§ The Secretary of State for Trade and Industry (Mr. Stephen Byers)The Queen's Speech has one central theme, which is to build a Britain of enterprise and fairness for all our people. That is a theme that reflects the mainstream of British politics.
For generations, the electorate faced an artificial choice—either to support enterprise, be pro-business and encourage wealth, but say and do nothing about social exclusion; or to support a command-and-control economy, and a policy of tax and spend in order to help those in poverty, but at the expense of building a strong economy.
The Queen's Speech shows that we can combine enterprise and fairness, and put behind us the artificial approach which for so long has dogged British politics and the British economy. The Queen's Speech is a radical and reforming programme, containing modernising measures to ensure that we can meet the challenges of the 21st century. However, we will be able to do so only if we maintain economic stability as well as steady growth. That will involve, and already has involved, taking difficult decisions.
We gave independence to the Bank of England over interest rates. That was criticised by some, including the hon. Member for Tiverton and Honiton (Mrs. Browning) who leads for the Conservatives on these matters. As I was flicking through back copies of The Mid Devon Gazette the other day, I came across a comment from the hon. Lady that some may find interesting. She stated: 240
People should look at the way New Labour is unravelling the British constitution. The first thing it did was to hand over control of interest rates to the Bank of England.
§ Mrs. Angela Browning (Tiverton and Honiton)I should be grateful if the right hon. Gentleman would complete what I said. I said that Labour gave control to the Bank of England without consulting Parliament. Perhaps he would be genuine enough to quote the full sentence.
§ Mr. ByersThat did go through Parliament. The extract from The Mid Devon Gazette to which I am referring does not go on to state that. Clearly, I am quoting from edited highlights of The Mid Devon Gazette.
The real issue is the hon. Lady's views on the matter. Does she believe that the Bank of England should no longer have the independence to establish interest rates? I know that her personal view is that it should not. It would be good if she confirmed that officially to the House today. The fact that she fails to do so speaks for itself.
The Government took the difficult decision to take politics out of the setting of interest rates. We believe that that is the best way to establish a sound economic framework. We combined that with ensuring that we had sound public finances, taking another difficult decision—that, in the first two years of government, we would not increase public spending, but would agree with the spending profile put in place by the previous Government.
As a result of the comprehensive spending review taken through by my right hon. Friend, now the Secretary of State for Social Security, who at the time was the Chief Secretary to the Treasury, we were able to identify funding for our essential programmes, particularly in schools and hospitals. We freed up £40 billion to be spent in education and health—once again, spending that was opposed by the Conservatives. They said at the time that it was reckless, but in reality it was money that the country could afford. The money is now going into our schools and hospitals, and is widely welcomed by parents and patients throughout the country.
The best chance of ensuring that we do not return to the days of boom and bust is to maintain economic stability and steady growth. It is worth reminding ourselves that, less than 10 years ago, we had interest rates at 15 per cent., inflation at 10 per cent. and the national debt doubling. We have put those days behind us and, as a result of the sound economic platform that we established, there is a once-in-a-generation opportunity to make a real difference.
The measures in the Queen's Speech that are sponsored by the Department of Trade and Industry show clearly how we can combine the two themes of enterprise and fairness. Of the 28 Bills contained in the Queen's Speech, seven are from the Department of Trade and Industry. To assist the House, I shall quickly run through those measures.
The first, and perhaps one of the most significant measures, is the Electronic Communications Bill, which was introduced in the House yesterday. Bill Gates called it a model for Europe. The Bill is an important part of the Government's policy to make Britain the best place in the world for electronic business by 2002. The Bill will also underpin the "Modernising Government" agenda by helping to meet the Prime Minister's target of 25 per cent. of Government services being available electronically by 2002, rising to 100 per cent. by 2008.
241 The Bill reflects the views expressed by business. We have changed it, and we make no apology for having done so: we said that we would consult and listen, and the result is that we now have a Bill that reflects the changing world of e-commerce. It will introduce a light-touch regime that gives the degree of flexibility needed to enable us to move with the times and adapt to developments in the months and years ahead.
§ Mr. Ian Taylor (Esher and Walton)I welcome the fact that the right hon. Gentleman has filleted from the previous draft of the Bill various aspects of the statutory trusted third party regime. I have recanted proposals that I made when I was a Minister, when the technology was at an earlier stage of development. However, will the right hon. Gentleman assure the House that, the provisions having been removed from the Bill and the matter left to the industry to sort out, the Home Office will not make an attempt to sidestep that process by inserting a statutory regime in its legislation?
§ Mr. ByersI am sure the hon. Gentleman knows from his own experience the importance of refining the Bill to reflect the needs of business. I am not trying to make a cheap point—the hon. Gentleman himself will concede it—but, when I became Secretary of State, I inherited some baggage from his time at the Department. We had to make changes made necessary by the changing nature of the industry, and we were pleased to do so. We introduced a light-touch regime after discussions with Home Office colleagues; they understand the need for such an approach, agree with the line that we have adopted in the Bill, and will not take steps in other legislation that run counter to the direction we have set out. We all realise how important that industry is to British business and the United Kingdom economy in general.
Our second major piece of legislation will be a utilities Bill, which was published in draft form earlier this year. It reflects the fact that water, energy and telecommunications are among the essentials of modem day life. Consumers must have a sufficient supply of such services on fair terms and, wherever possible, from their own choice of supplier. The Bill will demonstrate our commitment to consumers and to competition by giving regulators a new primary duty to protect the consumer interest by promoting effecting competition. We believe that that is the only way in which we can protect consumer interests in the long term. Creating effective competition among utilities is especially important, given that it does not exist at present.
The third Bill is a measure designed to modernise and reform postal services. Earlier this year, we published a White Paper in which we outlined how we could create a world-class postal service network in the UK, one fit for the 21st century. The Bill will deliver on the commitments contained in that document. The Post Office will remain in public ownership but, while it maintains an effective postal service, based on high standards and quality, that meets the social and commercial needs of our country, it will have greater commercial freedom.
We shall introduce a limited liability partnerships Bill to allow firms to incorporate with limited liability while retaining the organisational flexibility of a partnership. 242 The Bill will take account of the changing commercial environment by adding to the choice of business organisation available to all firms. That demonstrates our commitment to maintaining an up-to-date legal framework for business.
We shall also introduce an insolvency Bill that will complement our determination to encourage enterprise. The intentions behind our proposals are twofold: first, to assist the rescue of businesses that are experiencing short-term difficulties but are otherwise viable; and, secondly, to improve the procedure for disqualifying directors who have shown themselves to be unfit to run a company—a matter about which hon. Members on both sides have expressed concern.
We intend to introduce legislation to modernise the way in which Companies House operates. The measure will benefit all those who use the services provided by the Registrar of Companies, companies that have to provide information to the registrar and those who use the information provided by Companies House. That will benefit many small businesses that decide to incorporate. Of the 1.3 million companies registered at Companies House, slightly more than 1 million have fewer than 10 employees, yet our current system is primarily geared to respond to the needs of large, publicly quoted companies, and ignores the needs of small businesses. I hope that the changes that we make at Companies House will help small businesses.
Our final measure will be a nuclear safeguards Bill. The measure is needed to bring into force a new agreement made with the International Atomic Energy Agency and the European Atomic Energy Community. It forms part of an international effort to strengthen nuclear safeguards and is essential to meeting our international obligations.
§ Mr. John Bercow (Buckingham)Will the right hon. Gentleman reflect on the Government's proposals either for better regulation—which has so far been a failure—or for deregulation? I wrote to him on 20 May seeking a response to the six-point plan contained in my 10-minute Bill presented on 27 April. At the end of June, he replied with an undertaking to implement a measure of sunset regulation, along the lines of the American model, whereby regulations automatically lapse or expire after a given date if they are not deemed worthy of renewal. Will he now tell the House what specific measure he proposes to introduce in fulfilment of that promise?
§ Mr. ByersI shall ensure that the hon. Gentleman receives a copy this morning of the Electronic Communications Bill, which is being published today and contains a sunset clause. I thank Opposition Members for their silence.
The Queen's Speech prepares our country for the future and reflects a recognition that a fundamental shift, driven by globalisation, technology, innovation and knowledge, is occurring within our economy and society. In that context, we must be absolutely clear about the role that Government can and should play, especially in trade and industry and support for business. We should promote competitive markets, encourage long-term research and investment and help to equip all our people with the skills that they will need to succeed in a modern economy. I do not believe that my Department needs to go far beyond those essential requirements.
243 I recognise that, in a modern economy, the main source of value and competitive advantage will be human and intellectual capital. For most of our history, wealth and power have been derived from the control of physical assets—land, raw materials, coal, iron and steel—but, in the next century, they will come from human capital, so investing in knowledge, skills and learning is a key priority for the Government and our country. We were the cradle of the first industrial revolution, which was based on investment in plant and machinery—physical capital. The current revolution will be based on knowledge, which means that the responsibility of both Government and employers must be to invest in human capital—in skills, knowledge and learning.
A range of new policies and approaches is needed if we are to create a more entrepreneurial, knowledge-rich economy. That is the objective that the Government have set for themselves. When we look around the world today, it is clear that its chief characteristic is change. The force of change outside our country is driving the need for change within it. We must ensure that markets work effectively, which means operating a strong, robust competition policy and keeping consumers well informed and confident.
A market left to its own devices cannot educate or equip us for this world of rapid change; that is possible only if we work together. Our objective must be a dynamic, knowledge-based economy, founded on individual empowerment and opportunity, in which Government enable but do not dictate, and the power of the market is harnessed to serve the public interest. The real challenge for Government in the dying days of the 20th century is: how can we prepare Britain for a world in which knowledge will be the new currency?
I know that Conservative Members are obsessed with another currency—they can think of little else—but knowledge is the global currency to which they should give some thought. Successful economies and societies will be those that can adapt to the demands of rapid change, that are flexible and creative and manage change rather than being submerged by it. We want to ensure that change can be seen as a bringer of opportunity, not of threat.
There will be countries that find ways of including all their people, not just the new "knowledge elite". That is the challenge that we face. We need an approach that will be built around a new coalition, but with the historic objectives of the left of centre in politics: to create a better standard of life for our people, to ensure that British business succeeds at home and abroad, and to tackle exploitation in all its forms.
§ Mr. Geraint Davies (Croydon, Central)My right hon. Friend has spoken of e-commerce, changing technology and human capital. Does he envisage, as I do, a world in which, within the next few years, one in five working days may be spent at home, on a computer? Would not such a development have an enormous impact, decreasing the need for additional transport infrastructure, and radically changing the whole paradigm for the Department of the Environment, Transport and the Regions? Will that not be the effect of our innovations in the spheres of e-commerce and trade and industry?
Will my right hon. Friend work closely with his friends in the DETR to manage those changes? If one day in five is spent at home, presumably one office in five will be 244 empty, and the resulting space could be used for executive homes. The whole situation in British industry, in terms of the efficiency of travel to work and of communication—
§ Mr. Deputy Speaker (Sir Alan Haselhurst)Order. This is a long intervention, even for a Friday.
§ Mr. ByersMy hon. Friend has, however, made a serious point. Many large multinational companies are now considering the number of places that they will need to provide at their headquarters. The chief executive of a major multinational relocating in central London told me the other day that the company will require all its workers to spend one day a week at home, and that it will consequently need less office space. It is taking financial advantage of that reduction, and is encouraging people not to travel by providing them with all the facilities that they will need in order to keep in touch with the business from home. Such developments will lead to rapid changes in the way in which businesses organise themselves.
As I was saying, we must help British business to succeed at home and abroad, as well as tackling exploitation in all its forms. That approach, which runs throughout the Queen's Speech, recognises that, while the role of Government has changed fundamentally, Government still have a critical part to play in improving the performance of the British economy, and improving life for all our people.
By creating a stable macro-economic environment and ending the cycle of boom and bust, we can ensure that businesses have the confidence to plan for the future. We need them to invest in knowledge, whether through research and development or through training, and to be prepared to take risks in order to stay ahead in fast-moving markets. We can ill afford any delay in that vital investment owing to fears about the economy and its long-term stability.
As the world opens up, British firms will succeed in winning market shares only if they have access to markets, and are capable of competing. Opening up markets will be one of the Government's top priorities. We are driving that forward in the United Kingdom, where there is now full competition in the supply of electricity and gas, but much more needs to be done. Part of it will be achieved by the utilities Bill. Far too few domestic consumers, in particular, are taking advantage of the freedoms that are already available to them: very few, for instance, are changing their gas and electricity suppliers even when to do so would be financially advantageous. I want consumers to think seriously about how they can take advantage of the benefits that have resulted from greater competition in the energy market, and we shall look at how we can help consumers—especially domestic consumers—to do that.
We also need to ensure that the markets in Europe are made fully open, and that we make the single market a reality. I am sure that all hon. Members were concerned to learn yesterday that the French Government do not intend to implement the electricity directive that would have opened up the French electricity market to competition. We strongly believe that open electricity and gas markets are necessary throughout Europe, and that one of the key reforms in Europe will be making the single market a reality. France's failure to implement the directive is disappointing, to say the least.
245 EDF, the French state-owned electricity company, is taking advantage of open European markets to establish a powerful position in Europe, but retains a monopoly in its home market. That is clearly unacceptable. We strongly support the infraction proceedings initiated by the European Commission, but we must also consider what further action might be appropriate in relation to the French Government's failure to open up the energy market to full, effective competition.
In just 10 days' time, the World Trade Organisation's ministerial meeting will begin in Seattle. We shall use it as an opportunity to work with others to continue the drive for global free trade and increased liberalisation of goods and services. Within markets, competition will always be the greatest spur for innovation and the provision of genuine consumer choice. Next year will see the start of a new competition regime in the United Kingdom, which will ensure that anti-competitive practices and the abuse of dominant positions can be halted, and punished where appropriate.
We are living in a world of rapid change and, as a result, the nature of work itself is changing. More people work part-time; more people work on a temporary basis, or have fixed-term contracts. Fewer people work on the shop floor, and there has been an explosion of service-based jobs. More people work in small business, and the composition of the work force is changing. More women are working: some 52 per cent. of married women with a child under five now work, more than double the percentage just a generation ago. More families depend on two earners. We have introduced a new settlement for the workplace, based on minimum standards and on fairness rather than favours.
The Conservative party's response to the implementation of our policies has been interesting. The Tories—particularly the hon. Member for Tiverton and Honiton—are still opposed to the national minimum wage. It is unfortunate that her deputy, the hon. Member for Rutland and Melton (Mr. Duncan), is not here today. At our last Question Time, I quoted him saying that the minimum wage was a cretinous idea. He challenged me to spell "cretinous" so I went to the dictionary to ensure that I knew how to spell it. Literacy is fine. It is sums that are my problem, I am afraid.
§ Mr. BercowLabour Members split their infinitives.
§ Mr. ByersAs I have warned the hon. Gentleman before, if he keeps going on about split infinitives, many Labour Members will happily split his.
The dictionary definition of a cretin is a fool, or stupid person, which is a far more accurate description of the hon. Member for Rutland and Melton than of the minimum wage. We now see that it will benefit well over 1.5 million people and the Conservatives still oppose it.
The Conservatives would scrap the new deal. They say that it has been a failure, but, if we look at the facts and do not rely on prejudice, as some Conservative Members like to do, we will find that 300,000 young people have already been helped through the new deal. Youth unemployment has been cut by half, yet Conservative Members regard that as a failure. Of course they would. 246 In government, they were prepared to allow their economic and social policies to lay a generation of young people to waste.
§ Mr. Eric Forth (Bromley and Chislehurst)The Secretary of State must stop peddling such nonsense. I invite him to ask his Department to produce some figures about the movement in unemployment throughout all regions and age ranges over the last few years of the previous Administration and extrapolate those forward to now. I think that he will find that there is very little difference between what happened for some years under the previous Administration and what is happening now. The only difference is that he and his colleagues have thrown several billions of taxpayers' money at a problem that did not exist.
§ Mr. ByersThat is a good example of why we should rely on facts, not prejudice, as the right hon. Gentleman does. I share with him two facts. A total of 700,000 more people are in work than when we took office in May 1997, and youth unemployment has halved since then. That is the reality, but, again, it has been clearly demonstrated that the Conservative party opposes the new deal.
The working families tax credit is another example of how the Conservative party has lost touch with the electorate and has not recognised the lessons of its 1997 election defeat. The credit will make work pay and give parents a real incentive. It will leave 1.5 million families on average £24 a week better off, but it is opposed by the Conservative party.
At the end of July, the fairness at work legislation was put on to the statute book. A settlement based on partnership and minimum standards, it was opposed by the Conservative party. It ensures that part-time workers have the same employment rights as full-time workers and are no longer treated as second-class citizens, but it was opposed by the Conservative party.
We recognise that one of the greatest challenges that faces parents is how to juggle the responsibility of bringing up a family with holding down a job. That is why we have introduced family friendly employment policies, which are, again, opposed by the Conservative party. Next Tuesday, as a result of further implementation of provisions under the working time regulations, we will provide an extra week's paid holiday—from three to four weeks—for all people who are in employment; again, it is opposed by the Conservative party.
There is a genuine issue about regulation and the nature of regulation, but it is important to distinguish between two issues: the cost of red tape and the burden of bureaucracy; and the cost of providing direct benefits to employees. Conservative Members confuse the two. The Labour party is committed to reducing the burden of bureaucracy: to cutting red tape. We recognise that form filling, box ticking and a paper chase run counter to entrepreneurship, a spirit that we seek to foster. That is why we recognise that the legal requirements in many sectors need to be reviewed. We need to look at how regulations are being implemented—one of my first steps on taking office was to lift the burden that was going to be imposed in relation to the national minimum wage.
We have taken through changes on administration and record keeping with regard to the working time directive, which will become effective early in the new year.
§ Mr. Nick Gibb (Bognor Regis and Littlehampton)Last week, the Prime Minister said that he would look 247 again at the working time regulations to see whether there was scope for further relaxations on the burden on business that the regulations cause. When will that review take place and what further suggestions will come forward?
§ Mr. ByersThe hon. Gentleman knows that we have just taken through the House changes to the working time regulations.
§ Mr. ByersWith respect, they had not been agreed. They are changes. They are being implemented; they will be implemented early next year.
§ Mr. ByersNo. Let me answer and then I will give way. Hear my answer first.
Changes to the working time regulations will be introduced early next year to lift the requirement in relation to form filling and record-keeping, not diluting people's right to opt out of working more than 48 hours if they do not want to. Therefore, we have introduced those changes.
As Conservative Members will know, some provisions within the working time directive may lead to other groups coming within their remit. We are concerned about those issues and are keeping them under review. For example, earlier this week, the European Parliament voted that, within four years, we need to bring junior hospital doctors within the requirements of the working time directive. We do not agree with that and will argue against that approach, so it is developing. As the Prime Minister says, those are the areas that we are keeping under review.
§ Mr. GibbThe Secretary of State referred to the changes that went through the House, but they went through the day before the Prime Minister said that he would look again at further changes to the burdensome regulations, so will the Secretary of State say when the review will take place, or was the Prime Minister referring to changes that had already taken place? That is yet another way in which the Government mislead the country and the House, perhaps inadvertently, but they do so nevertheless. When will the review take place, or was the Prime Minister referring to changes that had gone through the House the day before?
§ Mr. ByersIf the hon. Gentleman looks at the procedure for the order, he will find that, if it had not completed its progress through Parliament and still had not completed its time in the House of Lords, for example—[Interruption.] I have tried to explain. There are two clear issues. First, changes are being introduced to record keeping with regard to the working time directive. Secondly, we are keeping under review other areas that might come within the remit of the directive. That is clearly what is happening. That is the review that we are conducting, and it is totally in line with the Prime Minister's comments. There is a serious point, which Conservative Members do not want to address. It is the way in which they confuse two important 248 issues—the need to lift red tape and the need to cut the burden of bureaucracy on business. We agree that that is what we need to do and we are putting in place procedures and mechanisms to do precisely that.
It is particularly significant that, earlier this week, the Prime Minister announced that my right hon. Friend the Minister for the Cabinet Office will chair a panel that will be able to call Cabinet Ministers to explain what they are doing about lifting the burden of red tape. Conservative Members may smile, but they all know that we are tackling a culture that exists in Whitehall itself. It has affected Governments of all political persuasions.
I was interested to see the comments on regulation and the need to lift burdens on business by the right hon. and learned Member for Rushcliffe (Mr. Clarke), the former Chancellor of the Exchequer, at this year's Tory party conference:
We kept trying, we never really succeeded".Therefore, we need at the heart of Government a system that will ensure that politicians take control of that process. The panel will be able to do that throughout Whitehall. The Minister for the Cabinet Office will make a real difference.
§ Mr. Geraint DaviesI welcome my right hon. Friend's statements about cutting red tape. Does he accept that large companies tend to like regulation because it thwarts the success of smaller companies that try to compete with them? There are several examples of that, which cover food standards agencies, abattoir regulations and even IR35. The Government need to keep an eye on that. Will my right hon. Friend give an assurance that the door is always open for small businesses in every sector of the economy to put their point of view on regulations?
§ Mr. ByersMy hon. Friend makes an important point. The Small Business Service will play a helpful role in such matters. However, there is a crucial dividing line between the parties on regulation: we believe in cutting red tape; the Conservative party believes in cutting benefits and wages. When the Conservative party refers to the burden on business, it means the burden of paying people a decent minimum wage and providing decent working conditions; it does not mean stopping the paper chase, the form filling and the box ticking, it means doing away with the minimum wage, the working time directive and decent conditions in the workplace.
The Queen's Speech has highlighted the clear political dividing line between the main parties. The Conservatives are, more than ever, a single-issue group, obsessed with Europe and little else, looking back to the past and scared of the future. The Conservative party resists change: it says no to the new deal, the working families tax credit, the national minimum wage, independence of the Bank of England, family friendly employment policies and the working time provisions.
The Queen's Speech outlines the programme of a forward-looking Government, in the mainstream of British politics, which is prepared to modernise and reform, to embrace the new and leave behind the old way of operating, and to bring together enterprise and fairness in the belief that wealth creation and social 249 justice are two sides of the same coin. The Queen's Speech is based on those principles, and I commend it to the House.
§ Mrs. Angela Browning (Tiverton and Honiton)I apologise to the House for not being able to stay until the end of the debate. My hon. Friend the Member for Havant (Mr. Willetts) appeared on "Question Time" last night at a distant destination. He is travelling back this morning and hopes to be with us by 11.30. He conveys his apologies—[Interruption.]
