receive statutory supervision and rehabilitation in the community. We are legislating to extend statutory supervision and rehabilitation to all 45,000 of the most prolific group of offenders.

It is important to realise the cost of crime caused by reoffenders, which the National Audit Office estimates at between £9 billion and £13 billion across society. That is why it has been right to take forward these significant reforms to deal with the very serious issue of reoffending.

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Network Rail

4 pm

Mark Reckless (Rochester and Strood) (UKIP): Network Rail has a quite extraordinary governance structure. It was set up in that way, as I think almost all parties would agree, with the primary aim of keeping its debt off the Government’s books. However, since a ruling from Eurostat, implemented by the Office for National Statistics here, that debt is now on the Government’s balance sheets, with that decision having been taken finally in December 2013, with the reclassification of the entity taking effect on 1 September 2014.

Last week, when I asked the Secretary of State for Transport whether it was not therefore time to reform Network Rail’s labyrinthine governance structure to make it more accountable, he replied that he would take my question as a representation to cancel the building of a new railway station in my constituency. I fear that exchange probably told us more about the Secretary of State’s character than it did about the governance of Network Rail, hence today’s debate, which follows yesterday’s publication of Network Rail’s report on the post-Christmas disruption. I will focus on two issues—pay and governance—before finally making one or two remarks about Rochester and the applicability of these issues to my constituency.

Yesterday, a report was published by Dr Francis Paonessa, who is the managing director of infrastructure projects at Network Rail. He is paid an annual salary of £425,000 with a further bonus opportunity of 20% of salary. I intend no personal criticism to Dr Francis Paonessa, who is clearly a manager of stature. Before taking his current role with Network Rail, he was the UK managing director of Bombardier, which, under his leadership, secured the important Crossrail contract for building trains, having previously lost out on the Thameslink contract to Siemens. Clearly, running leading infrastructure projects requires a different set of skills, given their complexity, but he replaced Simon Kirby, who moved on to head up HS2 Ltd as chief executive—clearly a huge job, at least potentially. However, the excessive cost structure in the rail industry, led by Network Rail, underlines my party’s belief that HS2 is unaffordable. Half a dozen people at Network Rail, at least, earn similar sums to Dr Francis Paonessa. Mark Carne, the chief executive, earns substantially more. Why has their pay not been cut to reflect the transfer of Network Rail as an organisation from the private to the public sector?

We talk often, as a comparator, about how much the Prime Minister earns, but the numbers of people earning in excess of the Prime Minister’s salary are legion within Network Rail. It has moved from being a private sector to a public sector organisation, and surely we should be told what new standards are being applied in Network Rail following that move.

In March 2012, the Department for Transport wrote:

“As a private sector company, Network Rail sets performance pay levels for its senior staff”—

but it no longer is a private sector company, so who is setting those pay and performance-related pay numbers now? Who are those senior managers accountable to for their pay? Is it the Secretary of State? Is it the so-called members of Network Rail, about which more in a moment, or is it themselves? Mark Carne has announced

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that he intends to limit his bonus to just 5% of his salary—of course, that bonus will still be more than average earnings across the country and in my constituency.

In particular, we have seen the failures over the post-Christmas period and the disruption that caused to many people across the country seeking to use the network, the extent to which it has become standard to have long-running periods of shutdown over Christmas and new year, the length of some of these infrastructure projects and the closures involved and the lack of predictability about them. In my constituency, we greatly welcomed the new railway station in Rochester, but one point I have from my constituents is why people cannot be warned further in advance about closures, so that they can plan around them.

Jim Dowd (Lewisham West and Penge) (Lab): On the point about the disruption and giving notice in advance, Network Rail had years to prepare for the shutdown of London Bridge station over the recent Christmas period as part of the admirable Thameslink programme. However, they made a huge blunder in organising that, the effects of which have still not been concluded and people’s journeys are still being disrupted. It is not bonuses that the managers should be looking at, but fines.

Mark Reckless: The hon. Gentleman makes a good point, which comes back to how these people are held accountable and whether that is through the withholding of a bonus or some other form of discipline, such as a reduction in salary. I do not know whether we are talking about fines, perhaps on a regulatory basis, or whether he is suggesting that it should be on a criminal basis—that would be very strong for such a management role. What I think my constituents and his want is accountability, and we simply do not have that with the current structure.