§ Mrs. BrowningBefore Labour Members start making ribald comments, I remind them that I was far more gracious a fortnight ago when a Labour Member decided, for constituency reasons, to leave a debate that the Government had chosen on family friendly policies. Therefore, I hope that Labour Members will moderate their sedentary remarks.
§ Mr. ByersMost hon. Members would accept previous constituency engagements, and the priority that they take, as a reason for absence. However, it is an insult to the House when a shadow spokesman puts appearing on a television programme before coming to the House. I am sure that the House is shocked that the hon. Member for Havant (Mr. Willetts) has put an appearance on "Question Time" before the discharge of his shadow responsibilities in the House. That is shameful conduct.
§ Mr. Deputy SpeakerOrder. A fast return to the Queen's Speech is in order.
§ Mrs. BrowningI am grateful to you, Mr. Deputy Speaker, because the comment that I was about to make might not have been appropriate for the Dispatch Box.
The Secretary of State kindly quoted from The Mid Devon Gazette, which is an excellent newspaper that circulates in my constituency. The editor will be pleased if the Secretary of State's comments from the Dispatch Box increase circulation, but if the Secretary of State wants to know what I say and do locally, I have an extremely good website at: www.abrowning.demon.co.uk. [Hon. Members: "Demon!"] Yes, and proud of it.
My local press releases and the full text of the speech from which the Secretary of State began to quote are on the website. I commend the piece from which he quoted because it gives him—and the rest of the world—a short, but concise and accurate summary of the way in which the Government are breaking up the constitution of the United Kingdom. Perhaps the Secretary of State will consider that and visit my website from time to time.
§ Mr. Keith Simpson (Mid-Norfolk)Dial a demon.
§ Mrs. BrowningYes, dial a demon.
As we heard in the Gracious Speech, from the Prime Minister and from the Secretary of State for Trade and Industry this morning, the Government's programme is supposedly based on enterprise and fairness. Such is the 250 Government's success in building an enterprise culture, that, in only two years, this country has slipped from fourth to eighth in the league of world competitiveness. They have imposed £30 billion in stealth taxes on business through, for example, higher fuel duties, stamp duties, changes to the administration of corporation tax and abolishing tax credits on pension funds. Despite the Secretary of State's words about the importance of IT and e-commerce, £500 million extra tax will be imposed on people who work in personal services companies. Through the IR35 regulation, companies in this country that have no reason to source staff who live in the United Kingdom are more likely to seek staff who live abroad and thus beyond the problems that the Government's taxation policies cause.
I and many of my hon. Friends spent many years in business and we admire the way in which the Government have learned the language of business. However, it is clear from their policies that it is not instinctive—indeed, when we examine their track record, we find that their grasp is bogus. I had a little chuckle when the Secretary of State explained the way in which he, the Minister for the Cabinet Office and others will establish a star chamber to wage what the Prime Minister describes as a war on red tape. We understand from the press that the Minister for the Cabinet Office began the process by holding a dinner at Lancaster house for 12 chief executives of companies from the FTSE 100. That flies in the face of the Secretary of State's comments about the importance of small business. The hon. Member for Croydon, Central (Mr. Davies) made an excellent point about the fact that legislation often does not affect—and even suits—large businesses, but has a disproportionate effect on small companies.
If the star chamber begins its work by gathering representatives of companies from the FTSE 100 round a select dinner table, it will not resolve the problem or lift the burden that the Government have imposed on small businesses. The Government have not got a clue. A feel for business, and especially small business, is not instinctive to them. Therefore, they produce a lot of words, set up more regulation task forces, more of this and that, and achieve nothing. What happened to the better regulation task force that Lord Haskins chaired? He simply reminded the Government, after they legislated, that they had made a dog's dinner of implementing regulations.
I do not expect any hope from the Minister for the Cabinet Office who, in a written answer on 11 November, said:
The volume and cost of regulation is less important than its quality and effectiveness."—[Official Report, 11 November 1999; Vol. 337, c. 825]There is a case for claiming that simply examining the number of regulations and setting a target for reducing it is not necessarily the most effective way in which to lift the burden on businesses. I say that after spending three years as a Minister under the previous Government, who tried to reduce regulation on business. We would be the first to say that we did not do very well, but at least we examined the problem from the philosophical standpoint of opposition to regulation.I can remember, for example, revoking 12 licences in a day. I was not flooded out with people saying, "Gosh, that has made a real difference to my life." However, we hoped that it would make a difference and we learned 251 what the Government have yet to learn: merely considering the number of regulations deals with only the margins of the problem, although that does not mean that our motives were not well intentioned.
Looking at the cost of regulation is a different matter and I am sorry that the Minister for the Cabinet Office dismisses it as unimportant, as she does at column 825 of Hansard. Of course it is important, which is why we in the Conservative party have already published in "The Common Sense Revolution" a pledge for the Conservative Government who will take office after the next election: we will carry out an independent audit of every Department to identify the cost of the regulations that each Department puts on business. Having done that, every Secretary of State will be given a target for reducing the costs on business during the lifetime of a Parliament. They will have to report annually to Parliament to show in a transparent way the progress that they are making. When costs on business are reduced, it can feel the burden lifting.
§ Mr. Andrew Dismore (Hendon)That sounds like more bureaucratic red tape to me.
§ Mrs. BrowningThe hon. Gentleman derides what I am saying, but his is not the party of business—I do not expect it to understand. When costs on business are removed, it starts to feel the weight lifting from its shoulders. If the Government are to make any impact at all on the appalling burden that they have already put on business in just over two years, the Secretary of State will have to do a little better than holding grand dinners in posh surroundings for the top FTSE 100 companies.
Labour, of course, is the problem, not the solution. To realise that, we have only to look at what it has done in terms of the burden placed on business by the cost of employment legislation. The Secretary of State described a range of policies that the Government have already put on a statutory basis, suggesting that we are opposed to them. Within the broad spectrum of family friendly policies, we are not opposed to many of them, but I say again—as we said in Committee and when the legislation was going through the House—that we genuinely believe that they are best left on a voluntary basis and should be agreed by employer and employee. We start to put burdens on business the moment that we put such policies on a statutory basis.
It is all very well for the Government to say to the general public, "We are improving your working conditions." That is fine, but they are doing so by simply dipping their hand into the pocket of business and expecting it to pick up the tab for their proposals.
§ Mr. Geraint DaviesDoes the hon. Lady accept that business wants a low-risk environment of stability and on-going growth? Under the Conservatives, there was record business bankruptcy, and boom and bust rather than business friendliness. Her words about business would be laughed at by the business community.
§ Mrs. BrowningI spend a lot of time with members of the business community and when I put these proposals to them, not only do they not laugh, but they urge me to do what I can to make the Government see the error of their ways in their treatment of small business. Of course 252 the hon. Gentleman is right—a stable economy is very important—but he will know that we have seen some worrying figures showing a dramatic increase in small business failures during the last quarter. Other statistics show that the taxation burden in this country is accelerating far faster than in other European countries and productivity is down. Under the Government, we have slipped in the competitiveness league. These are early days, but a trend is developing and they should not ignore it.
§ Mr. Daviesrose—
§ Mrs. BrowningI have given way once. I shall give way later if the hon. Gentleman wants to come in.
I want the Secretary of State to be fully aware of exactly what burden he has put on business. For example, the Centre for Policy Studies has calculated the impact on business of certain policies—the annual costs, not one-offs. The working time directive, which was described by Lord Haskins as a dog's dinner, will cost £2.3 billion a year. The rise in the limit for compensation claims in unfair dismissal cases from £12,000 to £50,000 will cost business £2.1 billion. Overall, family friendly measures will cost £50.7 million. The compliance cost alone of the working families tax credit will be £100 million. The compliance cost of administering student loans will be £79 million. The compliance cost of the stakeholder pension scheme will be £5.3 million. If the Government want to introduce stakeholder pensions, I do not understand why, statutorily, they have to be dealt with through the payroll. The total is £4.6 billion a year. That is the cost that the Government have put on to business.
The Institute of Directors has calculated a similar shopping list of costs for Government policies. It is all very well for them to say that their policies are all about fairness and justice for the working population, but they seem to have no strategy other than a dogmatic belief that they should rush to implement not only policies that they outlined before the election, but measures such as the revocation of the social chapter opt-out. They are dogma driven, and only when these measures hit the statute book do they get down to the nitty-gritty of how the regulations have to be applied in the workplace. That is when they suddenly realise the damage that they have done.
It is risible for the Secretary of State to make a virtue of establishing yet another Cabinet-based task force—he can call it whatever he likes—to try to resolve a problem that the Government themselves have created. That problem could have been avoided with a little more forethought, project planning and understanding of how business was likely to be affected by their policies, but they were simply being opportunistic and sought to gain an advantage by telling the general public, "This is what we have done for you in the workplace." They now readily admit that they have to solve the problem, but, because their policies have been put on the statute book, that will be much harder to do.
For example, the Select Committee on Trade and Industry has described the unbusinesslike way in which the Government approach their responsibilities, in particular their responsibilities to small businesses. Its 13th report, of September this year, states:
From the situation as we saw it a year ago, where there seemed to be something of a policy vacuum on SMEs, we have moved to one where there is some risk of an excess of loosely connected and apparently uncoordinated policy initiatives shooting off in all directions".253 We await the Secretary of State's response to the report. There is a lot of criticism of him and his Department, the way in which they manage their own affairs and the way in which they have treated small businesses, and I believe that there is more to come.The Secretary of State mentioned parental leave and we have seen what the Government have in mind—it is a classic example. They have introduced parental leave and made a virtue of it, and I am quite sure that the Prime Minister will want to take advantage of it fairly soon. We are all rather relieved to think that there will be 13 weeks in the next five years when we shall not see him on the television—I shall not say in the House, because he is rarely here.
A parliamentary Labour party brief on paid parental leave in the name of one Dan Corry, DTI special adviser, has been published. Members of Parliament on both sides of the House have been receiving letters from a range of people and from organisations such as the National Society for the Prevention of Cruelty to Children pointing out that the Government's legislation on parental leave is unfair, although fairness was a word that the Secretary of State used readily when he began his speech. The policy was not of our making, so before any Labour Member leaps up to say, "So what are you going to do about it?", let me say right now that it is not our job to sort the problem out—I had that discussion a fortnight ago.
Here is how the Government see the solution. They advise their MPs to write to their constituents in respect of parental leave and say:
As employers come to value these benefits they will want to go beyond the statutory visions, possibly including some paid parental leave.The Government have introduced parental leave in order to be popular, but they expect employers to bear not only the administrative cost. If the opportunity is to be made fair for all—in other words, if the proposal is to apply to people who are perhaps not well off enough to take unpaid parental leave—the burden will be put on employers who are clearly expected to pick up the tab yet again for another Government cock-up.
§ Mr. DismoreHow does the hon. Lady square her criticism of the Government—for saying that the arrangements should be effectively voluntary for employers—with her earlier comment that parental leave and similar issues should be for employers to address? Has she read the evidence given to the Social Security Committee by the Confederation of British Industry and the Institute of Directors, both of which thought that the matter should be for employers to deal with voluntarily? How does she square the two arguments?
§ Mrs. BrowningHad the Government not made the provision statutory, all aspects of parental leave—how much, when and how it should be funded—would have been a matter for negotiation between employer and employee. The merit of our proposals is that we would not have statutorily compelled employers to provide parental leave.
The Government have produced a parental leave policy for the few, not the many. The few who will be able to take parental leave are professional people—such as 254 barristers—and others who are much more able to take advantage of the policy than, for example, people on low wages and single parents. Labour Members talk about fairness and justice, but they have enshrined inequality in one of the core policies that they parade as family friendly. The Government's parental leave policy is friendly only to well-off families. They have created a problem, and they will now have to sort it out.
§ Mr. Geraint DaviesWill the hon. Lady confirm that—should Conservative Members ever again be elected to power—they would abolish the provisions on parental leave? If not, specifically how would they change them?
§ Mrs. BrowningI have a feeling—but I am not quite sure—that the hon. Gentleman was in the Chamber a few weeks ago for our debate on family friendly policies. As he may not have been here, I shall repeat what I said several times to his colleagues. Conservative Members will examine all the policies introduced by the current Government in the light of how we may want to modify, maintain or abolish them. Those policy decisions will be made in good time for the next general election.
§ Mrs. BrowningNo. The right hon. Gentleman should be familiar with the procedures by which the shadow Cabinet produces policies, as the Government followed the same procedures when they were in opposition. In "The Common Sense Revolution", we announced various policies that have been agreed. We are currently working on many more policies.
I am dealing with Conservative party policy development—which clearly seems to interest Labour Members. For the benefit of the Secretary of State for Trade and Industry, I should say that my right hon. Friend the shadow Chancellor is currently taking evidence from a wide range of interested parties on Bank of England independence. When the evidence has been considered, we shall announce our policy in the customary way.
If we oppose a policy in Committee, that is a statement of our position. However, at the next general election, we shall have to consider our priorities, and which policies we may or may not abolish.
§ Mr. Geraint DaviesWill the hon. Lady give way?
§ Mrs. BrowningNo; I have been more than generous. However, it might be helpful to the hon. Gentleman if I put on the letter board for him a copy of "The Common Sense Revolution", in which he will find many common-sense ideas that could well be applied by the Government. It might even get them out of a bit of a jam.
The Government are floundering on business and regulation issues. When one sees wording such as that which I quoted from the Select Committee on Trade and Industry report—which was an absolute indictment of how the Government and the Department deal with business—one knows that the Government are in need of help from all quarters. The Opposition will be as helpful to Ministers as we possibly can be.
The situation is not really getting any better, nor is it likely to get any better. Mr. Maurice Fitzpatrick, chief economist at Chantrey Vellacott, said that the new 255 business regulation index, covering the year to next May, shows that the main index has risen from just over 117 last year to 120 this year. That compares with the base of 100 set for the year to May 1997, which represents the Government's inheritance from the previous Government.
Mr. Fitzpatrick stated:
The index continued its remorseless upward trend, with additional costs to businesses arising for example from recent changes in employment tribunal legislation as well as the cost to businesses dealing with corporation tax self-assessment.Mr. Fitzpatrick also warned offurther legislation in the pipeline, not yet reflected in the index. This includes the EU recycling directive and the EU Workers Consultation directive.Therefore, when the Secretary of State for Trade and Industry prays in aid the work of the Cabinet Committee with which he will be involved, I hope that he not only bears in mind the damage that he and his colleagues have done in the past two years, but seeks to intervene and prevent even more damage, which is on the horizon.The Secretary of State said in his speech that Conservative Members had no interest in issues surrounding box-ticking and excessive paperwork. I am grateful to him for making that statement because nothing could be further from the truth, and it gives me an ideal opportunity to describe an exercise that he might like to set as a top priority for the new Cabinet Committee on red tape. The exercise would not require much effort to achieve results, as it would deal with the tax deduction scheme that the Government have introduced for the construction industry.
Many hon. Members have received letters from constituents involved in the construction industry, describing how they personally have to visit the head office of the company with which they are contracting to produce their certificates. They cannot fax certificates. Last week—in just one week—one constituent had to visit Edinburgh, Brighton and Worcester.
I have a letter from a small company—Bortec, of Brentwood in Essex—which I know will be of great interest to the Secretary of State, and I hope that he will go post haste from the Chamber to do something about the matters described in the letter. I shall quote the letter at length, as it describes precisely the type of case that the Minister for the Cabinet Office would have heard about if she had had round the dining table in Lancaster house people from small businesses, rather than from FTSE 100 companies—and I ask for the House's patience.
Bortec's managing director writes:
The new system has been in force from the beginning of August this year and has already become a total farce.We were issued with the requisite tax certificate and this has to be presented to each contractor in person by the individual shown on the plastic card. This can become totally uneconomic as my company works all over the UK. I might do a job in Aberdeen for a price of £1000. As I do not carry out the work myself I am required to then travel to Aberdeen at additional cost to show the certificate to the contractor in order to get paid.Despite the Minister's words about e-commerce, businesses are not allowed to fax or e-mail anything. Certificates must be shown in person. The letter continues:
In addition to the certificate we were issued with some voucher books. It appears that the system for dealing with these vouchers is not clear. We thought that we had to separate the pages and send 256 them off to the various places, ie one to the customer (contractor) one to the Tax Office and keep one ourselves. Apparently this is not so as the whole set has to be sent to the contractor.Having made the error and now having exhausted my supply of vouchers, I telephoned my Tax Office to request further supplies to be told—'Sorry we have run out. We were only supplied 10 sets per sub contractor'. The answer to the next question of OK when will we get some more was 'Well not only have we run out of voucher sets, but we have run out of the special paper needed to print new sets'.I know that the Secretary of State will want to follow up that point and examine it in great detail. What is the reason for special paper? Perhaps he will tell us, as the practice seems to demonstrate bureaucracy gone mad. The letter continues:
We will have to wait for them to make the paper. The vouchers then have to be printed and customised and sent to the sub contractor. It could take months.I shall make a copy of the letter available to the Secretary of State. It continues for several more paragraphs, but ends:
I presume this is another ploy by this incompetent set of Ministers to try to raise more money by imposing fines arbitrarily".Before the Secretary of State challenges Conservative Members for having no interest in form-filling and what he regards as inconsequential regulations, he should get his own house in order. Before he starts to parry with Conservative Members, he should deal with the bureaucratic nonsenses that the Government have created and are now obliged to deal with. He would do well to begin with the type of nonsenses that I have described, rather than having grand dinners talking to large companies. Only if he does that will he even begin to address the problems that the Government have caused the business sector.
The implementation of regulation has been a great weakness for the Government. The working time directive required a 98-page book simply to explain to business how it should be implemented. The national minimum wage required a 112-page book. How many businesses have the time even to read the books, never mind to know whether they are complying with the legislation? The penalties are punitive if businesses have not read, for example, page 94.
I raised this issue at the beginning of my speech, because it is clear that there is a busy schedule of new legislation in the Queen's Speech for the Department of Trade and Industry. If the Secretary of State wants his Department to regain any shred of credibility, it is essential that any new legislation introduced this Session must pass the test that he has spelled out today. We shall examine with great care any Bills that pass through Committees this Session to ensure that they deal with the detail and any potential problems before they are put on to the statute book. To date, the Government's track record on that has been extremely poor.
The Secretary of State mentioned the Electronic Communications Bill. It has come round for the second time, because it was announced in the previous Queen's Speech. I am pleased that the Secretary of State was able to tell us that the Bill has been printed today, because we would like to give it a pretty rapid passage through the House provided that it does what business wants, is not prescriptive and genuinely has a light touch. The Select Committee on Trade and Industry considered the 257 Government's approach to e-commerce in its seventh report and, on 12 May, it described their approach as being of
glacial speed in this rapidly changing industry".All too late, just before the end of the previous Session, the Government suddenly woke up to the fact that, despite the fact that they had announced an e-commerce Bill, they had not done anything about it. We want a light touch and, as the Secretary of State knows, most of business believes that we need rapid legislation to firm up the law on electronic signatures. Business clearly needs that, so that it can use e-commerce and electronic business-to-business systems more effectively.
We are glad that the Secretary of State has taken the proposals for encryption out of the Bill and moved them to Home Office legislation. However, we hope that he is talking to the Home Secretary to ensure that what the Home Office proposes does not impact on the business community.
Over and above that, we have reservations about whether the Bill need contain more than just four pages dealing with electronic signatures. Industry is best equipped to set its own standards; it does not need to set up a system that will become obsolete. When we debate the Bill in Committee, I hope that the Secretary of State will have a mind to what industry has said. I have spoken to members of industry and my understanding is that they want a Bill with a light touch.
We shall debate a Bill on the Royal Mail. We have already debated that issue when the Secretary of State made a statement and—I am sure that he was grateful for this—we supported his proposals to free up the Royal Mail to the marketplace even though he did not go quite as far as we would have liked. However, we were the only people to support him when he made his announcement on 15 July. There were some rather glum and concerned faces among the Labour Members sitting behind him.
It is important that the Royal Mail should be allowed to compete. We are greatly concerned about the future of the nation's sub-post office network and about the fact that, from 2003, sub-post offices will no longer be able to pay out benefits and pensions across the counter because people will be obliged to have their payments made into a bank account.
I am sure that we shall consider the Royal Mail in more detail when the Bill comes before the House, but it is interesting that, when the Secretary of State made his announcement, he said to great acclaim that he was going to allow freedom in the market for any postal item worth more than 50p. By cutting the figure from £1 to 50p, he said that he would reduce the Royal Mail's monopoly. He laid a statutory instrument in the House to that effect, but revoked it while the House was in recess.
Some of us wish that the House had been sitting at that time. The Secretary of State made a statement to the House and introduced a statutory instrument, so it was an extraordinary coincidence that, when the Post Office union workers decided that they would have a go on that issue at the Labour party conference, he was influenced to revoke his own statutory instrument. I am happy to allow him to intervene—apparently he does not want to—but will he explain why there was all this to-ing and fro-ing with the statutory instrument?
258 Yet again, it appears that the unions still have a great influence even on new Labour. The Prime Minister told the TUC conference only this year, "You run the unions. We run the Government", but that does not seem to apply to the Department of Trade and Industry. The Secretary of State laid a statutory instrument, but was prepared to revoke it simply because of union pressure. The Government talk tough, but they act weak. I hope that his resolve will be firmer when the Bill comes before the House.
§ Mr. ByersThe Select Committee on Trade and Industry reported specifically on this issue. It is an all-party Committee, and I agreed with its recommendation and decided to revoke the order. I listened to a Select Committee of the House, decided that its recommendation was sound and, on that basis, agreed to do what it suggested.
§ Mrs. BrowningI am, of course, aware of the Select Committee's recommendation. I take the Secretary of State's action as an encouraging sign. I assume that it means, when it comes to the important reports on which we await his response, that he regards the advice of the Select Committee on Trade and Industry as being such that he feels obliged to accept its specific recommendations. This case is a useful precedent for the Government and his Department.
In the past few months, the work of the Select Committee on Trade and Industry has been full of common sense. If the Secretary of State is telling us that he will accept the common-sense advice of the Select Committee, I will be the first to endorse that. I suspect, however, that this decision was the result of more than a coincidence. It was taken in the run-up to the Labour party conference and as a result of the pressure that the unions put on him. As we know, what appears on television is far more important to the Government than the fact that a statutory instrument has been laid in the House. Perhaps the Secretary of State will reflect on that, given his earlier comments about television.
§ Mr. Edward Leigh (Gainsborough)Given all the difficulties that a publicly underwritten Post Office has in competing with the private sector, does my hon. Friend not agree that it should simply have been privatised?
§ Mrs. BrowningMy hon. Friend is right. We encouraged the Minister to go the full way rather than retaining 100 per cent. of the shares. However, as I predicted to the Secretary of State earlier, the Bill will be the precursor to full privatisation of the Royal Mail. I believe that he would have carried that out in a leap and a bound were it not for the Post Office workers union. However, we are extremely grateful, because the Bill will be a paving measure for future policy development. If he does not go far enough, the Bill will certainly open the way for us to consider how we might liberalise the Royal Mail so that it can compete better in an open global marketplace.
§ Mr. Geraint DaviesWill the hon. Lady give way?
§ Mrs. BrowningLet me finish my point. I said this when the Secretary of State made his announcement, but I caution him that we shall be careful to ensure that the 259 methodology and regulation built into the Bill are transparent so that there will be public accountability for the funding and financial operation of the Royal Mail, of which the Government own 100 per cent. of the shares. We want no fiddled figures and no masking of where the public interest is and is not. When the Bill comes to Committee, we shall expect it to be transparent and detailed.
I worked with the Secretary of State when he was the Minister for School Standards and served on the Committee considering the School Standards and Framework Act 1998. Therefore, I am only too aware that he is a past master at introducing legislation to the House and leaving the devil of the detail until later, when a Bill does not receive the detailed scrutiny that it would in a Standing Committee. The legislation on grammar schools is a classic case in point, as we pointed out at the time. We are alert to his tactics and methodology, and we shall certainly look for transparency and detail in the Bill on the Post Office.
The Secretary of State will introduce other measures to the House this Session, some of which we shall, in principle, welcome. However, we shall reserve our position until we see what is in the Bills when they are printed. I believe that we can support the proposals for limited liability partnerships and we want to see greater competition in the privatised utilities. However, it is ironic to hear a Labour Secretary of State condemning the French for their restrictive practices when he and his colleagues, to a man and a woman, voted against the privatisation of the -utilities in previous Parliaments. We welcome their U-turns. They have very short memories.
§ Mr. DaviesThe hon. Lady implied that there was weakness on the privatisation of the Post Office. Will she explain why the right hon. Member for Henley (Mr. Heseltine) did a U-turn on his proposed privatisation of the Post Office? Will she confirm that the Tory common-sense revolutionary objective is to privatise it?
§ Mrs. BrowningIn the previous Parliament, the proposal to privatise the Post Office was not taken forward in legislation because my right hon. Friend the Member for Henley (Mr. Heseltine) did not think that he would get a Bill through the House due to insufficient support. Labour Members opposed it, but they now intend to support a measure to turn Royal Mail into a plc.
§ Mr. DaviesNo.
§ Mrs. BrowningYes, that is what it is. Perhaps I can guide the hon. Gentleman. The Government will have a 100 per cent. shareholding, but it is a partial privatisation. It is a precursor to what the Secretary of State intends to do. When we come to office, we will carefully consider the situation of Royal Mail to see whether what he has achieved gives them full market competitiveness, or whether we will need to take further action to achieve that.
§ Mr. DismoreWill the hon. Lady give way?
§ Mrs. BrowningNo. I must conclude, because I have had a fair crack and others want to speak.
We shall measure the Government by their actions, not by their words. We shall want transparency in every DTI Bill that comes before the House this Session. Before the 260 Secretary of State introduces regulations in secondary as well as in primary legislation, he should be aware that the words that he has said at the Dispatch Box today, especially about the Government's commitment to remove the burden of regulation from business, will be tested by what the Government do, not what they say.
§ Gillian Merron (Lincoln)The first constituent through the door of my first packed advice surgery after I was elected brought to my attention, as many have since, a long-standing and damaging wrangle with the Child Support Agency. The agency was described by that family, and by many hundreds in my constituency since, as a nightmare. That nightmare was created by the previous Government, and the present Government are determined to get to grips with it through a comprehensive Bill announced in the Queen's Speech.
Parents have a clear responsibility to provide for children so that they can make the most of their lives. It is also clear that the present state of affairs is unacceptable. Only two thirds of maintenance assessed by the CSA is paid to the families. The Government have a responsibility to provide the structure and support that can enable families to make the most of their lives, whether they live together or, sadly, live apart as so many do.
I welcome the Government's willingness in the Queen's Speech to get a grip on the discredited CSA. That is a major step towards ending child poverty, as 1 million children will gain by our ensuring that money gets to them more effectively and efficiently. Mothers, fathers and children need to know where they stand, especially at times of distress and disturbance when families break up. The title "Child Support Agency" has become a misnomer—it implies support for children as its reason for being, but it has clearly lost its way and we must put it back on track.
I particularly welcome the quality of the Government's consultation on the reform of the CSA. It is a difficult and delicate matter and it is tricky to get the right balance, but I believe that we will achieve that.
I wrote to my constituents in Lincoln who had raised with me their difficulties with the agency. I received a considerable response, and I made representations to my right hon. Friend the Secretary of State for Social Security. My constituents' comments were constructive and rooted in real life. I am sure that the involvement of those with direct experience will mean a stronger and more responsive service from the agency.
The CSA was doomed to fail. The formula for working out payments was far too complicated and difficult to understand and people never knew what was expected of them. Crucially, too little goes to the children. Many people would be staggered, as I was, to learn that the agency has 1.5 million children on its books, but only 250,000 gain financially. That cannot be right.
Not surprisingly, staff are doing sums 90 per cent. of the time and getting people to comply with payment orders only 10 per cent. of the time. It is no wonder that children are denied the financial support that is rightly theirs. The picture is of an agency that has grown out of control, having been set up on the wrong premise although to do the right thing.
The child support, pensions and social security Bill is only one of the 28 Bills announced in the Queen's Speech. In his opening comments today, my right hon. Friend the 261 Secretary of State for Trade and Industry described the background of an increasingly stable and prosperous economy. I am delighted that we now have the lowest number of people unemployed and claiming benefit for 19 years. That is a considerable achievement for the Government.
§ Mr. Steve Webb (Northavon)The hon. Lady's comments on the Child Support Agency were measured and considered, but the agency's history shows that the original formula used was insufficiently tailored to people's circumstances, and it created rough justice. The formula was made more sophisticated to deal with that problem. Is she concerned that an even simpler formula will result in further rough justice and will create the same problems as in the past?
§ Gillian MerronI shall return to the CSA and deal with the hon. Gentleman's points.
On Saturday, I met members of the Lincolnshire Society of Architects and asked them how they felt about business and the economy. They told me of a sense of confidence among members and their customers. They felt that there was a stability in the economy that they had not seen for some time, and that it allowed them to plan and to prosper. The strength of the economy enables us to provide strength for social change. The Queen's Speech lays further foundations for the country to build on, with proposals such as making it easier to vote and allowing government to be more open to the public to participate and scrutinise.
The House has ahead of it a balanced and radical programme of work. As my right hon. Friend said, seven of the 28 Bills announced are the responsibility of the Department of Trade and Industry. I believe that that will give a further boost to the economy and will fuel opportunities for fairness and better public provision, such as 16-plus education and proper support for children leaving care.
Since the previous Queen's Speech, the new deal has been extended to lone parents. I recently joined the Employment Service in Lincoln to celebrate the fact that, in the first year, more than 190 single parents had found either work or training as a result of the new deal. One of those single parents was Karen, who had been four years on her own and out of work. Like me, she pays a tremendous tribute to the new deal, because she now has a qualification to be proud of and a job that gives her and her family the income, dignity and status that she could not have got without the new deal. That is what Government policy should be about, and the Queen's Speech offers more such opportunities. There is something for everyone.
§ Mr. Tony McWalter (Hemel Hempstead)It is right to pay a strong tribute to the new deal because of the enormous change it has made to many people's lives, but does my hon. Friend agree with me that the system contains some anomalies? People who need training at NVQ levels 3, 4 and 5 are often prevented from gaining it, be they single parents or others. Some people require analysis of their needs. People with profound dyslexia, for example, may find that financial difficulties represent a 262 barrier to training. However, I agree with my hon. Friend and join her in looking forward to opportunities being extended to such people.
§ Gillian MerronMy hon. Friend is absolutely right. That is why I am pleased that Lincolnshire is a pilot area for gateway plus, which will provide greater support to those who suffer particular disadvantages.
I am sure that all right hon. and hon. Members have tales to tell of the difficulties that occur when relationships break down and problems are encountered in dealing with the Child Support Agency. Its beleaguered staff battle on with an impossible system. Last week I assisted a constituent who has three children. Her husband left her at the end of July and she has still received no money. The following day I spoke to another woman who told me that it had taken eight months to issue forms to the father of her children who had left her. That is not how the CSA should work. Delays and errors in assessment mean that substantial arrears accrue. That is bad for everyone involved—not only for the children, but for the parent with financial responsibility. Clearly, financial wrangling gets in the way of giving children the love and care that they deserve, particularly during difficult times.
My constituents will welcome the Bill for its clarity and fairness. It will provide a simple, consistent system of percentage rates. People will know exactly where they stand, so they will be able to make plans knowing exactly what is due to them.
The new system will also take account of those supporting children in second families, a difficulty that is often raised by my constituents. Those with second families often feel that the children in their second family may be disadvantaged because they have to support the children in their first family. That cannot be right. The interests of children, in whichever family, must be paramount.
The new system of working out maintenance will also take account of parents who are lower paid. There is sufficient flexibility to allow for people's individual circumstances while improving the clarity of the system.
Another important factor is that the Bill will provide more money to children in the poorest families who currently receive little if any benefit. I am delighted that those on benefit will be able to keep the first £10 of child support. Similarly, the calculation of the working families tax credit will take no account of child maintenance payments. Those are direct, practical measures to help the very poorest families.
Finally, on enforcement, there will be a crackdown on those who try to dodge their responsibilities. I am sure that other hon. Members also hear from mothers and fathers who feel that the issue must be treated seriously. That is reflected in the establishment of a criminal offence of withholding information. It will give some security to those who believe that their ex-partners are not telling the whole story—another constant cry. The creation of a criminal offence will give a clear sign to those who are less than forthcoming about their circumstances that this will no longer be tolerated. That, in addition to the penalties for late payment, will give teeth to a system that will be fairer and more effective.
We have a continuing problem in the meantime, however. Although there have already been improvements to the CSA and the service it provides through greater 263 investment in computers, increased use of the phone and a better system, will my right hon. Friend let my constituents know of any immediate changes as we wait for the Bill to pass through the House and to take effect? As I am sure he is aware, poor communication with the CSA is a constant complaint from and bugbear for my constituents.
On behalf of my constituents and their families, I very much look forward to a reformed and improved CSA that will provide a more sensitive service to all involved at a traumatic time in their lives. I look forward to the CSA doing what its name implies—supporting children whose interests we must all take to heart.
§ 11.5 am
§ Sir Norman Fowler (Sutton Coldfield)There have been two very good pieces of news this week, neither of which were in the Queen's Speech or the collective policy of the Government. We all know the first piece of good news and we congratulate the Prime Minister and his wife. Perhaps I am in the best position to express the hope that soon we will enable the Prime Minister to spend even more time with his expanding family.
The second piece of news, which is more directly relevant to the debate although it has nothing to do with the Secretary of State for Trade and Industry, is the appointment, which I am sure the whole House will welcome, of Digby Jones, the new director general of the Confederation of British Industry. Digby is west midlands through and through and has been a major figure in Birmingham for many years. Our hope in the west midlands is that the voice of the region will now be heard even more clearly. We are still smarting from having won the competition for the millennium exhibition, but seeing the judges keep to their original prejudice and send the dome to Greenwich.
In the west midlands generally, the services industry is significant, as it is everywhere, but manufacturing continues to be of great importance to the region. Another concern that was touched on in yesterday's debate is transport policy and its impact on business and cities. The case of the CBI and many others is that transport investment in the west midlands has fallen woefully behind that in London, for example. To impose restrictions on motorists without improving public transport would be wrong, and the workplace parking levy would simply add to business costs. It would be a business tax which would not deter people from using their cars. The transport agenda is becoming a business and industry interest throughout the country.
I deal now with two further issues, both concerning industry, and shall return to social security when the Secretary of State introduces the legislation. The first issue is training. The Secretary of State for Trade and Industry rightly emphasised the need to invest in training—knowledge, skills and learning. I agree entirely with those sentiments. Slowly and painfully, training has moved up the industrial agenda over the past 20 years. We increasingly recognise the importance of not just initial training, but training throughout life. By that I mean that the days when people started working for a company at the age of 18, 19 or 20 and remained there until they were 65 when they drew their company pension are over. Increasingly, people have to be much more flexible, a point made by the Secretary of State.
264 Training is of the essence—not institutional training but training connected to the workplace. Industry and business must have substantial ownership. Of course they are not the only ones involved, but they, rather than the Government or local government, must respond to changes in the marketplace. They know what their needs are, so in respect of training they must be in the driving seat.
That is why, in the late 1980s—when I was Secretary of State for Employment—we set up the training and enterprise councils. There was no doubt that the old Manpower Services Commission had run into the sand. It was failing, and even those who previously supported it could find little to say in its favour. With the TECs, we sought to involve leading local businessmen, and union and other local leaders. Whatever criticisms might be made of the TECs, we were outstandingly successful in that respect. We brought together the kind of boards that many plcs would give their eye teeth for.
Leading businessmen and company heads were freely giving their services to training in their area in an unprecedented way. A great many people have put great effort into developing training, and I regret the Government's intention to abolish TECs, which is a retrograde step for a number of reasons.
First, we had the involvement of industry, perhaps for the first time, and that is crucial to the development of training. In the past, training has been imposed on industry, and industry has not been involved properly.
Secondly, we need stability in our training structures. It is no wonder that Germany, for example, is way ahead of us in training. Not only did it start early, but it has kept to the same model for the post-war years, and arguably before that. If we continue to chop and change our structures, enormous damage will be done to this country.
If I have a criticism of the Government—actually, I have many—it is that, in several respects, they have changed schemes which have been working well because they could not bring themselves to embrace the work of the previous Government. Personal equity plans, for example, were replaced by the ever-more complex individual savings accounts. I do not believe that anybody thinks that that was a step forward.
Thirdly, TECs were important because they represented devolution from Government to industry and business. Doubtless improvements could be made, and doubtless criticisms could have been made during the early years of TECs, but those criticisms could have been answered. However, devolution was vastly important, and my fear is that we will return to a centralised system in which Government, in the shape of the Department for Education and Employment, pulls the strings.
I do not believe that the Department of Employment should have gone to the Department of Education in the first place—if it had to go anywhere, it should have been to the Department of Trade and Industry, which would have been much better. However, the idea that we now return to a system where training is centrally imposed and laid on business is a thoroughly retrograde step. If that happens, all the fine words of the Government will not prevent a failure of training, which would be a vast tragedy.
My main point concerns the Government's proposals for the Post Office. The Secretary of State said very little about this, apart from referring us to the White Paper, the 265 logical conclusion of which seems to be that the Post Office will move from the public to the private sector. It is as if, by accident, the departmental word processors were still printing the words of my right hon. Friend the Member for Henley (Mr. Heseltine).
There is much talk of
greater liberalisation of traditional monopolies … opening up European and world domestic markets … globalisation of postal services and consolidation amongst key players.The message seems to be one of commercial freedom, opportunity and meeting the demands of the internet age. But suddenly, the language changes, and the Treasury intervenes. The word now is:for investments of £75 million or less there will be timely notification with borrowing limited to a maximum of £75 million in each of the next five years. For investments over £75 million (or where the satisfactory return from a smaller investment is dependent on further linked investment) the approval of ministers will be required. The Government will approve Post Office requests for borrowing for investment cases which are consistent with the strategic plan, commercially robust and pose no undue risk to the taxpayer.We are left with a curious hybrid animal, neither one thing nor the other. It is the industrial equivalent of the House of Lords. The Post Office is to be owned by the Government, but it will not be a nationalised industry. It is to be allowed more commercial freedom, but it is not to be transferred to the private sector. In the language of this Administration, it represents the third way.
The trouble is that this third way risks satisfying no one. The fact is that the Post Office will be owned by the Government and will be subject to the kind of controls set out in the White Paper. That means, bluntly, that the Post Office will be subject not only to a regulator, but to the interference of Ministers and civil servants. One must make the point—I do not do so critically—that some of them have never run a business in their life.
Those concerned will have to take crucial commercial decisions on what
no undue risk to the taxpayermeans. Difficult decisions will go not only to the board of the Post Office, but to civil servants and Ministers. If the decisions are important, they will have to go to a Cabinet Committee. If they are really important, they will have to go to the Cabinet. Not many businesses have to deal with all those hurdles before they get permission to move forward.That is a recipe for delay and commercial failure, which I do not believe any of us wants. Government ownership raises the question of who will pick up the bill if an investment with "no undue risk" goes wrong. I see that the Post Office has invested in a German express parcels company. I hope that that is a good investment, but I am bound to say that parcels have not always been the most surefire financial winner in the past.
I remember the 1970s when National Carriers, the parcels business of the old National Freight Corporation, was losing £25 million on a £25 million turnover—some record. I remember that the same company, when still nationalised, went into France, with the probable support of the Government, and came out with heavy losses which led to the closure of the French business.
Clearly, business risk cannot be avoided. I have heard someone trying to suggest that we can somehow go into a business friendly, risk-free environment. That is a nice 266 idea, but it is not practical. When a company is owned by the Government, the risk is adopted by the taxpayer. The Government stand behind the company.
§ Mr. DismoreWill the right hon. Gentleman answer the straight question that was put by my hon. Friend the Member for Croydon, Central (Mr. Davies) to the hon. Member for Tiverton and Honiton (Mrs. Browning)? Do the Opposition believe in privatising the Post Office—yes or no?
§ Sir Norman FowlerI speak for myself, but my answer is yes, yes, yes. I shall now develop that argument, having made my position reasonably clear.
§ Mr. David Willetts (Havant)Come off the fence.
§ Sir Norman FowlerPerhaps I have not emphasised my position strongly enough.
We all want the Post Office to be a successful business, providing most of the basic services that it currently provides, although there may be a question about some of its parcels business. I hope that the hon. Member for Hendon (Mr. Dismore) accepts that there is no difference in aim between us. The difference is in how we believe that aim should be achieved. My view is that all those issues could be settled if we at long last plucked up the courage to put the Post Office into the private sector. That would give the management freedom to run the business without interference from Ministers, the civil service and the Treasury; the Government could lay down requirements on, for example, a universal postal charge; it would allow the Secretary of State to carry out an enabling role; and, above all, the business could prosper, which is the best way of ensuring continuity of employment—and good employment, at that—for thousands of Post Office staff.
§ Mr. Geraint DaviesDoes the right hon. Gentleman accept that his prescription for privatisation would lead to the destruction of the rural network of post offices, and that the thousands of jobs that he mentioned would be under threat from a privatised company? Does he further accept that the third way forward of greater commercial freedom, which contains the amount of risk borne by the taxpayer, is surely the way to square that circle?
§ Sir Norman FowlerI think that the third way forward is nonsense, and I think that the hon. Gentleman would agree with me. I do not think anyone believes that it is viable. It does not contain the risk—there is no question of that. Ministers and civil servants will still have to make judgments on what "no undue risk" means. The Post Office will be run like an old-fashioned nationalised industry, although perhaps a little better. As Secretary of State for Transport, I used to run a an old-fashioned nationalised industry, and, whatever the hon. Gentleman's views, it is no fun for the people running the industry. Whether one is Conservative, Labour or Liberal Democrat, it is a lousy way of running a business.
I do not agree with the hon. Gentleman. The Secretary of State said that the Government could have an enabling role. For the Government to lay down their requirements can be part of the privatisation process—I do not see that as a hurdle.
267 Why are the Government not taking this obvious action? Frankly, the only argument against it is that the unions do not like the proposal, and like the idea of losing influence even less. However, that argument is not remotely conclusive. Privatisation may not be in the interests of the union, but that is not to say that it is not in the interests of the work force or the business. Those are the crucial tests.
There is nothing remotely new about the union argument. I carried out the first privatisations of the Thatcher Government in 1979 and 1980. We denationalised the National Freight Corporation, which has some similarities with the Post Office in that it was a transport business and delivered parcels. In addition, it was one of the biggest removals businesses in the country, although I never quite understood why the Government had an interest in running a removals business.
I also denationalised the British Transport Docks Board. It is now Associated British Ports, and is prospering in the private sector. Needless to say, both proposals were condemned at length by the right hon. Member for Hull, East (Mr. Prescott), now the Deputy Prime Minister, and the right hon. Member for Holborn and St. Pancras (Mr. Dobson)—who, I believe, remains one of Labour's candidates for mayor of London. Of course, the unions liked neither proposal. The Transport and General Workers Union argued strongly against the measure and brought its members to the brink of industrial action. It told its members in the NFC not to buy shares in the new company. Fortunately, many of those members ignored that advice and gained substantially as a result. That was a prime example of a union arguing from its own point of view, not from that of its members. Therefore, I do not regard it as having been a crucial argument.
Those companies were not, in fact, taken over by outside managers. There was no wholesale recruitment of new managers to scrap this job or that. The companies were run by the same managers who had run them in the public sector, such as Peter Thompson of the NFC and Keith Stuart. The skill was there—what was lacking had been the freedom to use it. That is exactly the position with the Post Office.
When, having left the Government, I returned to the NFC 12 years later as a board member, I do not recall anyone saying, "We really want to return to the public sector and to Government control. We loved having Ministers telling us what to do and checking our plans, and we loved having civil servants crawling all over us." I never heard that wish expressed by anyone, even though we must have had some of the largest annual general meetings of any public company. One reason for that was the substantial employee shareholding in the business—the staff had a stake in the business that they were working for. That is an important lesson about privatisation for both the Conservative and Labour parties.
The Government talk about joined-up government. Last week the Chancellor of the Exchequer announced new plans for helping workers to take shareholdings in their companies and to allow tax incentives to result from that. Here we have the opportunity to put that policy into practice by enfranchising thousands and thousands of people who work for the Post Office, and that opportunity is being turned down. That is a lesson not only for the 268 Government but for my party: we need to learn that the opportunity that is there for us could fairly be said to have been there in the past.