From 1 September 2014, we have had a new agreement between the Department and Network Rail, but there is, I believe at least, a lack of clarity about what difference that agreement is making in how Network Rail is held to account. Why do we still have these 46 public members and a similar number of industry members, ostensibly playing a part akin to shareholders in this organisation? There was a vote back in, I believe, November 2009. Thirty-six of those members—I do not know whether turkeys voting for Christmas is a fair comparison here—voted to decrease their numbers, but 36 voted against that, and that has remained the situation ever since, despite the Government saying again in March 2012:

“We therefore welcome the governance proposals that Network Rail is announcing, including: reducing the number of members to a more sensible level, thereby improving the quality of decision-making.”

Has that happened?

In the same report, “Reforming our Railways: Putting the Customer First”, the Government said:

“Network Rail is a private-sector, not-for-dividend company, limited by guarantee…we believe the existing structure is capable of delivering the outcomes and the savings we need without disruptive and unnecessary organisational change... equity is a strong driver of efficiency and value for money.”

How in this unique, convoluted, labyrinthine governance structure does equity operate as a driver of efficiency? We have these industry members that the board reports to, to a degree. One might think it is useful perhaps to

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have that reporting line to the customer, but whenever those customers’ interests are involved, that member steps aside on the basis of there being a conflict of interest, so how can that governance structure work and is it really a sensible way for us to proceed?

In my constituency of Rochester and Strood, we have had the impact of the London Bridge changes. The disruption has affected some people. The sheer length of the closure of London Bridge station for Charing Cross-bound trains that we are currently dealing with is an enormous issue. We have to hold Network Rail to account for the costs that it applies, which are largely passed on in fares to the customer, but also for the length of time that these projects take. I would be interested to hear the Minister’s view. Could she tell us what she has done to ensure that that closure period is as short as possible and the costs are as low as possible? I just have an innate suspicion of an organisation that is not accountable, or at least not in a way that I can understand or in the way in which other organisations are.

The Minister will no doubt refer to the report, published yesterday by Dr Francis Paonessa, explaining away, defending and, to an extent, putting Network Rail’s side of the story in terms of the disruption that we saw immediately after Christmas, but that report is not addressed to anyone. I do not know: is it for the board of Network Rail, for its members, for the Secretary of State or for Parliament? It does not say. There is a foreword by Mark Carne and a whole series of explanations and, to some extent, excuses, but who ultimately holds Network Rail to account for that? Why is it being paid so much money? Why is that disruption allowed, and do we really believe that this labyrinthine governance structure and the costs that we see in this industry are the best we can do? I believe that this country can do it better, and it is time we got on with that and dealt with some of the governance issues at Network Rail and ensured that it works better.

Douglas Carswell (Clacton) (UKIP) rose—

Mr David Crausby (in the Chair): Mr Carswell, it is not in order for an additional Member to speak in a half-hour debate unless they have secured the agreement of both the sponsoring Member and the Minister. Has that advance agreement been secured?

Mark Reckless: My hon. Friend the Member for Clacton (Douglas Carswell) spoke to me yesterday, and I spoke to the Minister. I understand that agreement is forthcoming from her as well as myself.

The Parliamentary Under-Secretary of State for Transport (Claire Perry): That is correct, Mr Crausby.

Mr David Crausby (in the Chair): It has been agreed. I call Douglas Carswell.

4.12 pm

Douglas Carswell (Clacton) (UKIP): I am most grateful, Mr Crausby. I think that we have a serious problem with Network Rail. Certainly, on the Clacton line, which affects my constituency, weekend works have overrun several times, which has been very disruptive to commuters trying to get to work on Monday mornings.

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We routinely have problems and failures on the line and we have seen a lot of weekend closures. That is not very helpful to a seaside town that depends on a lot of weekend seaside tourists coming to visit it. We have seen the problems affecting London stations over Christmas.

My main concern is not so much the rail operators, although I think that in the case of Abellio, they have been insufficiently robust in dealing with their supplier, Network Rail. My main concern is with Network Rail. It is to all intents and purposes a public body, which has recourse to public funds and socialised costs, yet it does not seem to be accountable to the public. It seems to have the structure of a public quango, but the bonuses of a bank. What is fundamentally missing is accountability.

Before Christmas, I wrote a letter to the Secretary of State for Transport, asking whether there were any plans to revisit the Network Rail’s governance structure, because it is not working the way it should and, when errors happen, they are not corrected the way they should be. I got a response that I think was probably drafted, if I can put this kindly, by a private secretary who did not understand the question. I then raised the issue on the Floor of the House last week, and I got a response from the Secretary of State that was perhaps dismissive, perhaps contemptuous, but he is not running a Whips Office any more; these are grown-up questions that demand proper, considered, grown-up answers.