My sadness about this proposal is that it represents a lost opportunity. I want a Post Office that produces and provides a good service but which is commercially skilled and nimble enough to withstand the competition from other forms of communication. That competition will come, whatever legislation the House may pass, and the Post Office will have to respond.
I want more than just that. I want the British Post Office to be an international as well as a domestic success. It is all very well arguing that we should give it time and that the country will get around to that solution, but time is not on our side. The opportunity may be lost, and, if that happens, the opportunity for Post Office staff will also be lost.
I suppose that I must accept that the Government will not now change their mind. Goodness knows, they have been round and round the course and have come up with the most unsatisfactory solution possible. I believe that when we look back, we will see this compromise proposal—this third way hybrid—as essentially a failure of will. We know the right way to go, and it is not this way. I hope that my party will take up the challenge.
§ Mr. Andrew Dismore (Hendon)Unlike the hon. Member for Tiverton and Honiton (Mrs. Browning), I preface my remarks by warmly congratulating my right hon. Friend the Prime Minister and Mrs. Blair on their happy news. I hope that it presages an early announcement of further improvements in the right to parental leave.
I shall concentrate on reform of the Child Support Agency. The Social Security Committee, of which I am a member, conducted a major pre-legislative review of the White Paper during the summer, culminating in the publication of its 10th report. I compliment the Government on the consultation that they carried out on reform of the CSA. Many of the witnesses who gave evidence to us commented favourably on the way in which the Government had taken on board the many representations and comments that they had received. I pay particular tribute to my noble Friend Baroness Hollis, the Under-Secretary of State for Social Security, who gave evidence to us twice and was helpful in dealing with our detailed and complex questions and requests for information.
I very much welcome the White Paper and the promise in the Queen's Speech of legislation. If we get it right—and I am confident that we shall—it will make an important contribution to the fight against child poverty. In his foreword to the White Paper, my right hon. Friend the Prime Minister says:
Over half of all children living in poverty in Britain today live in single-parent families. If every absent parent paid the maintenance they owe, more than a million children would face a brighter future. Not only because they would be financially better off but when a child knows the non-resident parent is still helping to pay for their food, clothes and shoes, they understandably feel more secure and more loved.The reforms that we anticipate will put children at the forefront of what we are trying to achieve. The changes are not Treasury-led and no Treasury savings are being 269 sought. The reforms are cost-neutral. They will set up a system that will work and not get bogged down in bureaucracy.
The Select Committee compared the original targets for the CSA with what has happened. That is set out in detail from paragraph 4 onwards. The report says that one of the objects
was to reverse the declining number of lone parents on benefit who were in receipt of child maintenance. In 1979, 50 per cent. of lone parents on Supplementary Benefit…received child maintenance. By 1989 the proportion of lone parents on Income Support in receipt of child maintenance had fallen to 23 per cent. Nine years later, and five years after the Child Support Agency began its work, the proportion of lone parents on Income Support receiving maintenance for their children had not increased.… By May 1999, almost a third of non-resident parents assessed to pay child support were paying nothing, and a quarter were making only partial payments.It continues:Another of the major aims…was to 'produce maintenance payments which are realistically related to the costs of caring for a child.Criticism was expressed of the then court system, which produced average payments of £20 a week in county courts. By May 1999, the CSA had reduced the average value of payments to £19.99 per week. That was a supermarket discount on the county courts, not an improvement that was originally presaged.The original scheme was also proposed
to allow for maintenance payments to be reviewed regularly",but by July 1999 more than a third of a million periodic reviews were still outstanding. The report points out that the original White Paperwas critical about the length of time it took the courts to arrange maintenance. At that time half of magistrates court cases then were cleared within 7 weeks and the median for county courts was 19 weeks.As of 31 March this year, 47,000 applications had been outstanding for over a year, representing almost a third of the total outstanding applications to that date. The new scheme was supposed to produce consistent and predictable results, yet it clearly failed to do so.We all know from our constituency surgeries and correspondence how unpopular and ineffective the CSA has been. I shall illustrate that by quoting from a couple of letters that I received recently on the issue. One constituent wrote:
I am writing to ask you for help on behalf of my wife … in her long-running and so far fruitless attempt to get maintenance from her ex-husband via the Child Support Agency.The letter says thatyou can never deal with a single case officer: each time you make an inquiry you end up speaking to/receiving a letter from a different person—a recipe for confusion.Another problem is thatit is often hard to penetrate the smokescreen of jargon to find out what is really going on.In 1994 my constituent's wiferegistered with the CSA in order to obtain maintenance.… So far she has got nothing.Last summer the CSA informed her that owing to a bungle on their part, she had lost any claim to three years worth of arrears arising out of a maintenance assessment made in June 1995—an amount worth nearly £15,000.… The CSA suggested she apply for compensation, which she did.270Eight months later she received a letter from the CSA last week saying they had been unable to process her application for compensation so far because they lacked the 'policy guidance' to do so. …In the meantime, the CSA made a fresh assessment of her ex-husband and told her that from 13 February her ex-husband would be making a payment to her.I spoke to the family last night on the phone. Needless to say, so far nothing has come through.Another constituent wrote to me:
I wish to lodge a complaint in relation to the long delay and inability of"—the CSA—in obtaining arrears, in excess of £2,500, due to me by my ex-husband. The result of this excessively long delay has caused me increasingly severe financial hardship and the knock-on effect is affecting the emotional well-being of my children.…I first requested the CSA collect maintenance for me in April 1997. …. My children have been treated like punchbags. … Many debts have accrued as a result of the lack of maintenance.… and I understand that even if a Liability Order is made, it will not include interest and probably will be payable by instalments. However, my debts have accrued substantial interest.The letter writer goes on to describe how her case has been backwards and forwards to the courts. She contacted the enforcement office as requested a few days after the second hearing and was told that it had not heard from the presenting officer and would contact her as soon as it knew the outcome. Several weeks passed and several phone calls could not determine the outcome. She then contacted me. I investigated the case and found out what had been going on, but she has still not been contacted by the enforcement office and she has still not been informed officially by the CSA of the outcome. The letter continues:
The matter has dragged on for over 2½, years and it is looking to be nearer 3 years before effective action is taken.Those two cases and our general experience show graphically the problems of the CSA, which were further illustrated by the recent television series that showed how the original CSA scheme was doomed to failure when it was set up because it was Treasury-led, which meant that there were fundamental errors from the start. It had to use a hand-me-down computer system that could not cope. There was nothing in it for lone parents because of the decision not to allow them to benefit from maintenance payments. The only things that lone parents got out of it were complex forms, grief from bureaucracy and often hassle from the absent parent. That resulted in an absence of trust, a lack of co-operation from lone parents and absent fathers, and even civil disobedience.
The Select Committee heard evidence from the National Association for Child Support Action. I asked its representative Mr. Farquarson:
How do you square … the group offering tips on delaying the introduction of CSA payments, including failing to return documents or 'forgetting' to include relevant information, and returning to the CSA their correspondence unopened marked with the words 'gone away' or 'not known at this address'?His answer was:Very simply. I do not believe that when the CSA make an enormous assessment against someone that is beyond their means to pay … that there is a moral … responsibility to pay that money. I would also say with no shame at all that I admit … that NACSA has been involved in a campaign of civil disobedience.271 The Select Committee rightly condemned that approach, but it is understandable from people who have a real sense of grievance because of the fiasco that the CSA has been. That is why I welcome the Government's new approach. A simple formula of 15 per cent., 20 per cent. or 25 per cent. of earnings will enable people to know where they stand much earlier. Admittedly, there is an element of rough justice, but people will be able to make their calculations early and they will know where they stand.
§ Mrs. Linda Gilroy (Plymouth, Sutton)There is a Child Support Agency office in Plymouth, employing 1,400 people. Does my hon. Friend agree that simplifying the system will make their jobs infinitely easier because they will be able to concentrate on enforcement?
§ Mr. DismoreI am grateful to my hon. Friend for that intervention and I very much agree with her point. My noble Friend Baroness Hollis said in her evidence to the Select Committee that 90 per cent. of the CSA staffs time is currently spent on arithmetic and only 10 per cent. is spent on enforcement. She hoped that that proportion would be reversed under the new scheme. That may be optimistic, but it reveals how much more the CSA officers will be able to concentrate on compliance.
To answer an earlier intervention from the hon. Member for Northavon (Mr. Webb), paragraph 15 of the Select Committee report says that the new formula was welcomed by the independent case examiner, the Children's Society, the National Council for One Parent Families, the parliamentary ombudsman and, as the detailed evidence shows, many other groups. The new formula will enable quicker assessments to be made, resulting in fewer arrears, which have been among the problems of the existing scheme.
We recommended that the Secretary of State should have the power, subject to parliamentary approval, to adjust the formula in the light of experience and that the discretion in the scheme should have clear parameters set down in regulations so that the officials administering it know precisely what they can and cannot do, and claimants and absent parents can more readily know the amounts due.
I welcome the way in which second families will be treated. Children of first and second families will be treated more equally. We believe that the second option outlined in the Green Paper should be adopted, as it is even more fair. The recognition of the non-resident parent's role is also very important. We should ensure that, in shared care cases, the formula reflects the contribution of the non-resident parent, and we should encourage such parents to maintain contact with their children.
The introduction of the child maintenance premium will put right one of the major wrongs in the system. It is expected to encourage parents with care to co-operate with the CSA. Baroness Hollis told us that about 70 per cent. of parents who were required to co-operate with the CSA because they were on benefit were failing to do so in the first instance and that one of the reasons for their reluctance was that, for many, the agency simply represented
no cash and lots of hassle.272 We believe that the child maintenance premium will increase the income of the parent with care and assure the non-resident parent that his money is contributing to the children's family income rather than simply reducing the cost of income support to the taxpayer.
I am pleased about the greater emphasis on compliance and enforcement. My hon. Friend the Member for Lincoln (Gillian Merron) mentioned the sanctions, including the fine of up to £1,000 for withholding information and the 25 per cent. surcharge for late payment. The White Paper contains some more imaginative ideas that are welcomed in our report: for example, the withholding of driving licences or passports or, ultimately, the seizure of assets. Those imaginative methods will hit some irresponsible absent parents in a way that will drive the message home effectively.
§ Mr. WillettsThe Select Committee has done valuable work and I am listening carefully to the hon. Gentleman. He is talking about tougher criminal penalties, but does not he accept that there is scope for much better civil enforcement before we impose draconian criminal sanctions, especially as the Government proudly claim to be reforming civil proceedings?
§ Mr. DismoreThat is a valid point. Baroness Hollis argued cogently that our main task was to ensure compliance, with enforcement coming much further down the line.
We want the CSA to be much more accepted in the community at large. The Select Committee recently went on a study tour to Scandinavia. We asked people in Norway and Finland about enforcement in their countries. They were amazed that it was even an issue in our country. It is taken as read in those countries that absent parents will support their children. That concept has become increasingly alien in this country.
If we can get broad acceptance on compliance, that will be very welcome, but we need imaginative penalties, as well as draconian ones. We recommended that, if there is a dispute about income involving self-employed people, we should work on the previous year's tax returns.
The CSA needs to sharpen up its act and undergo a culture change. Paragraphs 80 to 82 of our report suggest that it should improve its internal processes for verification of income and that its annual report should include an account of its counter-fraud work. The report expresses some concerns. I was especially worried about the relationship between the CSA and private cases in which the public purse is not involved. The change was intended to deal with an ill identified in the old pre-CSA court system, but I question whether that still exists. We heard evidence suggesting that the problem may not exist and that it would be better to impose a duty on the courts to take account of the CSA formula as a starting point in child maintenance cases.
If the state starts to interfere in private cases, which are likely to involve better-off families with more complex financial arrangements, we could get embroiled in private negotiations or court judgments relating only to private assets in which the state has no direct interest. We would end up second-guessing the courts and indirectly providing a further line of appeal outside the process, thus undermining negotiation and the courts. We recommended further research on the effect on children's interests, should private cases be brought within the CSA system.
273 We also considered resources for the CSA. Between 1995-96 and 1998-99, the CSA's live case load doubled to 750,000, yet its staff and funding remained virtually static. I suspect that that contributed to some of the problems. An increase in the work load of 20 per cent. year on year is expected until 2001. On top of that, there will be the transitional problems of training, installing new information technology and physically changing cases from the old to the new system. We recommended that a distinction should be drawn between resources for the administration of the current scheme and those allocated for developing the new systems, which should be sufficient to reflect the expected increase in work load.
We are very concerned about computer systems. We had clear assurances from both the chief executive and Baroness Hollis that there was only a small risk that the new system would not be ready by 2001, but we recommended that it should not come on stream until the Government, and indeed the Select Committee, were satisfied that it was fully operational.
There will inevitably be winners and losers under the new scheme as compared with the present one. We must phase in the changes and handle them sensitively. I understood the agency's fear of the big bang approach, bringing both old and new cases on stream together, but we must expect pressure from affected parents to come into the new system perhaps before a proper view can be reached of its effectiveness. We need to show some light at the end of the tunnel for the parents on the existing scheme. Otherwise, we will continue to have grief from them and there will be no confidence in the new arrangements. We recommended that the Government timetable the transfer to allow people to know where they stand.
We identified a problem with the child premium payment. As things stand, that will apply only to new cases. I hope that my right hon. Friend will consider the Select Committee's recommendations, because I am mindful of the potential conflicts that could be created when one lone parent, whose case has been newly assessed, benefits from that extra £10 a week, whereas her next door neighbour has had a long-running battle with the CSA, yet all that grief and strife has brought an assessment that does not benefit her, and she sees nothing of the improvement.
I welcome the Government's approach to the long overdue reform of the CSA. It will correct many of the ills associated with the agency, which the previous Government should have foreseen when they introduced it. The reforms have been widely welcomed by practically everyone connected with the CSA, as our Select Committee report makes clear.
§ Dr. Vincent Cable (Twickenham)As we zigzag between two rather different subjects for the debate, I shall say a few words about the Department of Trade and Industry issues and I hope that my hon. Friend the Member for Northavon (Mr. Webb) will catch your eye, Mr. Deputy Speaker, on the social security issues.
There is a certain amount of conceit in Governments—not only the present Government, but Governments in general—about what they can do to stimulate the rate of 274 economic growth and the efficiency of the economy. All the economic and historical work that I have seen suggests that the underlying growth of the British economy has remained pretty well unchanged since the Napoleonic wars—a trend that largely survived major experiments such as the nationalisation of the commanding heights of the economy, and even Mrs. Thatcher. So one should be suitably modest about what seven trade and industry Bills are likely to achieve.
None the less, there is a consensus about good practice and the kind of things that the Government ought to do to help the economy maximise its potential. One of those is to provide a framework for financial stability, and we give the Government credit for their advances in that area, notably monetary stability, the independence of the Bank of England and low inflation. Those are all positive achievements.
However, there is one major negative—the exchange rate, which tends to get overlooked. British manufacturing industry has lost 10 per cent. of its competitiveness since the Government came into office, and 23 per cent. since the end of 1996. All the tax concessions and regulatory innovations that the Government are considering will not compensate for that massive hit, which originated in uncertainty about our policy towards Europe.
The second major contribution that the Government can make, and are making, is full support for international initiatives to ensure that British exporters can operate in world markets. The Minister referred briefly to the new round of trade negotiations, but I have one reservation—that that enormously important subject will not be debated in the House at all. A scrutiny Committee, European Standing Committee C, will examine the matter on Monday, but that is the only opportunity that Parliament will have to review the matter. However, the sounds coming from the Government are right, and I have no reservations about what they are saying.
The third and most important area, which is the main area of contention, is regulation. It is clear that the Government are in some difficulty there, and the comments in yesterday's Financial Times, which their tone suggests emanated either from No. 10 Downing street or Lord Haskins, reflect some of the frustration:
Tony Blair has been forced to rebuke John Prescott, Deputy Prime Minister, and Jack Straw, Home Secretary, for failing to co-operate fullywith an initiative addressing the issue of Government regulation.When we think about what happens in those Departments, it is clear what is meant. The Home Office is an example; one notorious area of over-regulation is known as section 8—a term that initiated with the Conservatives' Asylum and Immigration Act 1996, which is why their shrillness on the subject is a little ill judged.
Under section 8, all employers, whether big or small, are required to operate a sophisticated and detailed system of immigration control involving the scrutiny of up to 50 separate documents to establish the appropriate level of compliance with national insurance, passport and visa regulations.
Despite strong representations from the CBI, the TUC, the Commission for Racial Equality and many other agencies, the Government have ignored their own earlier intentions and persisted with that regulatory overload, which does little to help achieve their social or economic objectives.
275 As for the Deputy Prime Minister's Department, one area deserves special attention. Part of his large empire is the Health and Safety Executive. If one talks to employers they will quickly suggest the HSE as a prime example of excessive and inappropriate regulation. Clearly, the principles of health and safety regulation are widely shared, and we wish to protect the safety of workers at work. However, the HSE provides a good example of regulation that has gone badly wrong. There is a large bureaucracy that costs £170 million and produces an enormous amount of paperwork, but when it comes to the crunch of enforcing safety regulation on seriously negligent employers, little is done. A shocking report, which has now gone to the Select Committee on the Environment, Transport and Regional Affairs, points out that only 12 per cent. of serious injury cases at work are ever investigated. Even of those, only 10 per cent. lead to prosecution, and the overwhelming bulk are prosecuted in magistrates courts, in which large employers are faced with a maximum fine of £5,000.
There is therefore a disparity between very lax and casual enforcement by a regulatory agency and the enormous amount of red tape generated. That is the rather deep issue that the Government must address, and it goes to the heart of the Departments promoting deregulation.
The House has often discussed the problems presented for knowledge workers by IR35. One of the most striking features of that story is that when the Inland Revenue commissioned its own regulatory impact assessment, the study produced powerful negative evidence. It also showed that the Government would lose much revenue as well as recouping revenue. Yet Treasury Ministers took no action to reflect what their own regulatory impact assessment had told them.
I have been trying to pursue recently in parliamentary questions how the Minister for the Cabinet Office proposed to tackle the agenda. A week ago I asked whether she could think of one example of a regulatory impact assessment that had led to a regulation being withdrawn. She could not. Yet, so far as I know, the Government have so far introduced 2,800 new regulations.
There are various ways of tackling the problem, and they have been suggested from both sides of the House. I know that the hon. Member for Buckingham (Mr. Bercow) has been active in that respect, and has suggested the fade-out concept. Other action could be taken too, and I hope that the Government will think about it.
For example, one of the most positive features of the Financial Services and Markets Bill is that it requires the Financial Services Authority, before introducing a new regulation, to demonstrate that the benefits will outweigh the costs. That is a simple requirement, but I do not see why the practice should not be generalised throughout government.
I have dealt with the regulatory issue at some length, because it frames the context in which we have to consider major deregulation issues, such as e-commerce legislation. I must say at the outset that the Minister for Small Business and E-Commerce, creditably, has listened to representations, so that the items that many of us are concerned about, such as mandatory escrow and the obligatory licensing of encryption, seem to have disappeared from the Electronic Communications Bill. It will be published this morning, however, and we must wait to see the detail.
276 There are certainly two residual concerns, which we shall raise on the Floor of the House when we discuss the Bill. One of them has already been raised by the hon. Member for Esher and Walton (Mr. Taylor). It is the very important point of whether the removal of such features from DTI legislation will simply be nullified by their re-introduction, under a new heading, in Home Office security legislation.
The other point, which is more pertinent to the DTI, is whether the substantial reserve powers that will be granted—they are very extensive for secondary legislation, including, for example, a requirement for a register of approved providers—will stimulate e-commerce rather than produce heavy-handed regulation. We must confront such questions when the proposed legislation is before Parliament.
There is another important e-commerce issue on which the Government have got themselves into great difficulty, which is causing industry serious worry and needs to be resolved long before we tackle the legislation.
Although the DTI and No. 10 Downing street are pursuing a genuinely supportive and consistent policy on e-commerce, the Lord Chancellor appears to have his own, independent line. Indeed, he appears to disagree with the rest of the Government and has allowed to be incorporated into a European directive that is crucial to the development of e-commerce and which originally incorporated the home-country principle for trade—a rather technical issue, but important in commercial law—qualifications that could seriously disadvantage British industry.
In pursuing the issue, I asked a named-day question two weeks before the end of the previous Session. I inquired whether the Lord Chancellor could confirm that he agreed with the Minister for Small Business and E-Commerce. Despite the fact that the day had been named and the Lord Chancellor had abundant opportunity to reply, no answer was given. I checked with the Table Office, which seemed unclear about how to deal with a Minister who refuses to answer the question. The matter is serious. I put it to the Government again that the Lord Chancellor, by incompetence, arrogance or for some other reason, appears to be causing the rest of the Government serious difficulties. I hope that the matter will be addressed properly and promptly.
The regulation of the utilities and changes to the Post Office are the other major family of concerns that will be addressed in the new Session. It is a little difficult at this stage to see what the Government intend to achieve through utilities regulation. We have had only the very broadest of outlines. Three basic concerns need to be addressed—one, consumer interest, which is being given primacy, has already been heralded.
One of the other two issues is that of executive pay. Of course, it would be absurd for the Government to return to the old days of trying to prescribe specific levels of payment for senior executives in the utilities or in any other part of industry. However, there are genuine concerns. The enterprises involved are often not risk-taking ones. People are receiving very generous and, economically, totally inappropriate remuneration for operating in monopolies.
As we know from many of the scandals that erupted as a result of executives of privatised utilities paying themselves personal fortunes thanks to their proprietary 277 knowledge and contacts in the old public utility days, we need a clear framework of conditions under which executive pay should be set, with penalties for abuse.
The other issue that needs to be addressed is that of parliamentary scrutiny. How far are the regulators to be accountable to Ministers and Parliament? I hope that the Government will reflect on the following model. As somebody who sat on the Treasury Joint Committee, I have been very impressed by the positive way in which parliamentary scrutiny has worked for members of the Monetary Policy Committee. The idea of reviewing their membership and periodically questioning them in Parliament is a good discipline for them and valuable to the public interest. I hope that, in the Government's proposed utilities legislation, they will give thought to how such a principle might be extended to regulators.
§ Mr. Geraint DaviesDoes the hon. Gentleman accept that the regulators are accountable to the Public Accounts Committee?
§ Dr. CableThey may be accountable to the PAC, but, as I have just said, there are many aspects of utilities regulation which are not covered by such concern for the legitimate use of public accounts. The wide-ranging aspects of such regulation would be properly covered by different Select Committees, with their different specialisms. We can have such a technical argument when the Bill is before us. There are other and better methods of scrutiny.
The proposals on the Post Office promise to be the most contentious part of the Government's programme. Certainly, as the proposed legislation stands, we shall oppose it unless we receive substantial reassurances.
The Post Office clearly has a problem—I think that we all agree on that—because it faces intensifying competition, notably from e-mail, and its finances are severely constrained by the Treasury. I gather that, until recently, up to 80 per cent. of its profits were clawed back by the Treasury in one way or another. It is not able to sustain a regular investment programme, nor its valuable network of rural and other offices.
What should be done about the Post Office's difficulties? The Government must explain why their original and plausible proposal to make it an independent publicly owned corporation no longer finds favour. The argument overlaps with the debate about London's tube system, and there may be a good reason why that model will not work. However, why have the Government changed their proposal, and why do they now propose to make the Post Office a public limited company instead?
One suspicion is that the new proposal will allow shares to be sold, thus enabling the Treasury to top up its war chest when it becomes depleted—in other words, that the requirement is driven by the Treasury rather than by business.
The other suspicion was made explicit earlier in this morning's debate, and it is that the proposal is a prelude to privatisation. My attitude to privatisation is pragmatic: it has worked well in many instances, but badly in some. Its failures have been especially notable where networks are involved, and the Railtrack system is the glaring example of that.
278 Any proposal that made privatisation of the Post Office network more likely would have to be argued very persuasively. One person who would have to be converted would be the former Prime Minister, Baroness Thatcher, who I recall had enormous reservations about it.
A second key issue has to do with timing. The automated platform for the Post Office will be fed in to compensate for the loss of revenue from benefit work. If that is badly managed, enormous damage could be done to the Post Office system.
Another important factor would be the mechanism to ensure the maintenance of the system of sub-post offices, which benefits people all over the country, in both suburbs and countryside. There must be a proper system to evaluate any closure that is proposed.
I hope that the Bill concerning the Post Office will deal with those fundamental questions. Liberal Democrat Members consider that much of the rhetoric of the Government's programme is attractive, as far as it goes, but that there could be many problems in the small print. Many of the proposals will go through Parliament largely uncontentiously, but some will have to be opposed. We shall play our part in that.
§ 12.7 pm
§ Mr. Geraint Davies (Croydon, Central)I add my congratulations to Cherie Blair and the impending new labour that she and my right hon. Friend the Prime Minister are about to enjoy. That is great news, and I am sure that all hon. Members will join me in extending good wishes to them both.
I take great pleasure today in supporting the Gracious Speech, and the themes of enterprise and fairness that it contains. I am also pleased that the debate today combines the concerns of trade and industry and of social security.
The first condition for economic success and therefore social investment is economic stability, which has been established already through the independence given to the Bank of England. However, the comments of the hon. Member for Tiverton and Honiton (Mrs. Browning) emphasised how unclear is the Opposition's attitude to the Bank of England's independence. The common-sense revolution now appears to mean no more than preserving the right to change one's mind about matters. The hon. Lady made it clear that what the Opposition oppose today, they may support tomorrow.
It is not possible to take the hon. Member for Tiverton and Honiton or her party seriously on that or many other issues, including Post Office privatisation. The general public will not understand the position of the Conservative party, although people will know that the Government's decision to make the Bank of England independent was the first step towards providing the economic stability that, among other things, has given employment to an extra 700,000 people. It now pays to work, thanks to the working families tax credit and the minimum wage.
It was noticeable that the Leader of the Opposition, in responding to the Gracious Speech, promised to turn to the economy "in a minute", but then never did. That illustrates that the Opposition have no idea of how to improve the country's economic performance so that the proceeds can be reinvested in our social infrastructure.
The Government have been in power for only two and a half years but the fruits of success are already emerging. The Opposition have described the extra £40 billion to be 279 invested in health and education as reckless and irresponsible. They are now wondering whether to eat their words, and wondering how to square the circle of the common-sense revolution, which commits them to continuous cuts in taxation and therefore, according to the previous Prime Minister, swingeing cuts in public expenditure.
The Queen's Speech contains a good combination of measures to help families and to help industry. The Child Support Agency has been mentioned. As a member of the Public Accounts Committee, I am glad that we are moving towards a simple percentage formula—something that I recommended a couple of years back. That is obviously a cruder method, but we must deal with the legacy of the CSA, where 85 per cent. of assessments are incorrect and 66 per cent. of the money due is not paid.
I welcome the new approach, and alongside it, the new commitment to a second state pension, a stakeholder pension and, at the top of the age scale, the minimum income guarantee for the poorest pensioners. That begins to develop a sophisticated approach, targeting public resources at the people most in need.
Economic stability is important, and many of the Bills before us will form the building blocks for trade and industry success. The Electronic Communications Bill, as has already been said, has been applauded by Bill Gates. Developments in e-commerce will, I believe, be much quicker than many people anticipate, and will have profound implications for transport planning, environmental issues and industrial issues.
More and more people may choose not to live in the south-east and not to commute to offices, but to work from home instead. The implications for society's infrastructure must be factored into our decisions.
I welcome the range of Bills, including the insolvency Bill, the Companies House Bill and the limited liability partnership Bill, which will help small businesses, among others, to operate more flexibly and more effectively. The Government must take account of the views of small businesses in all sectors of the industrial community, as they do not have the same interests as big business, which will want more regulation to be introduced to squeeze out competition and innovation in the small niche business sector, in which big business finds it so difficult to compete as it stomps around in the marketplace.
I welcome the move towards greater commercial flexibility for the Post Office, accompanied by a guarantee to customers of network provision and a limited risk approach by the Government to the commercialisation package. I do not agree with comments from the Opposition that wholesale privatisation is the way forward.
One of the examples mentioned was Railfreight. Market expectations were that more freight would move to rail, as any Government would inevitably have to limit road growth. Freight was therefore expected to become an increasingly profitable area within the limited confines of transport opportunities, but the previous Government simply gave away Railfreight and 280 £250 million in public money. That was outrageous, and almost as bad as the case of Rai1track, which was sold for £1.9 billion and is now worth £8 billion.
§ Mr. Robert Syms (Poole)Does the hon. Gentleman accept that people who purchased shares did so in the knowledge that the Labour party would re-nationalise the industry—in other words, there was a degree of risk—and that the position of the Labour party at that time may well have depressed the share price?
§ Mr. DaviesI am extremely grateful for that intervention, which underlines the appalling action of the previous Government in selling off Government assets, as the hon. Gentleman acknowledged, at the depths of the market. Any responsible Government who were ideologically committed to selling off national assets should have had faith that the public would vote them back in—of course, they did not—in order for the Government to sell those assets at a premium price, which they did not. It was a case of a losing party deciding to spend public money in a disgraceful scorched-earth strategy.
§ Mr. McWalterDoes my hon. Friend agree that the privatisation of the Post Office poses as great a threat to rural postal services as the privatisation of buses posed to rural bus services?
§ Mr. DaviesYes, that is a key point. Even the right hon. Member for Henley (Mr. Heseltine) performed a U-turn on that policy. People in rural communities were greatly concerned about any proposed privatisation of the Post Office, so the Government will not go ahead with it.
The privatisation of bus services had an appalling impact on the environment and on competition. Small regional bus companies were ejected from the marketplace by larger companies, which initially offered discount pricing and many more routes, but then, having forced the smaller companies out of business, they abused their monopoly position by reducing services, the number of buses and the quality and training of drivers and increasing fares. The net impact outside London was that the quality and quantity of bus services plummeted. Only in London, where the market is more controlled, did bus patronage increase. I am glad that my hon. Friend the Member for Hemel Hempstead (Mr. Mc Walter) has given me an opportunity to restate the Government's commitment to rural buses, as demonstrated by the additional £170 million that they have provided.
Transport was one of the main themes of yesterday's debate, but it is appropriate to refer to that subject in the context of trade and industry. In 1996, the previous Government issued a Green Paper that set out many good ideas, including a presumption in favour of the introduction of congestion charging. The Opposition have changed their mind—perhaps they got cold feet or gave way to reckless opportunism—but the Government have sensibly decided to go ahead with that policy. The Conservatives also invented the fuel duty escalator, which Labour inherited. Now, it is clear that any marginal proceeds from that will be hypothecated for other transport purposes, as will revenue from congestion charging. Unlike the Opposition, the Labour Government are committed to marginal hypothecation of revenues from congestion charges and any above-inflation increase in fuel taxation.
281 The public will give a warm welcome to that policy and to the extra £700 million committed to local transport initiatives, £600 million to the tube, £170 to rural bus services and £50 million announced last week for London bus services. Under new Labour, there has been an increase of 1,000 in the number of trains running every day. Britain is back on the move because we are investing in public services and public transport.
Those policies, along with our initiatives on trade and industry, the economic stability we have created, and our drive to make work pay, to enable those who can work to do so and to give security to those who cannot, add up to a wonderful package for Britain as we approach the new millennium. I commend that programme to the House and, indeed, to the nation.
§ Mr. Robert Syms (Poole)Aside from their constitutional vandalism, the Government's theme so far has been to be interfering, busybodying and nannyish in their treatment of both the British people and British business, and this year's Queen's Speech displays the same themes as the preceding two. We have a Government who believe that Whitehall knows best, that the Government know best and that ordinary people do not.
In this year's Queen's Speech, people wanted a common-sense revolution. I am pleased that the Conservatives have advanced common-sense proposals and policies: I have always believed ideas are the foundation of any political debate, so I am sure that we shall have some interesting debates this Session. In the number of Bills they plan to introduce, the Government appear to have bitten off too much, so I am also sure that we shall have the same problems at the end of this Session as we had at the end of the previous Session, with guillotines imposed and Bills pushed through.
I have spent most of my life working in business, mostly small business, and I agree with the hon. Member for Croydon, Central (Mr. Davies): business does not always speak with one voice. Larger businesses, and the Confederation of British Industry, do not have the same agenda as small firms. If we are to become a successful knowledge-based, flexible economy, much of that must come from the bottom end, as it were, of the business environment—from smaller businesses rather than larger institutions.
When there is any question of social legislation and social change, it is important to listen to the voice of the small people as much as that of the big battalions, although the big battalions may be better organised, better at lobbying, better at attending dinners and better at putting their point of view. I have often heard Ministers pray in aid the CBI, but I do not think that it necessarily represents the views of all business, especially business at the bottom of the market.
The Government's record over the past two years has been one of implementing far more regulations—2,700, in fact. According to Chantrey Vellacott's business regulation index, of which we heard earlier, that is a 20 per cent. increase over those two years. Running a business is difficult. A business manager must deal with people, and they will not always be the easiest people; he 282 must also deal with the banks. An increasing burden of regulation will consume a disproportionate amount of time and effort, especially in the case of small firms. Business managers must attend training sessions to ensure that they will be able to apply regulations and law correctly, and while they are doing that, they are not earning a living. They are not going out and securing more customers, and they are not providing the services that they are supposed to provide.
Many small business men in Poole tell me that they are spending more and more time trying to comply with regulations and red tape, and less and less time running their businesses. I admit that they made the same complaint under the last Government, who did not do enough to restrain the natural inclination of Governments to regulate and interfere; but I think that, if anything, the situation is worsening. We should be careful. At the end of the day, people must run their businesses, make a profit and pay their workers, and any burdens that detract from their ordinary, everyday activities will create many problems.
I will not list all the Government changes, but I agree with what was said by my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler), particularly his comments about PEPs and TESSAs. Any party, when it takes office, is tempted to change or rebrand, and the present Government have changed many things that were working quite well purely for the sake of it. That is a great pity. The key is to restrain all that regulation and red tape, and throughout the current Session, Opposition Members will do all that we can to draw attention to the costs to small business and, indeed, to the country as a whole of an over-regulating, busybody Government.
At the beginning of the debate, the Secretary of State for Trade and Industry referred to the general economic situation. As usual, he attacked the Conservatives for some of the measures that we had to introduce in the last Government in order to get the economy into shape. Listening to the right hon. Gentleman, one could almost believe that everything had started in 1997, but in fact the recovery from the last economic downturn began in 1992. The present Government were fortunate enough to inherit a golden legacy of five years of growth and falling unemployment, along with an increase in tax revenue as a result of the growing economy. [Interruption.] I think that the record speaks for itself. We have heard today about the creation of 700,000 jobs since the election, and we welcome that; but it follows a trend that had already been established.
The present Government, like the last Government, are succeeding vis-a-vis Europe simply because we devote less of our gross domestic product to public expenditure than other countries, and try not to tax as much. The rest of Europe has not grown as much over the past 20 years because of the temptation both to spend more and to tax more. If I have a worry, it is that the Government have embarked on a course that will start to take us towards European levels of taxation and spending. Going in that direction will affect our economic performance, employment and all those other things.
§ Mr. Geraint DaviesDoes the hon. Gentleman accept that his leader and the shadow Chancellor predicted a deep and damaging recession in Britain? They blamed it on the Government, but it was rooted in the south-east Asian financial collapse. Such global economic turbulence 283 did not occur in the 18 years of Conservative Government. Under more stable global conditions, the record was hopeless, with 15 per cent. interest rates and much higher unemployment and inflation.
§ Mr. SymsSometimes in the Chamber, we suffer from selective memory. I left school in the 1970s, when Britain was, to some extent, a basket case. I remember the previous Labour Chancellor having to turn back at the airport because of the International Monetary Fund and problems with Budgets.
There were world problems. Over 18 years, the British economy did immeasurably better. I do not say that all the Conservative party's judgments were right. We got some things wrong—perhaps the exchange rate mechanism was one—but the key point is that, overall, British economic performance, which pre-1979 was lagging behind that of our competitors, is at least measuring up to their performance. As we go into the next century, we may catch up many of the countries of continental Europe, which grew rather more in the 1950s and 1960s and which have had problems in recent years. Therefore, I do not accept the hon. Gentleman's argument.
When a party is in office for 18 years, it is easy to pick out one element of economic policy in that period. Eighteen years is a long time, as those on the Government Front Bench will no doubt testify. There may have been high interest rates, or particular difficulties, but, overall, impartial observers would say that the previous Government did make a positive contribution to the economy. I hope that the Government will continue that. I hope that we have a successful economic legacy and that we go forward with great success into the next century. I want my country to succeed, whether I sit on the Opposition or Government Benches. I believe in my country.
The key thing is that we have to be careful not to over-regulate, to over-tax and to go to European levels of taxation and interference. The Government have raised £40 billion more in taxation—some taxes by stealth, others more overtly—which works out at £1,500 per tax-paying individual. It is important to dwell on that. I believe that it is better to leave money in people's pockets. On the whole, individuals, families and businesses are better at spending money. The Government have to do some things, which we all accept, such as running the national health service, but, by and large, striking the right balance between taxation and the amount of gross national product that is taken by the Government and by individuals is important. There is a worrying trend in that regard.
The key thing is to keep the economy going. Opposition Members will express concern about the rising tax burden—I notice that the Gracious Speech contains no mention of Organisation for Economic Co-operation and Development statistics on that burden—and ensure that regulation is kept to a minimum. With the Opposition doing their job and the Government perhaps listening a bit more, particularly to small business men, the country may not do too badly over the next 10 or 15 years.
The Post Office was mentioned earlier. One critical factor is that the Department of Social Security will switch from paying benefits through sub-post offices to paying them through banks, which will cause many sub-post offices a problem. We know that the trend has 284 been for more and more of those post offices to close—it has happened over successive Governments—but, if we are not careful, we will have a much more rapid rate of closure, with a loss of services.
§ Mr. DarlingMay I correct the hon. Gentleman on that point? We are proposing that, from 2003, payments should increasingly be made by automated credit transfer, but at the same time we are giving the Post Office the ability to provide banking services, which it did not have in the past. That means that, if they want to, people will be able to get their benefits from either the Post Office or the bank, so we are helping the Post Office network.
§ Mr. SymsI thank the Secretary of State for making that clear, but, as he will acknowledge, there is concern among sub-post masters about that change. For many areas, particularly rural areas, the sub-post office provides a social service as much as anything else.
The royal commission on long-term care has reported, but we do not know what action the Government will take. We all know that there are costs—certainly to the taxpayer—whatever Governments do about long-term care, but I hope that the Secretary of State may be able to give us some idea of when proposals will be introduced. I represent Poole in Dorset, where a lot of retired people live, and many of them have to go into care.
Long-term care is a key and growing issue with which the Government will have to grapple and the matter of elderly people having to sell their homes to pay for care is arising rather more often these days. It is inevitable that that problem will grow, because people are living longer and there are more owner-occupiers, but there is a strong feeling that the current system is unfair. Someone who has not contributed a penny and is fully supported by the state could end up in a home next to someone who has had to sell his house to pay for his care. Australia has a system under which a percentage of the value of any home is protected and I was interested and pleased to see that, in "The Common Sense Revolution", my own party has started to address that issue—perhaps through an insurance scheme—to ensure that some of the assets produced by a lifetime of hard work are maintained for the individual and his family. That is a key issue.
I shall not discuss parental leave at length, but no doubt the Secretary of State is aware of the campaign to persuade companies to pay for parental leave. We all have to take account of the fact that letting employees go on parental leave represents a cost for companies, even if they do not have to pay those employees, because they have to be replaced and their jobs covered. If there is any argument for paid parental leave, it is that responsibility lies with the Government rather than a particular company. If companies are forced to pay for parental leave on top of paying for cover, they will be paying twice. The consequence will be that women of child-bearing age or those married to such women will not be as successful in the labour market because employers will be wary of taking them on. Long-term care is the biggest issue for my constituents and the Government have to introduce proposals with a degree of urgency because whatever proposals they make, it will take some time to implement them.
Overall, the Government have confirmed my prejudices about their interfering in people's lives. We will be paying careful attention to their legislative programme to ensure 285 that the costs are pointed out to the public when they raise tax, and when they regulate and interfere. We shall do our best to stand up for British business and British individuals. Although we are not against many of the social benefits in themselves, we realise that one can have a big heart, but sometimes do people down, because implementing many regulations and benefits diminishes people's ability to get jobs. This will be an interesting Session and over the next 18 months, we shall have interesting debates on many of the important topics in the Gracious Speech.
§ Mrs. Linda Gilroy (Plymouth, Sutton)I join those who have expressed good wishes to my right hon. Friend the Prime Minister and Cherie on the announcement of an addition to their family. I suspect that the phrase "Blair's babes" will never have quite the same meaning again.
I had the great pleasure of visiting Downing street yesterday with three young constituents—Kerrie, Stacey and Frederick, from Hyde Park junior school—and Members from both sides of the House representing seats in the south and the west. It was a memorable afternoon for them.
§ Mr. BercowI join the hon. Lady and other right. hon. and hon. Members in congratulating the Prime Minister and his wife. However, in the light of the announcement, does the hon. Lady think that that was what the Prime Minister meant when he talked about the year of delivery?
§ Mrs. GilroyI am not sure that he meant precisely that, although given the number of Bills in the Queen's Speech that build on the good work that we have been doing to tackle child poverty and eliminate it in the next 20 years, the Prime Minister and the Government have the concerns of children very much at heart.
The Government's first 30 months—924 days—in office have resulted in some very positive developments for people in communities and businesses in my constituency. Those developments were grounded in legislation outlined in the first two Queen's Speeches and will be built on by this year's Queen's Speech.
Conservative Members really are grasping at straws by saying that Britain needs any type of revolution. Revolutions are about radical transformation, but Conservative Members are simply doing what they are best known for doing: looking at the past, not the future.
There have been significant transformations in my constituency in the past two years. We had some of the United Kingdom's highest unemployment rates, but they have been slashed to the average. At the previous general election, more than 10,000 people were unemployed in the two key Plymouth constituencies, but that figure is now down by almost one half, to about 5,000. On fast-track punishment for young offenders, we are nearly down to the national target of 72 days.
My constituency is achieving the Government's targets on class sizes for five, six and seven-year-olds. More than 3,000 young people in my constituency were in classes exceeding 30 pupils, but that number is now down to fewer than 300, and we are well on track to getting it 286 down to zero. We also have the benefits of a stable economy, low inflation and low interest rates, ensuring the highest-ever number of people in employment.
Significant transformations are bringing a new confidence, sustaining Plymouth's public-private voluntary partnership—the 2020 partnership—to plan, over 20 years, the pathfinder strategy to halve the number of Plymouthians living in the most deprived wards in England. The strategy will enable people to harness the opportunities of our triple-zone status, and promotes the spirit of partnership for which Plymouth is becoming so well recognised nationally.
One aim of the pathfinder strategy is to ensure an exceptionally pro-business climate for all those who are prepared to invest, and in which particularly micro and small to medium-sized enterprises flourish and contribute to the city's success. I agree with hon. Members on both sides of the House that, as the Government continue to make progress, we should ensure that the door is always open to small businesses so that they have an opportunity to express their views on regulation and many other aspects of business.
I assure sceptical hon. Members, who might think that the catalogue of progress I have described amounts to no more than warm words, that the pathfinder document produced by our partnership describes a highly focused package that is not only practical but seeks to do the right things well. However, the partnership—like the Government—does not seek now to do everything. Some people always want more proposals to be included in the Queen's Speech than could possibly be considered and implemented.
I welcome the Queen's Speech, as the desperately needed transformation of my constituency has only begun. I do not know where Conservative Members get the idea that they left a golden legacy. In 1995, one of the wards in my constituency was listed in the index of local conditions as the poorest in England. Although she apologised for her absence, I am sorry that the hon. Member for Tiverton and Honiton (Mrs. Browning) cannot be here now. She lives in the same county as me and it would have been good to hear her apologising for the previous Government's record, which caused those problems in my constituency.
It is a sad reflection on nearly 20 years of Conservative government that, in 1998, 19 per cent. of the Plymouth population—about 46,000 of the city's total of about 250,000—were among the most 10 per cent. deprived in the country. Our pathfinder strategy seeks to tackle that problem.
Today's debate is on those aspects of the Queen's Speech that deal with trade and industry and social security, which are two sides of the same coin. We recognise that social justice and economic efficiency go hand in hand. The proposals in the Queen's Speech are about enterprise and fairness. They are about enterprise in the measures to modernise company registration, to give flexibility to partnerships through limited liability status and to set down a framework that will allow electronic trading, e-commerce and e-communications to flourish. They are also about fairness, with measures coming from a Department that is bringing hope to many in my constituency who at long last can afford to work. The minimum wage, which was introduced in the previous Session, is an important part of the jigsaw that makes work pay.