There needs to be a rethink of this organisation’s governance structure. I would be interested to hear whether the Minister has given serious thought to how we might change the governance structure of Network Rail. My suggestion is that it should have greater accountability to Parliament. We could perhaps give a role to the Select Committee on Transport, which could confirm the appointment of senior management to this body. Perhaps this body might appear annually before the Select Committee to appeal for its budget. I do not claim to have all the answers. What I know is that the status quo is not working. There is a lack of accountability, and we need real reform. I would love to hear from the Minister how we can do that. How can we ensure that there is real accountability?

Mark Reckless: The Government said in March 2012 that Network Rail would invite other companies to compete against its core business. That contestability is perhaps one way to bring market disciplines to the operator. In the same document, the Government said that we could have vertical integration between operators. Perhaps in an area such as Kent, where Southeastern is the main operator, they could work more closely together or even become an alliance or a single body. I just wonder why that is not taken forward. Has my hon. Friend any insights?

Douglas Carswell: My hon. Friend’s suggestion is a good one. There are all sorts of models of accountability. There is the proposal for parliamentary accountability. There is the proposal for restructuring in the way that he suggests, which would provide greater accountability. My fear is that we may have spent longer this afternoon discussing new models of corporate governance in this Chamber than the Minister may have done in the Department over the years. I would like to hear from

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the Minister what specific thoughts she has about changes to Network Rail’s accountability and governance structure.

Network Rail is a corporatist organisation. It lacks accountability. People who try to do the right thing but who have to travel by rail, who have to buy season tickets and travel on the railway to get to work find that the fares go up but the level of service remains poor. Ordinary people feel an incredible sense of frustration that, for all that they do and all that they are forced to do, the people at the top of Network Rail do not seem to be held accountable for mistakes that their organisation makes. We often hear Ministers talking in this place about accountability to Parliament through the Minister. I suggest that that model of accountability is not working and we need a fundamentally different way to ensure that Network Rail is properly publicly accountable. I would love to hear what that is.

4.16 pm

The Parliamentary Under-Secretary of State for Transport (Claire Perry): It is a pleasure to serve under your chairmanship, Mr Crausby. I am delighted to have the opportunity to respond to this debate. I congratulate the hon. Member for Rochester and Strood (Mark Reckless) on securing it. This is a really important issue, and he and his colleague, the hon. Member for Clacton (Douglas Carswell), were right to raise it on the Floor of the House last week. I am sure that the constituents of the hon. Member for Rochester and Strood will be delighted with his new-found interest in the railways. It did strike me, in doing some digging, that before last week he had made only two mentions of his local trains in this Parliament. One was to express his profound support for HS2 and what it would do for his constituency, and one was to talk, quite rightly, about the inexcusable fact that constituents on his local franchise were paying RPI plus 3%—a policy that this Government have ended.

Mark Reckless: The Government’s ending of RPI plus 3%, for which my constituents were used as guinea pigs, and going to RPI plus 1% and now RPI is a positive thing that I very strongly welcome. Did the Minister consult her right hon. Friend the Member for Chipping Barnet (Mrs Villiers) on the many discussions that I had with her about the railways when she was the Minister responsible?

Claire Perry: No, I relied on the public record, which I think it is important to do. In fact, the hon. Member for Clacton has spoken more in the last week on the railways than he has done in the entirety of this Parliament, because I can find no record in the public discourse—

4.18 pm

Sitting suspended for a Division in the House.

4.31 pm

On resuming—

Claire Perry: I am sure the constituents of the hon. Member for Clacton are delighted that he has finally spoken up on railways, because my little trawl suggests that he has not mentioned railways in this Parliament.

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Douglas Carswell: When I was a Conservative Member of Parliament, I was bound by the Whip, and of course the Minister and her boss in the Department for Transport were then running the Whips Office. It was therefore much more difficult for me to speak freely in the interest of my constituents, and I am grateful that I am now at liberty to do so.

Claire Perry: The hon. Gentleman suggests that he could not have asked questions about fares, services and station refurbishments, but he managed 42 mentions of the EU. It is rather depressing that his last comment on the railways dates from seven and a half years ago. Presumably, he could have spoken in that Parliament—no matter. I am delighted to welcome his nascent and new-found interest in the railways, which raises several questions. What is his party’s policy? The UK Independence party’s 2010 manifesto, of course, called for three high-speed lines, not two, with no mention of cost control. We will leave that point and move on.