287 A utilities Bill will be introduced this Session. It will seek to put consumers first and competition in its rightful place, which means serving consumers. In my constituency, paying for the two basic necessities of life—warmth and water—takes up a huge proportion of the income of the poorest constituents. Together, the bills for those items commonly gobble up 20 to 30 per cent. of their apparent income. Anything that brings further downward pressure on prices is, therefore, greatly to be welcomed.
As I have said, one in five of my constituents are in the poorest 10 per cent. of the country's population. Big bills hurt many more of my constituents than they do those of most Conservative Members. Perhaps that is why Conservative Members do not grasp that a real revolution and a real transformation is rooted in long-term difficult decisions rather than in quick fixes and knee-jerk reactions. Such difficult decisions require leadership with eyes fixed on a 20-year horizon rather than myopically on the next tabloid headline. They will be difficult decisions that require an understanding of when the vested interests of the few are playing to the gallery and pressing the buttons that play on fear and ignorance rather than showing how the changes that are opposed can be made to work for the many as well as, often, for the few.
Utility regulation is one aspect where such decisions must be taken. Under the Conservatives, there was often total confusion about the relative roles of regulators, Ministers and Parliament. As a result, there was uncertainty for business and consumers alike and higher costs of capital. Some consumer councils were too closely connected to the regulator, with too few rights and too little access to information. We need to do something about that. The utilities Bill will seek to remedy those problems.
I was surprised to hear the hon. Member for Twickenham (Dr. Cable) say that we did not know much about what will be in the utilities Bill. There has been very extensive consultation on its contents and there are now high expectations about what it will deliver. I am confident that it will place the interests of consumers first, will introduce new duties to help low-income utility consumers and will prompt further competitive benefits in a way that will achieve a fairer deal for consumers. It will develop competition that is a means to an end, that serves rather than dictates and that recognises social and environmental obligations.
The utilities Bill will set the framework for modern, transparent and accountable regulation. It will be modern by depersonalising the regulatory function and introducing a regulatory board. That should reduce the risk premium and the cost of capital and bring further downward pressure on prices. It will be accountable through new social and environmental measures to ensure that the industry takes its responsibilities seriously and that, where the market fails, regulation will surely follow. We desperately need those measures to wage war on fuel poverty.
I welcome much of what the Government have achieved in their first term in respect of fuel poverty and the introduction of the home energy efficiency scheme. However, given that 8 million households experience fuel poverty, and that double the national average in my constituency live in poor private rented housing-a key cause of that poverty—we need to harness all the means available to tackle the problem.
288 There will be a transparent framework which, as the hon. Member for Twickenham said, is needed to clarify the links between directors' pay and performance. I also hope that it will provide clarity when regulators explain their decisions and reveal their forward work programme and their means of consulting people and taking decisions.
As the hon. Gentleman said, we need more information in respect of the consumer voice which must be empowered to help achieve redress. As my right hon. Friend the Secretary of State for Trade and Industry said, far too few consumers are changing companies and becoming aware of the advantages that different companies can offer in the utilities sector. One reason for that is the fog of information, or indeed the lack of information, which makes it difficult for people to take decisions that are in their interests. I hope that the consumer councils will have access to independent information of a robust nature and will not be dependent on the regulators for that information. If the regulator is allowed to control access to any information, that information should be clearly defined and the regulator should be required to give full, clear and timely reasons for withholding information.
My constituents and I set great store by the delivery of Labour's manifesto promise to reform and modernise the regulation of our utilities. The utilities Bill will achieve that. First and foremost, it will deliver a fair deal for consumers, but it will also deliver a fair deal for businesses, for their aspiring competitors, for employees and for communities. It is important, too, that there should be a fair deal for future generations for whom we hold the resources of those communities in trust.
In the 13th century, the first trading standards weights and measures officers had simple and accurate scales as the tools of their trade. As we approach the 21st century, the goods and services that we enjoy are infinitely more sophisticated. The knowledge-based economy has been mentioned several times this morning. It demands sophisticated standards fit for the 21st century and better regulation that fits the future and not the past, thus meeting the expectations of the many sophisticated consumers of the new millennium and not those of people who seek to preserve the old privileges for the few.
This summer we experienced a total eclipse in Plymouth. Whenever the next election comes, I suspect that the Conservative soundbites will be totally blacked out by the steady implementation of our manifesto promises. I commend the Queen's Speech and I am confident that my constituents' lives will continue to be transformed by the forthcoming programme of legislation which it heralds.
§ Mr. John Bercow (Buckingham)I would like to focus my remarks on two issues. The first is a prominent feature of the Loyal Address, but the second is a notable omission from it.
Let me deal at the outset with the subject of regulation. The House will be aware of what is included in the Queen's Speech on this subject. It states that, as part of the Government's drive—as though there were such—to address inappropriate and over-complex regulation, legislation will be introduced to increase the effectiveness of the power to remove regulatory burdens. In so far as that goes, the words are honeyed, and welcome.
289 Unfortunately, on this subject—as on a plethora of others—the Government have form. They have previous convictions, and those convictions are a long way from being spent. Labour Members of Parliament would be singularly unwise to suppose that the public had forgotten those unspent convictions. In particular, they can rest assured that business has not forgotten the unspent convictions in relation to over-regulation. We intend to ensure that business remembers them for a long time to come.
What is the track record? I shall take the House through it. Ministers may not enjoy being reminded of it, but they must deal with the results. In April 1997, the then shadow Chancellor, the right hon. Member for Dunfermline, East (Mr. Brown), in the foreword to Labour's business manifesto entitled "Equipping Britain for the Future"—there was a photo of the right hon. Gentleman at the top of the foreword to demonstrate his commitment—declared that Labour would
not impose burdensome regulations on business, because we understand that successful businesses must keep costs down.The sentiment was welcome, but within weeks of its utterance the Government had begun the process of betrayal, which has culminated, thus far, in an additional 2,700 regulations flowing forth from the machinery of Government since 1 May 1997.On 7 November 1997, the hon. Member for Hornsey and Wood Green (Mrs. Roche)—then the Minister for Small Firms—told the House, apparently not in jest:
We are moving purposefully and very speedily to bring about simpler government and cut red tape, which is a real barrier to growth for small businesses."—[0fficial Report, 7 November 1997; Vol. 300, c. 483.]We are grateful to the hon. Lady for the apostolic conversion, which, as a member of the Labour party, she appeared at that time to have undergone.Even then, however, the Government had ushered in a whole tranche of new regulations. While the hon. Lady's remarks might have been well intentioned, they were directly contradicted by the facts of the Government's record.
In one of his last pronouncements as Secretary of State for Trade and Industry, the right hon. Member for Hartlepool (Mr. Mandelson), told the House on 25 November—with the nearest approximation to a straight face that he could manage—that the Government
have no intention of introducing any legislation that presents a burden on business and reduces the competitiveness of British firms."—[Official Report, 25 November 1998; Vol. 321, c. 214.]We were grateful to the right hon. Gentleman, except that the record flagrantly violated his words on that occasion.What is the record? As a number of hon. Members have pointed out, it is so far a record of massive increases in regulatory burdens and cost. Some 2,700 additional regulations have spewed forth from a Government risible for their lack of business experience or sensitivity to the needs of industry and commerce.
A number of my hon. Friends and others have pointed to some of the examples. There is the working time directive—£2.3 billion of extra costs for business, and a 290 mere 45 days' notice from the right hon. Member for Hartlepool of the content of the 71 A4 pages of regulations which business would then be obliged to introduce. The national minimum wage added a further £2.7 billion a year of costs to business, and a mere three weeks' notice was given to business to grapple with the 112 A4 pages of regulations with which they had to come to terms and to which they needed to give effect.
§ Mrs. GilroyIf the minimum wage protection was really damaging to jobs, Cornwall, which has had some of the lowest wages in the country, would have had very high levels of employment. That has not happened. Does the hon. Gentleman recognise that one person's red tape is another person's social protection? Will he say something at some point in his speech to those whose social protection he seeks to slash?
§ Mr. BercowI am in favour of social protection. The best means by which to achieve it is to have a thriving economy. We need an enterprise economy, a dynamic economy, an economy characterised by the creation of small businesses and the advance of their cause. I have to tell the hon. Lady in all candour that if she believes that the motor of economic advance and extension of business opportunity is raising wage levels, I do not agree with her. We shall make a judgment in due course about the extent of the damage that has been done and we shall come forward with a proposal on the minimum wage accordingly. However, that it has increased wage costs and presented businesses with great difficulty is not in doubt.
§ Mrs. GilroyIs the hon. Gentleman in a position to say whether the Conservatives support a minimum wage?
§ Mr. BercowI am genuinely taken aback that, 18 months or two years before the next general election, the hon. Lady apparently expects me to give her an advance copy of the Conservative election manifesto. I have no intention of doing anything of the kind, although I understand why she seeks to divert attention from the legitimate and growing chorus of complaint against the over-zealous regulatory policies of the Administration that she supports. She should remember that 99.6 per cent. of firms in this country employ fewer than 100 people, that between them they employ 50 per cent. of the private sector work force and that they account for two fifths of national output.
Those businesses are not assisted by the Government's regulatory policies; they are held back and retarded by them. Examples abound across the board, for which the time in this debate does not allow. There is the child care credit, the disabled persons learning credit, the student loan repayment administration regulations and the working families tax credit. None of those measures is helpful to business and all of them, regardless of their other intrinsic merits or demerits, have one feature in common: they shuffle responsibility from central Government to beleaguered businesses, forcing the latter to become unpaid tax collectors and benefit distributors. In no way can even an authentic representative of new Labour argue that that is beneficial to small businesses, 291 which are the engine of economic growth. They are the seedcorn of our present and future prosperity. They are what we depend on if we are to be successful.
§ Mrs. Gilroyrose—
§ Mr. BercowI have already given the hon. Lady two opportunities. I have politely to say that she has mucked them both up. She cannot realistically expect me at this stage of my speech to give her a third chance. If she is patient, I might give her another stab at it a little later.
The regulatory burden is very high. Hon. Members will be aware that I am always anxious to be helpful. Accordingly, on 27 April this year I presented a ten-minute Bill, supported by several of my hon. Friends, to reduce the burden of regulation on business. That seemed perfectly sensible.
My first proposal was that there should be an annual statement to Parliament on the costs to business of regulation and on the Government's plans in the ensuing year to reduce that cost. My second was that there should be a six-monthly report to the House on the progress of deregulatory initiatives. My third was that there should be a review of all existing regulations to see where gold-plating of European directives and regulations was taking place courtesy of British Government Departments and the all-knowing civil servants working in them. My fourth was that small businesses—which are the great majority of businesses in this country—should be exempt from the most damaging regulations. My fifth proposal was that the Government should institute a policy of sunset provisions by which regulations would automatically expire or lapse on a given date—perhaps three or five years after their enactment—if Parliament did not judge them worthy of putting back on the statute book.
I took my cue in that from the experience in the United States. I hope that the Minister has, in his short tenure of his post—on which I congratulate him—studied the Regulatory Flexibility Act 1980 and the Small Business Regulatory Enforcement Fairness Act 1996, which represent the American model. Those measures are profoundly helpful to small business. The United States has a magnificent record in the generation of private sector jobs, overwhelmingly through small firms.
Instead of looking to the continental example, which represents a good way of destroying jobs, as recent evidence testifies, we should learn from our American friends. I hope that the Minister will attend in detail to the merits of the American legislation with a view to its transposition, with appropriate amendments and allowance for national customs, to Britain.
The Secretary of State for Trade and Industry, under pressure in debate from my right hon. Friend the Member for Wokingham (Mr. Redwood), agreed to look at my Bill and comment on it. Some weeks later, he said that he saw some merit in sunset regulation. It is a sign of the complacency of Labour Members and of the way in which they take pride in exiguous achievements that they think it a cause for celebration that the Secretary of State has inserted one titbit of a measure into the Electronic Communications Bill to allow for future sunset regulation. They think that that is game, set and match. They think that it is clever politics, as it facilitates a little spin, might gain a headline and provides a cheap debating point, but 292 there is all the difference in the world between a temporary advance, with a small step of minimal significance, and permanent steps representing substantial advances with long-term significance.
My Bill, which drew on the experience and wisdom of many of my colleagues as well as on multinational experience, represented a positive step in the right direction at an opportune time. If Ministers are not worried by the fact that businesses continue to complain about the massive burdens on small business, they are foolish. They should be seeking to do something concrete about it, but the evidence is that they are not.
It is not surprising that, a fortnight ago at the CBI conference, Sir Clive Thompson complained that the Government shimmy to the right, dance to the left and are then away, as he put it, increasing costs and regulations, making life more difficult for business and reducing the flexibility of companies to adapt to changing circumstances. That is a damning indictment of which the Government should take note, as Sir Clive knows a thing or two about business interests.
Only this week, the estimable City commentary in The Times drew attention to the fact that the Government had failed "spectacularly" to get it right. It said that they were making life more difficult and increasing the burden, and did not appear to realise the seriousness of the situation that their actions and inertia alike had created.
I hope that we will not have complacent words or, worse still, no response from Ministers. They cannot continue arrogantly to pretend that everybody else is wrong and they are right. The CBI, the Institute of Directors, the British Chambers of Commerce, the Federation of Small Businesses and the Forum of Private Business, to name but a few, are united, whatever their other differences on public policy, in condemnation of the Government's over-zealous regulation. Ministers have a responsibility to consider the issues intelligently, to accept blame and to do something.
It is not good enough, either, for the Secretary of State to strike a reasonable tone that is not matched by action. The present Secretary of State is good at striking a tone of reasonableness, but unfortunately—unlike, I am pleased to say, the Prime Minister's wife—he does not deliver.
That is an unfortunate state of affairs. The right hon. Gentleman said earlier this year either to The Daily Telegraph or The Sunday Telegraph that the Government had not got it right on regulation. In a speech to the British Chambers of Commerce in June he heralded a major advance in deregulation, and he gave me the impression—no doubt it was just a sop to shut me up—that the Government would introduce substantial sunset regulation.
However, the Government simply have not done those things. They talk about the drive to address inappropriate and over-complex regulation as though that undesirable phenomenon had wafted into their presence and was in no way a consequence of their own conduct. Yet they are to blame for the present situation. They have been in office for 31 months, and it will not do for them to blame other people for their own inadequacies. Their failure to deliver is increasingly being identified, and it is more strongly resented throughout the country with every day that passes.
293 Another issue that is important to trade and industry and to the country as a whole, but which represents a notable omission from the Queen's Speech, is the euro—or, as I ought to say, the Government's proposed abolition of our national currency in order to enter the euro.
The Queen's Speech mentioned working for economic reform in Europe, achieving open markets, securing greater growth, new job creation and so forth, but there was no mention of the euro or the single currency. I am no conspiracy theorist, but I think that there is something significant about that omission. I happen to believe, and I hope that my hon. Friends agree, that the biggest attempted confidence trick in modern British politics is the Prime Minister's claim that he is open-minded about entry into the euro.
Nothing could be further from the truth. The Prime Minister decided long ago that he was determined to scrap the pound and join the euro as soon as he thought he could get away with it. Some people might say, "If that's a confidence trick, it isn't very effective because it hasn't conned me, and it hasn't conned my colleagues." It is not designed to do so. As I am sure that my hon. Friend the Member for Havant (Mr. Willetts) will agree, the intended victims are not Conservative activists, political journalists or hardened sceptics about the euro, but the British people.
That is why the Government have erected an elaborate smokescreen of spurious economic tests, contradictory ministerial statements, perplexing front groups, misleading Government advertising, deceitful lobby briefings and diversionary attacks on alleged xenophobes. Those are all part and parcel of a deliberate strategy by the Government to close down any serious debate about the most important economic and political issue that has confronted this country since our accession to the European Economic Community—or rather, the Common Market—in 1973.
That is why we hear so much of the supposed—I use that word advisedly—five economic tests. Surely by now the House must be aware that none of those tests is objective, none is measurable and none is capable of independent assessment. There are not five economic tests that the country has to pass before joining the euro. For the Prime Minister there is only one, electoral, test: whether a majority of the British people can be bamboozled and brainwashed into ditching the pound and joining the euro.
In the short term, that does not look likely. The most recent poll, commissioned by my hon. Friend the Member for New Forest, East (Dr. Lewis) and undertaken by ICM, asked, "Do you think that Britain should replace the pound with the single European currency?" It was a very straight, fair and unspun question. The answer: 64 per cent. said no and 27 per cent. said yes. That is a notable improvement on the 56 per cent. opposition and 32 per cent. support recorded in an exactly comparable poll 12 months previously.
So, it would appear that the Government are losing ground. There is reason for optimism, but, for those of us who are sceptical about this dangerous enterprise, there is no excuse for complacency. None of us should underestimate the sheer determination of the Prime Minister ultimately to get his own way. Let us make no 294 mistake, the Prime Minister is hellbent on dragging Britain into the euro, with a cost that he will not calculate, for a benefit that he cannot quantify and at a risk to the self-government of the British people that he dare not admit.
Why is there reason to be anxious about such a prospect? There are three reasons. The first is that entry to the euro automatically entails a huge arrogation of powers from this country to the institution of the European central bank. That bank is charged, legally by treaty, as right hon. and hon. Members know, with the operation of monetary policy in euroland and the setting of the European interest rate.
We need at least to reflect on the composition of the ECB's governing council. It comprises three Germans, two Dutchmen, two Finns, two Frenchmen, two Italians, two Spaniards, a Belgian, an Irishman, a Luxembourger and a Portuguese. What do they all have in common? They have in common—I say this, as my hon. Friends will understand, not pejoratively but as a statement of legal fact—no responsibility to promote or safeguard the interests of the British economy. Rather they are charged with responsibility for the pursuit of the European economic interest, as they, subjectively, in their best judgment, perceive it.
No one should underestimate the power of those gentlemen or ladies. For, under article 108 of the treaty of Amsterdam—the treaty so foolishly signed by the Government—the central bank is exhorted, no, obliged, not to seek or take instruction from any outside body about the conduct of monetary policy or the establishment of interest rates.
Moreover, the treaty goes on significantly and ominously to add:
governments of the Member States undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the ECB or of the national central banks in the performance of their tasks.The House should recognise that, if we were to enter the European single currency, the cost of mortgages and the price of business borrowing, to name but two subjects—subjects with which one would have thought democratically elected members of the British legislature could legitimately preoccupy themselves—would henceforth be determined permanently by people whom we did not elect, whom we could not remove and whom it would be illegal to seek to persuade of our point of view. That is not democracy; that is the antithesis of democracy.It is critical to convey to the British public that the argument about whether we join the euro is not some minor technical debate about an instrument, a device or a means by which to facilitate an easier life for tourists or a saving of half a per cent. on the gross domestic product for business men as they face transaction costs. The treaty makers of Maastricht did not incur mass unpopularity in their own countries and endure the agony of pushing it through their respective Parliaments for that purpose. They did nothing of the kind. They did it because wider objectives were at stake.
The second concern about entry into EMU is the prospect of tax harmonisation—a point made continually by Conservative Members. History shows very clearly that currency unions, to be sustained, almost invariably have required the existence of a central authority making 295 fiscal disbursements. In the United States, where there is very substantial labour mobility—some 7 million people each year move from one state to another to obtain work—30 per cent. of the cost of regional economic downturns typically is borne by fiscal transfers from federal funds. Those transfers are possible because of the existence of a central tax authority.
Labour mobility in the EU is much lower. Long ago, the MacDougall report for the European Commission calculated that monetary unions typically require 20 per cent. of GDP to be disbursed from the centre, and that an absolute minimum of 5 to 7 per cent. of GDP would be required to be disbursed from central funds within euroland in order for the single currency project to be sustained.
The European Union is already involved in indirect taxation and in taxation of business and savings. The danger, and the overwhelming likelihood, must be that, once the single currency is up and running, the EU—eventually if not immediately but as sure as night follows day—will seek to arrogate to itself the powers of taxation and expenditure. That would be in accord with the wishes of the European Parliament which, in seeking to raise its status from flyweight to heavyweight, has already called for a direct relationship between European institutions and the European taxpayer.
The third reason for disquiet about early entry into EMU is that, as I hinted earlier, it is about politics, not economics. It is only we British who, in our peculiar and rather stubborn fashion, persist in debating this matter as though it were mainly about economics. On the continent, politicians and bankers do not merely admit to but positively rejoice in the political motivation behind the European single currency project.
The House need not take that just from me, estimable and upright member of the community though I try to be on behalf of my Buckingham constituents. The House should take it from those who know.
For example, Dr. Otmar Issing, former Bundesbank president, has said that there is no example in history of a lasting monetary union that was not linked to one state. Willem Duisenberg, president of the European central bank, has said that EMU is, and was always meant to be, a stepping stone on the way to a united Europe: Gerhard Schroder has noted that the risks will remain, especially if the bold step that led to a single currency is not followed by further bold steps towards political integration.
Finally, Romano Prodi, President of the European Commission, has said that the euro can only lead to closer and closer integration of countries' economic policies. Alarmingly, he went on to add, in a somewhat threatening tone, that that would demand that member states gave up more sovereignty.
Some trusting souls among Labour Members may say, "Those are just the high-falutin' pronouncements beloved of the continental statesman. We should read into them no great significance for their practical effect."
Anyone so naive as to think that should note the remarks of someone closer to home—former Irish Prime Minister John Bruton. He has said that political unity of purpose will be crucial if the euro is to work, and that member states will not be able to dine à la carte at the European table any more. Mr. Bruton maintained that 296 Europe must develop political institutions with sufficient democratic legitimacy to demand sacrifices of Europe's peoples and to mobilise them in a common cause.
Is it not a sad commentary on our affairs that we need to turn for guidance on these matters to the wise pronouncements of the Eritrean ambassador to the United States? I do not know his name. If I did, I am not certain that I would be able to pronounce it, but I pay tribute to that wise gentleman. His country had been through a bloody war with Ethiopia. It came to mint its own currency, and that gentleman said that an independent nation with its own policies needs its own currency to implement its decisions. That distinguished ambassador should probably be made an honorary member of the British Conservative party. How wise he was.