I propose to make three sets of remarks this afternoon. I will first canter through Network Rail’s current governance structure and correct the hon. Member for Rochester and Strood, or at least answer some of his questions. Secondly, I will ask whether there is any evidence of governance failure. Lastly, I will review recent events, on which there are valid questions that we all need to ask.

In December 2013, as the hon. Gentleman knows, the Office for National Statistics made an independent decision to reclassify the Network Rail balance sheet from the private sector to the public sector, which changed nothing in terms of operational performance; it was an attempt to put public debt on the public balance sheet, which I strongly support. The reclassification does not change the industry structure or the day-to-day operations of the rail network, and it has no effect on fares, performance, punctuality, safety or timetables.

Douglas Carswell: Will the Minister give way?

Claire Perry: It would be helpful if I could make a little progress.

The reclassification rightly raises the question what the governance should look like, which is why the framework agreement was published in September 2014. The agreement specifically sets out what the relationship between Network Rail and the DFT looks like, and it tries to achieve two things. First, it tries to achieve a level of operational independence. All political parties, including the hon. Gentleman’s party I am sure, would say that Ministers should not be running trains and that there should be an element of independence and control. [Interruption.] The hon. Member for Clacton is chuntering away from a sedentary position, and I am trying to answer some of the questions. He is not particularly interested in railways, but perhaps he might be after today.

For many people, including the UK Independence party, it is not appropriate to have Ministers and, indeed, officials running the railway network; it is appropriate that Network Rail operates as an arm’s length body. However, it is important to deliver accountability and correct governance and structure. Under the new framework agreement, the Secretary of State for Transport, as a special board member, has levers by which to steer

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Network Rail, including the right to agree business plans and to approve Network Rail’s remuneration envelope.

Mark Reckless: Did the Secretary of State not previously have those powers as a special board member? Are those powers not due to him under Network Rail’s articles of association, rather than under the framework agreement?

Claire Perry: The issue is whether they have been exercised, and since this new structure was introduced, they have indeed been exercised. The Department, representing the Secretary of State, has started to do appropriate things such as attending annual general meetings and being involved in board meetings.

Mark Reckless: Will the Minister give way?

Claire Perry: I will make a little more progress, because the hon. Gentleman has asked a lot of questions.

In extreme cases, the Secretary of State has the power to remove the chair or, indeed, to become the sole member of Network Rail. So what is the role? The Secretary of State determines the rail investment strategy and the statements of funding available, and he works with the Office of Rail Regulation to monitor the timely delivery of major projects. Ministers effectively set the high-level strategic and spending approach to the railways and, ultimately, are accountable for the model of delivery and the operation of rail works for the country and for passengers.

Interesting suggestions have been proposed for improving governance. Crucially—this perhaps has not been conveyed clearly, so let me make it very clear—the Department is completely focused on maintaining and reviewing the appropriate role for governance. If governance needs to change to deliver improvements, it will change but based on the work done up until September 2014, and on the analysis of Network Rail’s board and the role of its public members, the current diagnosis is that it does not need to change to deliver the railway improvements that we all want to see.

The hon. Gentleman asked about the number of public members. As I am sure he knows, the number has been cut from 90 to 45. There was an independent external review of whether those members were carrying out their functions effectively, and it was found that they were performing their duties. On whether there is evidence that Network Rail’s governance is currently failing, it is right to raise those important issues, but I think the diagnosis is that Network Rail’s governance arrangements are working appropriately. We must carefully consider the role of the public members. It could have been said in the past that public members did not have the specific relevant experience to carry out that governance role, but they have now been appointed from relevant sectors and have experience and understanding of corporate governance.

The hon. Gentleman referred to some of the compensation arrangements for senior managers. I am sure, like me, he welcomes the fact that the bonuses paid in this year of Network Rail’s operation will be one tenth of those paid in the last year of the previous Administration. Given that the company’s role in carrying out its business has not changed—as a reminder, it is a

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company of 35,000 individuals with an income statement of some £7 billion a year, and it has £38 billion of investment proposals to deliver over the next five years— the question for the hon. Gentleman is: how much compensation is appropriate to deliver such highly important investment for the country?

Mark Reckless: What has changed, now that Network Rail has become a public sector body and its debt is on the Government’s balance sheet, is that it does not face the market risk of going bust, being insolvent or falling back on itself when its bond obligations cannot be satisfied.