To those who say that there is no alternative, that the euro is inevitable, and that Britain will have to go into it, I say that that is a counsel of despair and it is intellectually dishonest. If they want to argue the case, let them do so openly, but let them not pretend that there is something automatic and inevitable about British participation. There is not.
To be effective, a single currency zone requires the existence of a common identity, a common purpose and a common willingness to make equal sacrifices to achieve that purpose. None of those conditions currently applies to this country in relation to euroland. The power of self-government, the right to hire and fire our rulers, and the capacity freely to shape our own destiny as an independent nation are inalienable birthrights of every Briton. They should not be traded in for a mess of potage, otherwise known as a back-row seat at a show called "The Heart of Europe."
Even under this Government, Britain has achievements of which to be proud. We are the fourth largest economy in the world. We are the second biggest overseas investor, with £1,666 million worth of assets invested overseas, 78 per cent. of which is outside the European Union. We are third most attractive location for inward investment, after the United States and China. Even under the depredations of the Government, we have thriving industries in oil, telecommunications, civil engineering and financial services.
I regret that the Government have not had the honesty to refer to their plans for the euro in the context of this Queen's Speech, and are seeking to dumb down the political debate on this topic, as on so many others. This country can be and should be an independent nation. The future is bright; the future is global. The success of this country in the future depends not on artificial constructs such as the European single currency, but rather on the capability, the determination and the energy of our leaders, our businesses and our work force.
§ Mr. Steve Webb (Northavon)It is always a pleasure to follow the hon. Member for Buckingham (Mr. Bercow). Indeed, I spent most of the past 34 minutes looking forward to the moment when I would follow him. I suspect that we agree on almost nothing, but I enjoy the way in which he presents his case.
I had thought to remark that a debate such as this gives us an opportunity for a more measured exchange of views, and the possibility of trying to influence Government policy, away from the fevered atmosphere that 297 surrounded, for example, the passage of the Welfare Reform and Pensions Bill. I was tempted to remark that it was a chance to make my observations when no one else was listening. I had not realised that that would be quite so nearly literally true.
With reference to the social security legislation in the Queen's Speech, I shall deal with each aspect, concentrating first on the state second pension proposals. I believe that the Government's heart is in the right place, but that the delivery mechanism will not deliver. I want to probe the extent to which the Secretary of State is willing to reflect on the detail of what he is proposing.
The hon. Member for Plymouth, Sutton (Mrs. Gilroy) mentioned the total eclipse that took place over her constituency. My fear about the state second pension is that there will probably be another total eclipse before it has any impact, such is the slowness of the pace at which it is to be implemented.
As I understand it, even if the legislation is passed quickly, it will be some years before the first year of entitlement is credited or achieved, some years more before the state second pension reaches its final form, and decades before it starts to make its mark. Towards the end of the previous Session, the Secretary of State answered a question about the impact of his policies—not mine, which he kindly describes as "mad". Indeed, I received a response to the right hon. Gentleman's comments, from a gentlemen who is not a constituent of mine, which read, "Dear Mr. Webb, I understand that you have some mad pension proposals. Please can I have details?" However, I shall leave aside my proposals for the time being.
The Secretary of State says that by 2025—a quarter of a century hence—his policy of replacing SERPS with the state second pension will add £1.30 a week to the incomes of the poorest fifth of pensioners. Those are his figures, not mine, based on his assumptions, not mine. My back of the envelope calculations tell me that £1.30 achieved over 25 years accrues at 5p a year. I realise that the Government are taking other measures, but let us consider only the Bill to replace SERPS with the state second pension. Given that the Secretary of State and I want to help the same people—carers and those in low-paid employment—does he not accept that that pace of progress is too slow? I put it no more strongly than that: a reasonable man should be able to accept that 25 years at 5p a year is too slow.
Let us consider what can be done. Even if the Secretary of State is reluctant to accept any change in the principle of his proposals, it should be possible to implement them more quickly. In Committee, I shall table amendments to ensure that we do not have to wait an entire working lifetime before people receive their full entitlement under the state second pension. Is there any way in which people can be brought faster into the new scheme? If the scheme is designed to help those who are carers or low paid now, why do they have to wait 20 or 30 years before they derive meaningful sums from the scheme?
The Secretary of State will tell the House that those earning £4,000 or £5,000 a year get next to nothing out of SERPS. He is right, but why do they have to wait decades before getting something out of the new scheme? I hope the Secretary of State will accept that that criticism is intended to be constructive. If we accept the 298 Government's policy that there must be state involvement in second-tier pension provision, we should ask them to implement it more quickly so as to help the very people whom they intend to target.
I understand that the proposal is to be introduced in two stages and that, when it is fully implemented, it will provide a relatively bad deal to those on, say, £15,000 a year. The scheme is targeted on low earners, so those on higher earnings will be discouraged from remaining in it and encouraged to take out a stakeholder pension, but they will not be compelled to do so. There is a real risk that people on, say, £15,000 will have had their state second pension entitlement devalued by the emphasis on the low paid, and will end up with a grotty pension if they do not opt out.
If those people are well advised or understand the system, they will probably not fall into that trap, but what if they are not or do not? In the absence of compulsion, what will make people earning three quarters of average earnings opt out? If they fail to opt out, they will be penalised. Is that really what we want to happen? If the idea is to force people to take out stakeholder pensions, is not some element of compulsion necessary in respect of people earning that sort of income?
The Secretary of State might say that people will not make the wrong choice because it should be obvious when they should take out a stakeholder pension; he might even set up sweeteners to encourage them to do so. However, only yesterday, I received an e-mail from a pensioner in my constituency who has only just learned of the widows SERPS issue. The House has been discussing that issue for months, it has featured in press articles for the past year or more and the relevant provisions have been on the statute book for 14 years, yet one of my constituents has only just found out about it.
Against that backdrop of the public's lack of understanding of pensions, leaving people on modest earnings to understand what a grotty deal the second state pension is designed to give them and hoping that they will take out a stakeholder pension but not requiring them to do so is a dangerous step. I hope that the Secretary of State will consider whether some form of compulsion is necessary—albeit not to cover the entire income scale, because I understand the arguments in respect of the very low paid. Is it enough simply to leave people at certain income levels to make the right decision and to hope that they do so?
§ Mr. WillettsDoes the hon. Gentleman suspect that many in the industry believe that the Government intend to make the stakeholder scheme compulsory? That is the only logical interpretation to place on the policy that has been announced over the past few months.
§ Mr. WebbI believe that that is what will eventually happen, although the Government are hoping against hope that they will not have to do it. I think that they hope that the scheme will prove to be a popular product—a mass product—and that the number of marginal cases will be too small to warrant compulsion. I do not believe that they will get away with it, however, and I think that the self-employed will present a real problem.
I offer those comments when "no one is listening", in the hope that the Secretary of State will feel able to amend the Bill before we see it—before we know that there has been a U-turn—in the interests of good government and good pensions policy.
299 I approve of the Government's intentions in regard to the Child Support Agency. I think that their heart is in the right place. As I said earlier, however, I am not convinced that their proposals will work in practice. The short history of the CSA demonstrates that the first formula did not respond sufficiently to individual circumstances. Having been introduced, it was found to create many rough justices, and people could legitimately claim that it was providing the wrong answer. As a result, the Government of the day had to introduce another Act to allow, for example, departures from the formula to cope with individual circumstances. The precedent is that an approximate formula creates rough justice. The proposed Bill, however, features a formula that is far more rough and ready than anything envisaged before, and I fear that it will create even more rough justice.
The Government have promised to keep the matter under review, and that is welcome; but I do not believe that we can go on and on reforming the Child Support Agency. We must get it right this time, or all credibility will be lost.
§ Mr. DismoreI am sure that the hon. Gentleman has had an opportunity to look at the report of the Select Committee on Social Security, in which the Children's Society states:
Although it has an element of rough justice, it appears to be the best compromise between clarity and fairness".Does the hon. Gentleman disagree with the Children's Society?
§ Mr. WebbYes, I do. I am aware that opposition to the legislation is not common, but that should ring bells in the minds of all Members in view of the history of the CSA. Everyone agreed that it was a good thing, and no one dared stand up and say that it was not; then we all realized—all parties were partly responsible for this—that it was a blunder. I hope that the Secretary of State will appreciate that a nagging voice raising genuine concerns about the possible consequences needs to be heard now, before it is too late.
I see the CSA as a tyre that has been worn thin, and patched again and again. The time comes when a tyre cannot be patched any more, and needs to be thrown away. I believe that there is an endemic culture in the agency that is beyond reform. Let me give an example. Recently, two of my constituents—absent parents on income support—were told by the CSA, after complaining about the lack of progress in the granting of maintenance, that they should not worry: it would not make any difference, because they were receiving benefit. That was factually inaccurate in any case, because if those people obtained jobs again, the fact that they had been receiving maintenance would help, and, indeed, would make it easier, for them to obtain jobs. It was extraordinary for the agency to say "It does not matter whether you receive maintenance, because you are on benefit." That, I think, is typical of the CSA culture—and I do not believe that changing the formula, or changing the graph, will change the culture. I believe that the agency will have to go.
§ Mr. BercowI am grateful to the hon. Gentleman for giving way to me. I know that I kept him waiting for some time, but his remarks are of genuine interest to me, and to other Members.
300 Does the hon. Gentleman agree that, although it is important for parents to honour their obligations, it is vital in the first instance to establish beyond doubt who is the parent? Does he accept that my constituent, who insists that he is not the parent of the child concerned and who faces a heavy monthly bill that he cannot afford to meet, has reason to be aggrieved about the fact that only after many months of protest and involvement by his Member of Parliament has he been able to secure a DNA test allowing him either to prove that he is right and that he is not the father, or to be shown that he is wrong and that he is?
§ Mr. WebbCertainly, proving parenthood needs to be dealt with swiftly. If a father denies parenthood and a DNA test proves that he is the father, he should have to bear the costs of that test, but, in either case, the matter has to be resolved quickly.
On the CSA, there is much that is welcome. In my maiden speech in the House, I called for a child maintenance disregard—yet another example of an aspect of my maiden speech that has become law, so I am heartened by that—but my underlying concern is: if the reform fails, where can we go from there? Can we tweak the formula again? My concern is that, essentially, it is our last chance. The hon. Members for Lincoln (Gillian Merron) and for Hendon (Mr. Dismore) made thoughtful and informed contributions on the matter and the reform has welcome aspects, but my concern is that there will be too much rough justice.
I give one final example. I understand that the formula is to give exceptions; it will not be just income. It is a Government myth that three bits of information will be required. Dozens of bits of information will be required; we all know it. I bet the House that the form will not be a one-side sheet of paper. Something tells me that there will be pages of it, notwithstanding the claims of simplicity.
I read that one exception in the formula arises where a debt has been incurred in the interests of the child. Take, for example, the case of a couple who are happily married and not anticipating divorce. The husband takes out a car loan after he is offered a job. It requires him to drive, so he takes out the loan in good faith.
The couple then divorce. The husband has the onus of the loan. If he does not make the payments, he will lose his job and cannot pay any maintenance. I ask a genuine question of clarification. Will that count as expenditure in the interests of the child? If so, that is a welcome exception in the formula. If not, is that not a reasonable prior claim on his income before the maintenance formula kicks in?
That is just one case. I suspect that there will be many. A crude, simple formula may not take account of circumstances, may create injustices and may not help children to get maintenance.
§ Mr. DismoreAs I understand the hon. Gentleman's position, he is saying that the CSA should be abolished, yet he is not saying what he would put in its place. What is his view about that?
§ Mr. WebbI would be more than happy to set out in some detail what we would put in its place. In brief, the Liberal Democrats have taken the view that the previous 301 court system had many failings in terms of the level of maintenance assessment and the variations between courts, but that a court-based system is not inherently wrong. One of the things that people dislike most about the CSA is the standardised letters, the remoteness, the fact that they are not having their day, that their case has not been heard and that their circumstances have not been taken into account. That feeling will get worse under the proposed formula. Many absent parents and parents with care will say, "What about this feature of my case?" and they will be told that it is irrelevant.
We believe that a new court-based system that takes account of such matters, within parameters and guidelines—there have to be guidelines—and that is enforced effectively is a better way forward. I could go on at some length, but it is not appropriate.
§ Mr. DismoreWill the hon. Gentleman give way?
§ Mr. WebbNo. It is not appropriate to go on any further on that point.
My initial reaction to benefit sanctions for people who do not adhere to community service orders was that it was gesture politics. It was talking tough on something that would not save the taxpayer significant amounts of money. It will almost certainly be counter-productive, but it might win a good tabloid headline.
That was my ill-educated view on the issue, but the National Association for the Care and Resettlement of Offenders has said that the measure
makes no sense as a way of tackling crime. Plunging offenders further into poverty"—which is what is being proposed—must increase the temptation to commit theft, burglary or street robbery, so damaging, not improving community safety.There are similar quotes from the National Association of Probation Officers and—from the horse's mouth, if you like—from someone on the new deal. When asked on a recent BBC radio "File on Four" programme what would happen if his benefit were stopped, he said that he would dowhat everybody else does, most probably go out and rob or something".If people who have already committed offences, some, no doubt, of theft and other means of obtaining money falsely, are suddenly faced with being £40 or £50 short, the chances that the measure will be in the interests of public order and of the victims seem impossible. It is in the interests only of talking tough, not of being effective. I hope that the Secretary of State will reflect on that and not introduce such an ill-conceived measure.My next point straddles the Departments of Trade and Industry and of Social Security, and has already been mentioned once or twice. It is about the Post Office network's position in view of the decision to start withdrawing over-the-counter benefit payments in 2003. I met several sub-post masters and mistresses last night. Despite the Secretary of State's assurances, they are far from reassured about the prospects for their businesses in the coming year. I am glad that the Secretary of State is present to respond to the debate and I hope that he will tackle their genuine anxieties.
302 The Benefits Agency has given assurances that there will be no further push towards automated credit transfer before 2003 and that it will not try to force people to start a bank account. However, last month, the Benefits Agency wrote to people whose child benefit is paid weekly to encourage them to have it paid monthly. That would cut three quarters of the handling charges from the Post Office. The Benefits Agency included a form for bank details to enable benefit to be paid through the bank. Post masters reported to me that people had come to post offices and said, "I've filled in that form so I won't be getting my benefit from you." The post masters asked why the customers had filled in the forms and they replied, "Because we had to." The letter gave people the impression that they had to change to bank payment. Will the Secretary of State confirm that he knows about the letter, that it has been withdrawn and that there will be no further moves to bank transfer before 2003?
What will happen in respect of post offices in 2003? It has been suggested that benefit recipients will have their money paid into a bank account. Therefore, we must assume that clearing banks will accept accounts for people who have small amounts of money. Many of those people will take money in one day and take it all out the next. In other words, they are unremunerative customers.
Last night, it was suggested to me that customers would lose out if banks started charging heavily for withdrawals. I hope that the Secretary of State can assure us that benefit recipients who transfer to a bank, open a new account and have minimal cash balances will not have to pay bank charges out of their modest incomes. What sort of fees will post offices, especially rural sub-post offices, receive for handling those transactions? They currently receive a predictable stream of fees from the Benefits Agency. Will the Secretary of State assure us that banks will be willing to pay them large sums for handling rather unprofitable accounts?
The way in which the Department tackles benefit fraud relates to the overlap between the Post Office and benefits. I was told that pilots of the benefit payment card had taken place in Bristol. The card has subsequently been withdrawn. I was also told that benefit fraud was cut by 90 per cent. in a specific office during the pilot scheme. Sub-post masters and mistresses found the benefit payment card to be an effective anti-fraud tool. It has been withdrawn because the contract was a shambles. What will replace it?
Reform of the Benefits Agency always gets a big cheer in the House. The Government deem reform to be good; a new, modern system is, apparently, inherently good. However, reform per se is not good; the details have to be scrutinised. Reform of the pension scheme is grindingly slow; reform of the Child Support Agency may create more injustice than it corrects. For those reasons, the Liberal Democrats have grave anxieties about the social security measures in the Queen's Speech.
§ Mr. David Willetts (Havant)I am pleased to see so many of my hon. Friends present on the third day of debate on the Queen's Speech. My hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) summarised it well. Sadly, I was not here in time to hear my hon. Friend's whole speech, but the key words gave me its flavour. They were: regulation, costs, burdens, 303 dogmatic, dog's dinner, damage, opportunistic, vacuum, cock-up, red tape, farce and incompetence. Who am I to disagree with my hon. Friend's forceful critique of the Queen's Speech?
I want to focus on the social security aspects of the Queen's Speech and Government policy on social security more generally. The Queen's Speech promised us the next instalment of the Government's welfare reform agenda and I must hope that they have a happier time with their forthcoming Bill than they had with the Welfare Reform and Pensions Act 1999. May I offer the Secretary of State some advice? In the past two years, the Government got themselves into most difficulties with the so-called welfare reforms for which there was no clear strategic vision or underlying principle supporting what they were trying to achieve.
When the Government got into their troubles with single parents, they caused confusion to their own side because it was not clear whether they were signalling that they expected single parents to work. They got into their more recent difficulties over disability benefits because it was not clear how their approach to the savage means-testing of disability benefits was compatible with their claims about encouraging pensions and savings. It is important to have some sense of direction for and a strategy behind the so-called welfare reform agenda.
As the Government get deeper and deeper into welfare reform, our fear is that, instead of achieving a clearer sense of their strategy, they are becoming more muddled and confused. The direction in which they are trying to take the social security system, and why they are doing so, seems less and less clear. I hope that the Secretary of State will enlighten us on some of the big questions on which the Government's philosophy is becoming less clear as every week passes. One, of course, is the contributory principle and the future of national insurance, so I am pleased to see in the Chamber members of the Social Security Committee from both sides of the House.
It is possible to construct an authentic third-way argument in favour of the contributory principle by saying that it is rooted in our political culture and all to do with rights and responsibilities. A striking number of people still think of their national insurance contributions as giving them an entitlement to benefits—most obviously, the retirement pension—and to health care. That gives them a self-confidence as consumers that would be lacking if they felt that there was no contractual basis for what they were expecting to be delivered in return. There is a good, clear argument for the contributory principle, but the Secretary of State might want to argue that it is a load of actuarial mumbo-jumbo, that few people can see any real connection between the size of their contributions and their ultimate entitlements, and that as part of modernisation—we heard that word a lot during the Queen's Speech—it has to be swept away.
I think that Members on both sides of the House would like to know what is happening, one way or the other. We cannot have increasing confusion and uncertainty about what the Government think about this important subject. If they carry on in the way that they have so far, contributory benefits will survive in nominal form, but they will gradually disappear as they are submerged by a rising tide of means-tested entitlements. That will not do as a serious approach to so-called welfare reform. Perhaps the Secretary of State will enlighten us on that.
304 There is also the whole question of the Secretary of State's approach to means-testing. We remember the attacks made by Ministers on means-testing when they were in opposition. When the Secretary of State came to the House only the other day to make his uprating statement, he made bold claims about how he would take pensioners out of means-tested benefits. As the hon. Member for Northavon (Mr. Webb) has pointed out today and on other occasions, claims have been made about how the state second pension will take people out of the means test, but it seems that an awfully long run-in will be required before anybody feels the effects. Meanwhile, an increase in the minimum income guarantee for pensioners in line with earnings and an increase in the basic pension in line with prices were announced. The uprating statement brought tens of thousands more pensioners within the scope of means-tested benefits.
There is increasing confusion and uncertainty about how the minimum income guarantee will interact with the stakeholder pension and the new state second pension, but it is very important that future pensioners should know on what basis they are saving. If they are saving simply eventually to find themselves caught in a means test, by which their savings are penalised at up to 100 per cent., it will not be a very good deal to offer them. It is very important that they should know the basis on which the Government are formulating their pension strategy.
§ Mr. WebbThe hon. Gentleman mentioned next April's basic state pension uprating of 75p. I advise him that I and other Liberal Democrat Members will vote against the uprating statement—will Conservative Members join us?
§ Mr. WillettsOur policy has not been that we should necessarily vote against the uprating statement. Our questions will be on the scope of means-testing for pensioners, and the effect that that will have on pensioners' savings.
We are able to discern already the effects of means-testing on savings in the catastrophic decline in the savings ratio, which is the economic background against which any social security debate has to take place. Conservative Members believe that the best way of financing future pension provision and, if at all possible, other social provision is by genuine private savings. The savings figures, however, are extremely worrying. In the second quarter of 1997, when we left office, people saved 10.6 per cent. of income, but that percentage is now down to 5 per cent. That is a very significant decrease in the savings ratio.
Part of the decrease could be explained by cyclical economic factors that drive savings, but that is not the full story. It is clear to anyone who talks to people working in the pensions industry and trying to encourage people to save that planning blight, uncertainty and confusion are also driving a retreat from savings products that were developed in the past 20 years, under a very favourable regime—a supporter and sponsor of which, my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler), I am pleased to see in the Chamber.
We certainly do not want catastrophic declines in the number of people taking out new personal pensions. The latest Association of British Insurers figures show a fall of more than 10 per cent. in new personal pension provision. Such developments are taking us in the wrong direction.
305 I hope that the Secretary of State will also tell us in his reply exactly when we might be given the details of the regime for stakeholder pensions. It is absurd that, although the House has passed legislation on stakeholder pensions, we still have not been given any indication of the final regime. It would be a great pity if we were asked to debate and vote on proposals for a state second pension in conditions of similar uncertainty.
It would be far preferable if we could know in advance what we are supposed to be legislating on. If anything brings the House into disrepute, it is—despite the best efforts of my hon. Friends who served on the Standing Committee that considered the Welfare Reform and Pensions Bill—passing such general provisions without being able properly to scrutinise them, simply because the meat of the proposals is not available. I hope that the situation will be better in our consideration of the state second pension.
I wonder also whether the Secretary of State will feel a slight twinge of guilt about what, in their manifesto, he and other Labour Members promised the nation on second pensions. The manifesto stated:
Labour will retain SERPS for those who wish to remain in it.The Government's current policy to abolish the state earnings-related pension scheme and replace it with the state second pension does not seem entirely to match the manifesto on which they were elected. Moreover, as we know from events earlier this week, Ministers attach great importance to people's commitment to the manifestos on which they were elected. It would be interesting to hear—if they were asked to explain why they abandoned part of a manifesto on which they fought an election only two years ago—how they defended that U-turn.