Claire Perry: Like me, the hon. Gentleman has a background in finance. He should therefore know that investors will always have considered that debt to have been effectively underwritten by the public sector, so the reclassification is simply a formalisation of what I suspect savvy investors have known for many a year.

There is no evidence that Network Rail’s governance structure is inappropriate or failing. However, I suspect that the hon. Gentleman’s new-found interest in its governance may be a result of the disruption after Christmas at several mainline stations and, more recently, at London Bridge station, which many people living in his constituency use on a daily basis. I am incredibly grateful to him for giving me the opportunity once again to state very clearly what passengers should expect.

The Secretary of State made it clear at the time that the disruption at King’s Cross and Paddington immediately after Christmas was totally unacceptable. In my view, the situation was inexcusable. Passengers deserve a reliable rail service, clear information and rapid help if things go wrong. I am sorry that, in this case, they did not get those things.

Across the industry, we have to be able to trust Network Rail’s ability to complete vital engineering works on time, and it is essential that the lessons that started to be spelled out in the report, which the hon. Gentleman slightly traduced, are learned. Work continues on finding the most appropriate time of year to do engineering works. I say again—this was said last week—that Network Rail carried out its busiest engineering programme ever over this holiday period. There were 2,000 work sites.

Douglas Carswell: The Minister says that the failures were inexcusable, but she is now excusing the failure. She says that she is sorry for what happened, so what is she actually going to change about Network Rail’s governance to ensure that it does not happen again?

Claire Perry: I appreciate the hon. Gentleman’s enthusiasm for railways, which marks a rapid change from his former portfolio of interests.

Mark Reckless: Answer the questions.

Claire Perry: I am keen to answer the questions, if the hon. Gentleman will allow me to proceed.

As I was saying, an unprecedented amount of engineering work went on over the holiday period, because the main driver of problems on the railways is twofold. First,

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passenger growth is unprecedented. About 1.6 billion passenger journeys are now made every year, twice as many as before privatisation. Secondly, successive Governments have underinvested in the railways for many a long year.

The hon. Gentleman asked about London Bridge station, as did the hon. Member for Lewisham West and Penge (Jim Dowd). That station is 176 years old, and frankly, it has been ignored, although it is one of the busiest pinch points into London. That work is finally being done, so that residents across the south and south-east can transit in and out of London much more effectively.

Jim Dowd: I congratulate the Minister on organising a meeting next week with the principal train operating companies running into London Bridge—Southern and Southeastern. Can she confirm that we will also have an opportunity to consider the position regarding London Bridge itself and the colossal debacle that my constituents and many others have had to experience for 10 days now, with little sign of the problems abating?

Claire Perry: I agree with the hon. Gentleman; I think that he uses a good adjective. I have visited the station, and my officials have been there. The Secretary of State himself went there during rush hour. We are extremely concerned that the engineering works, which are fantastically overdue, are delivered in a way that does not inconvenience passengers. That gets to the crux of the matter.

This is not a governance problem; it is a failure to work across industry, with passenger benefit front and central. Enormous operational improvements will clearly be delivered by this Government’s unprecedented £38 billion investment in the railways, which is long overdue and will benefit all Members in this room, but it must be delivered by thinking first and foremost about how passengers will use the network and about the benefits for them.

As we saw in the McNulty report published several years ago, the challenge for British railways is to do what we suggested then and join up the objectives of Network Rail and the train operating companies to carry on this unprecedented amount of investment, as we know can be done across the network. I am happy to reassure Members that the Government are committed across the board not only to ensuring operational independence, but, clearly, to delivering better services for passengers in the running of the railways. I am also happy to reassure Members that we remain committed to our huge programme of planned improvements, including the entire rebuild of Rochester station by the end of this year and £120 million of signalling works in east Kent, which I am sure the hon. Member for Rochester and Strood is rising to congratulate the Government on providing.

Mark Reckless: I am indeed. I rise to congratulate the Government and Network Rail on the new station in Rochester, which will be fantastic. The Minister talks about working together with the operators. The new station is half a mile or so closer to London, and significant investment has been put into signalling changes. It would be useful to know how many minutes that is likely to knock off train times from Rochester into

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London. Can Network Rail and Southeastern work together more closely on planning that for the new timetable?

Claire Perry: I do not know the answer, but I am happy to find out and write to the hon. Gentleman.

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Direct Selling Industry

4.43 pm

Chris Heaton-Harris (Daventry) (Con): It is a pleasure to serve under your chairmanship, Mr Crausby. As you know, my constituency takes the name of Daventry, but it also has a couple of nicknames. Some call it logistics central because of the number of jobs in the logistics sector there; others call it direct selling central, which is extremely relevant to the debate.