Perhaps—while we are on the state second pension—the Secretary of State will explain rather more fully than he has been able to do so far the significance of the £9,000 limit. Below £9,000, people will essentially have an unfunded entitlement to the state second pension, whereas—as the hon. Member for Northavon said—there seems to be an expectation that, in the long term, people above £9,000 will not be in the state second pension. That looks like a form of social exclusion. It appears as though we shall end up with two pension regimes, with a clear cut-off at £9,000. It will be interesting to see how anyone with less than £9,000 and the purely nominal entitlements will ever build up a pension fund in future. Those are my questions about the pension provisions that we expect to see in the social security Bill.
We have heard many comments about the Child Support Agency. I listened with care to the speech of the hon. Member for Hendon (Mr. Dismore) who is a member of the Select Committee on Social Security, which produced a valuable and useful report on the subject. I thought that the hon. Gentleman was rather complacent in his promises about how the new regime would solve all the problems that the old regime had undoubtedly experienced. Those of us who remember the way in which the CSA developed know that one can start with high hopes and aspirations, but then be trapped by severe practical problems. I hope that the hon. Gentleman does not regret his easy optimism that the new formula will 306 solve every problem and that, suddenly, CSA cases will cease to cause such distress and trouble to our constituents.
§ Mr. BercowIs my hon. Friend aware that my mother takes a keen interest in the pronouncements of the hon. Member for Hendon (Mr. Dismore)? Despite the hon. Gentleman's best efforts and today's lucubrations, my mother did not vote for him at the last election and is exceedingly unlikely to do so at the next.
§ Mr. WillettsPerhaps my hon. Friend's mother will have an opportunity to vote for Mr. Finkelstein. I do not know whether he will be the candidate in that constituency or elsewhere in north London.
§ Mr. Eric Pickles (Brentwood and Ongar)He is standing in Harrow, West.
§ Mr. WillettsHe is standing there, is he?
I should like to make three points about the CSA. First, one of our frustrations when analysing the Government's social security problems is the dearth of clear figures on gainers and losers. At the heart of any serious attempt to change social security must be a gritty analysis of gainers and losers. I am afraid that virtually no Government publications on social security since they were elected have frankly and openly confronted the question of who gains and who loses. We will not be able seriously to reform child support without confronting the question of who gains and who loses. We need to know much more fully than we have been told in either the Green Paper or the White Paper who will lose and by how much.
Secondly, I want to know why we shall not have the proper proceedings on a draft Bill that so many people had hoped for. The report of the Select Committee on Social Security says:
We are disappointed that it has not proved possible for the Government to fulfil its earlier intention of publishing its Child Support proposals in the form of a draft Bill.It adds thatwe recommend that the legislation on child support should be committed to a Special Standing Committee in order to enable its Members to take evidence directly on the details of the legislation, which they will then proceed to debate and (if they wish) to amend.Although the Select Committee carried out a full investigation of the subject, it did not think that its work was a substitute for such pre-legislative scrutiny. Does the Secretary of State accept that proposal, which was made by Labour Members and others on the Select Committee?My third point is about criminal and civil sanctions. Of course, for people who persistently and obstinately refuse to co-operate with the CSA, one ultimately needs some criminal sanctions. However, we must ask whether more could be done to collect money efficiently before we have to consider criminal sanctions. It is easy to get headlines by talking about severe criminal penalties, but it is not clear what will be gained from putting the man—it normally is a man—whose income one needs behind bars. The one thing that we can be sure of is that sewing up sacks and receiving a bit of money for it will not make a significant contribution to the maintenance of his children. Therefore, it is much better to improve civil remedies to extract money before one reaches the stage of criminal proceedings. We want to hear what more the Government will do about that.
307 One of the problems that the Government encountered this year with their legislation was the odd little ideas that came to them as a Bill was passing through the House, and which were added at a late stage without any clear scrutiny and without much thought in advance. The notorious IR35 is the most conspicuous example of that. We hope that there will not be an equivalent to IR35 this time round. If the Bill has a broad title and Ministers smuggle in extra provisions on Report or later, it will be a great pity if they are as ill thought out and as damaging to British business and the economy as IR35 will prove to be.
Does the Secretary of State envisage any changes to housing benefit? There have been front-page stories in the newspapers about the Government introducing bold reforms on housing benefits. At one point we were promised such reforms this autumn, but the Secretary of State has gone rather quiet on that recently. Will he assure the House that if there are no housing benefit proposals in the Bill when it first appears, there will still not be any when it concludes its passage through the House?
We have heard much about reviews of the capital rules and means-tested benefits. How are they proceeding? Can we expect provisions on changes to the capital rules? We would be interested to know whether there will be changes to sickness pay as a result of the scrutiny of statutory sickness pay. We would also like to know more about the recent announcement on community service orders. The Government sound tough and draconian, but one wonders how many people will eventually lose benefit because of their failure to comply with a community service order. The interesting and important question is: how many people does the Secretary of State expect to be penalised under that provision?
We have had a long and thorough debate. We have heard distinguished contributions from both sides of the House, especially from my right hon. Friend the Member for Sutton Coldfield, and my hon. Friends the Members for Poole (Mr. Syms) and for Buckingham (Mr. Bercow). What they have in common is that they believe that the welfare system should be reformed and that we should save money on social security if possible, but that there should be a clear, strategic purpose. Sadly, the further the Government embark on their social security changes, the less any clear strategy is apparent.
§ 2.2 pm
§ The Secretary of State for Social Security (Mr. Alistair Darling)The debate has inevitably been wide ranging, as the Opposition have chosen, as is their right, to link trade and industry and social security in one debate. The connection is not immediately obvious, although fortuitously the two areas combine enterprise and fairness. The Opposition probably did not consider that when they grouped the two topics together.
As the House will appreciate, I want to concentrate on social security matters. My right hon. Friend the Secretary of State for Trade and Industry will have taken careful note of what was said on trade and industry matters for which he has responsibility. There will be a number of Second Reading debates on trade and industry and social security legislation, so many of the issues not covered today can be dealt with in greater detail then.
The hon. Member for Havant (Mr. Willetts) said that welfare reform is necessary. I am sure that we could stop there and all agree on that. However, he is right that the 308 problems arise when we consider the detail. We will get absolutely nowhere unless we are prepared to face up to the fact that the present welfare system is not working, is out of date and was designed for a world 50 years ago that was different from today, that it needs to be reformed, and that if we do anything to improve things, we will bump up against some hard decisions and run the risk that some group somewhere will take offence.
I knew right from the time I was appointed that whatever I did would cause some controversy. I have no doubt that the Bill containing further steps to bring the welfare system up to date will cause controversy and will face opposition from some quarters, but I will not shrink from that. The worst possible thing for any Government to do would be to run away from the challenge of bringing our welfare system up to date.
The hon. Member for Havant said that he could see no clear direction in our policy. He would say that, although it does not seem to be his principal concern. His principal concern seems to be to oppose whenever he sees a quick chance for opposition. Our philosophy is clear: we want to bring the welfare state up to date and make it fit for the next century; we want to ensure that all those who are able to work do so; and, at the same time, we want to provide security for those who cannot work.
We inherited a social security system that, despite all their rhetoric, cost the Conservatives some £40 billion more after 18 years in government than it did when they took over the system. Despite that increased expenditure, one in three children were living in poverty—three times the number in 1979—one in five households of working age had nobody in work and one in five pensioners had to rely on income support. I take those three statistics in isolation, but anyone looking at the system can see that it resulted in many people being written off, especially children. We know that children who are born in poverty are likely to be held back, possibly for the rest of their lives, and chances are that households with no one in work represent the second or third generation of people in those circumstances. When so many pensioners rely on income support because they have had no chance of saving during their lives, anyone would say that reform was necessary.
Our first objective was to help people to help themselves by ensuring that all those who can work do so. The hon. Member for Poole (Mr. Syms) took up a theme that was first raised by one of his hon. Friends. However, given that we have halved long-term unemployment, that youth unemployment is down by two thirds, that there are now 700,000 more people in work than there were at the time of the general election, that some 200,000 vacancies are being notified to jobcentres every month and that there are 1 million vacancies in the economy, any reasonable person would conclude that the Government's efforts through the new deal, the reduced starting rate of tax and the benefit changes that have been made have been effective and people who hitherto have been written off—often along with their families—are now in work. There is a clear sense of direction and a clear distinction between us and the Conservatives, who have opposed every single measure that we have taken to get people into work.
The second strand of our approach was to provide more help for those in need. I make no bones about it. The 309 state's primary obligation must be to help those most in need. That is why the Welfare Reform and Pensions Act 1999 does more to help the severely disabled, who, until we made those changes, were living on so little benefit that they were dependent on income support for their entire lives. We have increased child benefit and done more to help poorer pensioners.
The third strand is to provide for the future. I shall return to pensions later in my speech. We are the first Government ever to have pledged to end child poverty within a generation. We do not believe that any society can function economically or morally if so many children can be written off without being given any help or opportunity.
We want to provide a welfare system, backed up by policies across Government Departments and elsewhere, to help those who can work to do so and to make sure that those who cannot work—either because of disability or because they have reached the end of their working lives—have a decent income. At the same time, we are bringing the social security system—the actual means of delivery—up to date. It is common ground that for years the Department of Social Security and its agencies have relied on IT equipment that is long past its sell-by date and is in desperate need of renewal.
I now turn to the first point that the hon. Member for Havant raised, as I have no doubt he will return to it. He referred to the contributory system. He spoke about confusion, but the Tories in power doubled the amount of means-testing in the social security system. They are now against it and tell us that it is a terrible thing. They are also committed to slashing social security expenditure, to which I shall turn shortly. However, if they want to get rid of means-tested benefit and have more contributory benefits, they must realise that a cost is involved. It is important to ensure that the state concentrates help where it is most needed. Crucially, the social security system is judged on outcome—on what it does. That concerns people rather more than how the benefits came to be delivered.
We have strengthened the contributory system in many respects. We have extended contributory benefits to men and enabled low earners and carers to qualify for the second state pension. We have extended maternity allowance to women earning £30 a week and incapacity benefit to disabled people in childhood. We do not have a dogmatic preference for one means of benefit or another. We have increased universal child benefit, and we have increased fivefold the winter fuel allowance for pensioners. We have extended the non-contributory disability living allowance and, for those on income-related benefits, we have made increases—the working families tax credit, the national minimum wage and so on.
I do not have a dogmatic preference. The benefits system in this country has, since its inception, been a mix of contributory benefits, means-tested benefits and payments based on extra costs—DLA, for example. Successive Governments have followed that pattern. Of course, they have made changes from time to time, but it is the outcome that bothers people.
310 Curiously—for perhaps the first time in a social security debate—the hon. Member for Havant did not mention social security spending. I wonder why he did not mention it. I always like to see what he has to say. At the Conservative party conference, he was condemning our alleged failure to control social security spending, which he called a
catastrophic failure of financial control".He went on to say:The first Conservative pledge I give this conference is that we will cut social security spending as a proportion of our national income. We did it before and we can do it again".I found that quite curious. In the Tories' 18 years of power, social security spending as a proportion of national income rose by a third. He said that they would cut it as they did before, but they increased it. It strains credulity for him to say that the Conservatives would cut spending on the basis that they did it before, when they manifestly did not.Social security spending grew by 90 per cent. in the Tories' 18 years in power. At the same time, poverty grew and the gap between rich and poor grew because the Tories were paying more and more for economic failure. I suspect that the hon. Member for Havant did not mention that, because he is now aware that, in this Parliament under Labour, social security spending—including the working families tax credit and the record increases in child benefit—will grow by only 1 per cent., compared with 4 per cent. in the last Parliament. He will not mention that because he knows that he was skating on thin ice when he spoke at the Tory party conference.
The hon. Member for Havant knows that his party is skating on even thinner ice. The Conservatives have pledged to slash social security spending—as the hon. Gentleman and the Leader of the Opposition have said again and again—but they cannot tell us what they are going to cut. If they are to make huge inroads into social security spending—which they did not manage in 18 years—at some stage they will have to say which benefits they will cut. They will have to tell us also how on earth they can pledge to cut social security spending when, in the other place, the Tories backed £4 billion worth of amendments to the Welfare Reform and Pensions Bill.
If the Tories reinstate the married couples allowance, it will cost more than £2 billion. If they reintroduce the idea, floated at the last election, of a single transferable allowance, that will cost £3 billion. The hon. Member for Havant has a lot of expenditure to finance before he sets about slashing social security expenditure. Of course, he does not wish to intervene.
§ Mr. Willettsrose—
§ Mr. DarlingThe hon. Gentleman does wish to intervene. Will he tell me which social security benefits he intends to cut to fulfil his first pledge to the Tory party conference?
§ Mr. WillettsI stand by my pledge at the conference: we are committed to reducing social security spending as a proportion of GDP. Will the Secretary of State confirm that he has offered a definition of social security spending in which, he said explicitly, he included the working families tax credit? I was grateful to him for using that 311 definition of expenditure—it is the one that the OECD recommends. Does he agree that that is the best measure of social security expenditure?
§ Mr. DarlingI was explaining how much social security spending is growing. It is growing at just over 1 per cent., compared with 4 per cent. under the Tories. The Tory complaint has always been that we do not include this, that and the other. I am simply pointing out that even taking account of the many improvements to the system that we are making, we are saving money. Interestingly, we have saved some £7 billion so far as a result of getting more people back into work, and we will save another £7 billion before the end of this Parliament. That can all be spent on families, pensioners and disabled people, which is what the majority of people in this country want.
The Welfare Reform and Pensions Act, which was introduced in the previous parliamentary Session, provides more help for those who need it most, such as disabled children. It introduced bereavement allowances, stakeholder pensions and the new ONE service that will help people back into work. Those measures, in addition to the other steps that we are taking, such as increased investment in education and health, will mean a fairer and more enterprising society that will generate the wealth necessary to meet the country's needs.
§ Mr. Bercowrose—
§ Mr. DarlingI was about to turn to this Session's Bill, but I shall give way—if not happily—to the hon. Gentleman.
§ Mr. BercowI am grateful to the right hon. Gentleman for giving way. He is rather glib in his comments. What assessment has he made of the regulatory impact on businesses, in particular small businesses, of the child care credit, the working families tax credit and the disabled persons learning credit? They are matters of central significance to small businesses the length and breadth of the land, not least in my Buckingham constituency. What assessment has the right hon. Gentleman made of the damage that will be done, and what will he do about it?
§ Mr. DarlingThe Government publish assessments for all such measures when they publish their proposals, as the hon. Gentleman well knows. I know that he and his colleagues want to get rid of the working families tax credit, the disabled persons tax credit and just about every other bit of help that we have given to people on low wages. Most people believe that these measures—which mean that work pays for many people where it never did before because so much of their salary went in deductions—are a good thing. Our reforms are also a good thing for employers, in Buckingham and just about everywhere else. It is increasingly the case in many parts of the country that more people are needed in the labour market because the economy is expanding. In some parts of the country, because of the changes that we are making, many people now work who were unable to do so in the past.
Clearly, the time to debate the detail of the social security Bill that we intend to introduce this Session will be on Second Reading, in the not too distant future. However, I can outline our approach in general terms and deal with some of the particulars that were raised.
312 We propose to reform the Child Support Agency—it is part of our drive to tackle child poverty. I believe that the changes to the child support system will benefit 1 million children, once the reforms are fully in place. We are also introducing further help in child benefit, child maintenance, income support and the disregard for the working families tax credit. All such measures are geared to ensure that children have the best possible start in life and get the help they need.
We are also promoting mutual rights and responsibilities, which has been a constant theme of our welfare reform programme. Opposition Members frequently criticise us and say that we should talk about child support in terms of which parents win and which lose. To my mind, the key question is which children gain. Children should be at the heart of any strategy on child support, and my starting point is that all parents have responsibility for their children. One or two of my hon. Friends have mentioned difficulties connected with the CSA. One said that some parents thought that the procedures were so complicated that they were somehow justified in not co-operating. I do not accept that for one minute, because parents have responsibility for their children.
We are proposing further pension reform to complete the stakeholder pension reform started last year. The hon. Member for Buckingham (Mr. Bercow) referred to regulations. I have made it clear again and again that the regulations necessary to implement the stakeholder pensions will be in place by April of next year, a year before the stakeholder pensions are put in place. We have consulted widely, and our proposals are well known in the industry. Although I expect Conservative Members to be critical of anything we do, the approach that we set out in the Green Paper, and which has been developed on stakeholder pensions, has by and large been widely welcomed by the pensions industry, which will be providing the pensions, as well as by all other bodies.
§ Mr. LeighWill the right hon. Gentleman give a commitment to the Select Committee? Paragraph 106 of the report says:
The importance of effective computer systems cannot be exaggerated. We recommend that the new child support scheme should not be implemented until the new computer system is fully operational.I am sure that he agrees that we do not want any more traditional computer foul-ups. Will he give a commitment to members of the Select Committee that he will abide by that recommendation?
§ Mr. DarlingThe hon. Gentleman is right on cue, because I was about to deal with the child support system and I am happy to deal with his point straight away. He is right. The computer system currently operating in the Child Support Agency was bought—not quite off the back of a lorry, but not far off that—by the Conservatives when they were in government. I understand that it came from someone in Florida who had a system that was going to be ideal—no questions asked, it would be just the thing. As we all know, it turned out not to work terribly well. To that extent, it fits quite well with some of the rest of the computer equipment that the Conservatives purchased over the years, because most of it was not up to the job when it was introduced and still is not up to the job.
313 When I made a statement introducing the White Paper, I gave a commitment to the House that we would not introduce the new reformed child support system until we had the information technology and computer systems to back it up and make it work. It would be possible to operate some of the new support system without new IT systems, but if we are to change the culture of the place and the quality of the service, we need a new IT system. I hope that we shall be able to make an announcement about that next year. The hon. Gentleman has raised a good point.
I should like to deal with some of the points that have been raised about the CSA. The hon. Member for Northavon (Mr. Webb) talked about the formula. The proposals for taking 15, 20 or 25 per cent. of earnings are a generalised approach. We thought about the issue long and hard. Anyone who has children knows that it is impossible to calculate down to the last penny how much it costs to bring them up. We can only approximate the amount. Our philosophy is that it is better to get money flowing from the parent without care into the hands of the parent with care as quickly as possible. We published a ready reckoner at the back of the White Paper which shows how much people will have to pay. The aim is to get the calculation made and the money flowing within days rather than the months that it currently takes.
The hon. Gentleman expressed a fondness for the old court system. I started out in practice and I know that justice was sometimes a loose concept in the courts when such cases were heard. I remember appearing before crusty old judges and trying to explain what the benefits system was, never mind how much the amounts were. They would eventually reach the judgment of Solomon and split the difference. Maintenance was calculated but often not collected because of the difficulties. It is wrong to suppose that the court system worked and delivered money to children.
The Liberal Democrats also have to face the fact that if the system was transferred to the courts—about 1 million cases—it would not be a free good. It would cost in administration and legal aid. I do not know how many pennies in the pound on income tax the Liberal Democrats will want to add by the next election, but I assure the hon. Gentleman that his proposals would be expensive. I know that the Liberal Democrats do not run the country and, as things stand, there is precious little chance that they will ever get to do so, but if they ever did, they would have to have policies that worked and work out how to finance them.
§ Mr. DismoreI remind my right hon. Friend that the Chairman of the Social Security Committee is a Liberal Democrat and he is fully signed up to the report.
§ Mr. DarlingI know the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) well. Within the Liberal Democrat party there are many different views on everything. When we come to discuss the CSA, I hope that the hon. Member for Northavon will reflect on the practical effect of what he is saying. Surely the crucial thing is to get maintenance flowing to children as quickly as possible.
The hon. Member for Northavon and others mentioned the benefit payment card. We did not proceed with it because it was costing far more than anyone had 314 anticipated, it was running three years late and there were formidable problems with the technology. We decided to provide the Post Office with a banking capability and that, from 2003, we would move to making payments by automated credit transfer which is cheaper—I make no bones about that. At present, the Department pays too many benefits through giros that were designed during the second world war, and we need to bring the system up to date.
The hon. Gentleman asked about the letter sent by the Benefits Agency two weeks ago. That letter has been going out in one form or another since 1982.
§ Mr. DarlingYes, because we ask people from time to time whether they want to revise their arrangements. We want to ensure that the transition is manageable so that the Post Office can provide the service that we all want.
I will deal with pensions only briefly because we will debate them at greater length on Second Reading and beyond. The Government's policy is clear: we believe that moderate and higher earners would be better off having funded pensions than relying on state pensions. The state second pension effectively doubles the rate at which those on low earnings, who certainly should not be in funded pensions, accrue their entitlements. For example, someone earning £6,000 a year would get £13 a week under SERPS, but more than £50 a week with the state second pension. That is the best possible way of helping the lower paid.
We believe that those on higher pay should be in a funded system, with an occupational, stakeholder or personal private pension. Private pensions are better suited to those on higher earnings because of their high administrative charges. Our philosophy is to ensure that all those who work throughout their lives will have the opportunity to build up a decent pension and avoid the situation that exists now, with too many people retiring on inadequate pensions.
The hon. Member for Havant referred to our manifesto and SERPS. The changes that we are making will be much better than SERPS. Those who supported us in the general election will be glad that we have gone a lot further than we said in the manifesto. We will return to all these issues on Second Reading and in Committee.
The Queen's Speech covers more than the two Bills. Today's debate has encapsulated the Government's twin themes of building an enterprise economy and creating a fair society. That is what people wanted when they voted for us. They wanted an end to the boom and bust of the past. They wanted a stable economy, with businesses growing and individuals doing the best that they can; but they also wanted a fair society in which those who had lost out under the Tories could be looked after far better than in the past.
The people who supported us in the general election wanted us to end the scourge of mass unemployment. We have reduced youth unemployment by nearly two thirds, and there are now more people in work than ever before. We are driving up standards in schools, helping people to get better qualifications and to do better.
The contrast between us and the Conservatives could not be clearer. We are building economic stability; they left us with a doubled national debt and an unstable 315 economy. We are building strong public services; they wanted to privatise them. We are providing opportunity for everyone, not just the privileged few; they were increasingly concerned with just the few. We are taking the tough decisions that we need to take to reform the welfare state and modernise our institutions. In short, we are building a country fit for the future, whereas the Tories left us with a country that was run down and in which an increasing number of people were excluded.
The Queen's Speech represents the policies of the future—the policies that we need for the next millennium—as opposed to the policies of the past. I commend it to the House.
§ Debate adjourned.—[Mr. Betts.]
§ Debate to be resumed on Monday next.