My constituency is a hub for the direct selling industry. On my southern doorstep is Avon. Its former boss, Paul Southworth OBE, is one of the most active people in Northamptonshire business politics I have ever met, and until recently he was chairman of the Northamptonshire enterprise partnership. Andy Smith, a constituent of mine, also happens to be the general manager of Amway UK and Ireland, and there a number of big direct selling businesses just down the road in Corby. For example, Cambridge Weight Plan has more than 100 jobs and exports to more than 25 other countries, and Herbalife UK is based in Middlesex, along with dozens of other companies.

I therefore try to keep a watchful eye on what is happening in the direct selling industry. I wanted to take this opportunity to remind the Minister how important the direct selling industry is to the British economy. The industry has an association—the appropriately named Direct Selling Association—and its member companies contribute about £1.6 billion a year to UK GDP. Some 400,000 people work in the industry, making it one of the largest providers of part-time working opportunities nationwide.

The industry is open to everyone. There are absolutely no barriers to entry, which is why so many mums coming back into the jobs market choose to do so by setting up their own direct selling businesses. In fact, stay-at-home mums account for 29% of direct sellers—many are attracted by the flexibility and social aspects of direct selling—and for a 20% increase in numbers between 2012-2013 and now.

If hon. Members will forgive me for being slightly political for one moment, the Opposition regularly talk down part-time job opportunities as not being proper jobs. I see things very differently. I view every part-time job provided as a massive positive. For many, the flexibility of part-time work allows them the opportunity to earn some extra money when it suits them. For some, it facilitates re-entry into the jobs market. As I said before, there are no barriers to entry in direct selling. It does not matter what age or gender people are or what culture they are from; pretty much everyone can succeed in the industry if they put their mind to it.

One need only look at the recent survey by the Direct Selling Association of its 60 member companies, which discovered that 38% of direct sellers are over 50 years old, yet the number of those under 25 entering the market has increased by 29%. It highlights the breadth of people to whom direct selling reaches out and whom it enables to work. The industry has gone from strength to strength: revenue in the sector last year increased by 7%.

That makes the direct selling industry invaluable to UK plc. Think about it: when the Opposition had some issues with how they ran the economy, jobs in some

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parts of the country were few and far between. Which industry was still recruiting new blood in those areas? The direct selling industry was. Female unemployment rose more than male joblessness after the recession. Given that 79% of direct sellers are women, the continued growth of the industry has been invaluable in aiding women back on to the employment ladder, thus helping our economic recovery. I am sure that the Chancellor would not forgive me if I did not add that such entrepreneurship is key to our long-term economic plan.

In my constituency, the unemployment claimant rate has fallen to just 1.1%, with just 600 people claiming. Youth unemployment has fallen more than 40% since 2010, and long-term unemployment has fallen by nearly half as well. That is all excellent local news for Daventry, but I am aware that not every part of the country is as fortunate as my constituency. However, I do know the direct selling industry is giving those who are harder to place in employment the chance to start their own business, no matter where they are based. Direct selling is like the Heineken of industries, operating in every part of the country no matter what the economic circumstances or social demographic. It is a phenomenal industry that, in my opinion, does not get the credit it deserves from Government or in our national press, which is why I thought this debate was needed.

In the time remaining, I will say a bit about the benefits of self-employment, and specifically about the opportunities in direct selling, including opportunities for female entrepreneurship. With the help and sponsorship of Amway, one of the biggest direct sellers, I have hosted a lunch and an afternoon tea in Parliament on the subject with some of the great and good of politics from the House of Lords, the House of Commons and local government, and business representatives and some amazing female entrepreneurs and their advocates.

Amway is the world’s No. 1 direct selling company, established in 1959, and Amway business owners operate in more than 100 markets around the world. There are more than 40,000 Amway business owners in the UK alone, selling products across a wide range of industries including skin care, cosmetics, hair care and so on. One good example of an Amway business owner is Brenda Wills. She and her daughter Sally Brinner have been working as distributors for Amway for more than 30 years. Sally was introduced to the business by her parents, who started their Amway business together in the mid-80s, and they have worked together in the industry ever since.

Sally’s parents were drawn to the prospect of owning a business that offered independence, flexibility and a chance to earn a living on their own terms. Some 30 years later, Brenda is still working from home and enjoying an income aged 81, and Sally and her own 27-year-old daughter Victoria, who has been an Amway business-owner since the age of 18, are now driving the business forward. That means three generations of the same family are part of this entrepreneurial industry, which sells products globally.

The Direct Selling Association has had a close relationship with my local university, the university of Northampton, for a number of years. Indeed, DSA representatives regularly visit the university to give talks to students about the direct selling industry, including

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on how to start up their own business. The DSA provides advice on how students can combine a direct selling business with their studies. One benefit of such a business is that it provides students with something concrete and interesting to put on their CV for life after university; it shows that they have held a position of responsibility and gained some experience in a number of areas by running their own business. Of course, it also encourages something that is almost impossible to teach—the wish, or urge, to be an entrepreneur and run a business. That is the direct selling industry’s strongest suit. Direct selling is the first and easiest of all steps on the ladder to becoming an entrepreneur.

The DSA’s experience is that many young people want to run their own business but do not know how to go about it. The direct selling industry provides a safe environment for them to take their first steps as an entrepreneur. Some stay in the industry, while others use it as a stepping stone. When I was researching material for this speech, I asked how many younger direct sellers there are in the UK and was told that there are around 75,000 direct sellers under the age of 25, 75% of whom are women. That is an amazing statistic.

As a Conservative who has set up and run businesses of my own, I hope I know how important self-employment is, but just in case the Government do not get it, let me read out part of an interview conducted last summer with the Minister for Employment, my right hon. Friend the Member for Wirral West (Esther McVey). The headline was: “‘Young people should think about starting their own business instead of university,’ says employment minister.” She said that, for many teenagers, being their own boss would be better than embarking on a career with a large firm, and she wanted to encourage people who had the “seed” of an idea to pursue it, instead of feeling pressured to follow friends or family into taking a degree. She said that the choices made by people to become apprentices or self-employed are

“equal and good and worthwhile”

when compared with those made by people who go to university. I wholeheartedly agree.

As I am sure my hon. Friend the Minister knows, the direct selling industry can help to deliver the opportunities for people to do exactly what our right hon. Friend the Minister for Employment was talking about. As I have already said, one of the industry’s biggest players is Amway and it regularly commissions a study on how different countries view entrepreneurship. The findings of the latest study were fascinating. Denmark is considered to be one of the top countries within the EU for having the most positive attitude towards entrepreneurship. Perhaps an explanation for that is that the Danish Government encourage the teaching of enterprise skills at school from the age of 16. Whether or not that is a good idea is a discussion for another day. However, the study also highlighted that fear of failure was one of the main reasons given by women, young people and pretty much everyone in the UK for not setting up their own businesses. The direct selling industry contains many excellent people who help people such as that—we know from the statistics I mentioned earlier that this group especially includes women—over the hurdles that help to perpetuate that fear.

In conclusion, I wanted this debate to ensure that the direct selling industry is not forgotten by the Minister or his Department when they are deciding policies in

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future. I also wanted to explain that the industry provides fertile training ground for entrepreneurs, from people who want to provide a little extra for their families to those who aim big and want to employ others themselves. It gives people the chance to make their lives better, to build self-confidence and business confidence, and to succeed. Thus, I would like to receive one simple assurance from the Minister today: that he and his Department recognise and understand the importance of that industry, and will continue to work with it in future to ensure that it continues to play such a positive part in our country’s economic development.

4.54 pm

The Minister for Skills and Equalities (Nick Boles): It is a pleasure to serve under your chairmanship, Mr Crausby. I congratulate my hon. Friend the Member for Daventry (Chris Heaton-Harris) on securing this debate on an industry that is not only important to his constituency—although, as he rightly pointed out, it could easily claim to be the centre of direct selling in the UK—but to communities across the whole country.

We in our profession should have a particular affinity with anyone in the direct selling industry, because what are we politicians ourselves other than direct sellers, going—particularly in the next few months—from door to door and trying to persuade people to buy a product from us? We do not do so for profit, but we often have to use many of the same skills and methods as those who succeed in the direct selling industry. We all know that, simple though it sounds, summoning up the persuasive powers and reserves of charm necessary to persuade a sceptical person on the doorstep that they should give us a little time so that they can listen to our message and understand what we are proposing is not the easiest thing in the world.

It is a huge credit to the people engaged in direct selling that they are as successful as they are and that they are able to build sustainable incomes for their families. My hon. Friend told the wonderful story of Brenda, Sally and Victoria, three generations of one family, all of whom—including Brenda, who is now 81 but still active—are direct sellers; I believe it is for Amway, which is obviously the most famous direct selling company in the world.

Those three formidable ladies provide particular lessons for us. The first lesson is that the income is sustainable. Direct selling is not just something that people do perhaps for a year or two at the start of their careers, although it could be that. It can provide a sustainable income and be a business that provides a livelihood for a family—not just for decades, but across generations.

The second lesson is that, as my hon. Friend pointed out, this is an area of business and entrepreneurial activity that is perhaps particularly attractive to young women, especially those trying to combine work and enterprise with bringing up children. That is because it has a key, innate flexibility. A direct selling business is one that they can run from home, devoting whatever hours in whatever days of the week suit them. What matters is their results, not how they achieve them.

That is why it has been so important that the Government have been focused, and remain focused, on making it easier for people to set up and run businesses from their homes. Of course, not all businesses run from homes

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are direct selling businesses, but a great number of them are. Previously, there were some pettifogging bureaucratic rules that made it harder for people to set up and run businesses from home—rules on tenancy agreements, meaning that people required a specific change to them, with the agreement of their landlord, before they could set up a business to run from home. We have changed the law so that landlords can agree to home business use without in any way affecting or undermining their residential tenancy agreement.

In addition, there were rules relating to business rates and planning conditions that also militated against people setting up businesses to run from home. Consequently, we have made sure that, in the majority of circumstances, home-based businesses will not attract business rates. We have published revised business rates guidance to clarify that point. That is important, because if someone is setting up a home business they probably do not have a great deal of capital to set it up; perhaps one of the attractions of the direct selling industry is that it does not require a huge amount of start-up capital. However, if they face the prospect of being charged business rates instead of council tax, that could be very off-putting. The change that we have made will help to make the prospect of setting up a home-based business more attractive to people.

Finally, we have published a guide for anyone who wants to set up a home-based business, so that they can find in one place all the information they need to ensure that they are acting properly within the law and to understand what support they get from Government as start-up businesses, as well as what opportunities there are for start-up loans and other financial support from the British Business Bank.

We believe, as a Government, that we have a good record of supporting anybody who wants to set up a business—particularly a business from home. I am sure that that record has played a role in the substantial increase in home-based businesses. The number of home businesses has increased to 2.9 million, a 500,000 increase since 2010. That increase is enabling people who previously either did not have any work or had a job that was not satisfying to them and was incompatible with their other responsibilities to take charge of their lives and provide for their families in a way that suits them.

My hon. Friend made an important point in saying that this way of working enables people to have independence and to run their lives in a way that suits them and their families. It can also suit their broader responsibilities, providing them with an opportunity to develop a business and earn an income that is flexible and fits with the pattern of their lives. I am happy to give my hon. Friend an assurance that we will continue to take into account home-based businesses—particularly direct selling businesses—in the formulation of policy.

My hon. Friend mentioned an interesting study of attitudes towards home-based businesses and direct selling businesses in different countries. He singled out Denmark as a place where attitudes were most positive. He conjectured that that might be a result of the fact that Denmark requires every young person to be offered enterprise education from the age of 16.

I hope that my hon. Friend welcomes—I am sure that he does—the work by the noble Lord Young, who has held a central and distinguished position in a series of Conservative Governments going back over many decades

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and who is passionate about enterprise education. Lord Young recently produced a report for the Prime Minister called “Enterprise for all”. He proposes specifically to establish a network of enterprise advisers—current or former executives with local businesses—attached to schools, whose job it would be to co-ordinate bringing people into schools who could inspire young people with the possibilities of enterprise and of setting up their own businesses.

That policy is welcome and has now been given over to the new careers company that Christine Hodgson is setting up and leading, to which the Government are committing £20 million. We hope that within a couple of years we will have a network of enterprise advisers across the country and that every school will have somebody with real business experience, embedded and implanted in the local business community, who can bring into schools speakers, programmes and work experience offers that will enable young people who think they might be interested in setting up a business to get some experience and talk to people who have done it.

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I say to my hon. Friend’s constituents who are senior executives in the direct selling businesses, and to individuals running direct selling businesses and members of the Direct Selling Association, that they could make contact with their old school, go back as alumni and talk to young people about what direct selling and setting up their own business from home has done for their lives. They could say how it has enabled them to fulfil their dreams and establish financial independence for their families. That would be as powerful a message as any.

I thank my hon. Friend for bringing this subject to the attention of the House. It is certainly one that the Department for Business, Innovation and Skills is focused on.

Question put and agreed to.

5.4 pm

Sitting adjourned.