So who was telling the truth? Are PM Cameron’s In EU camp lies?

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Westminster Hall

Wednesday 27 November 2013

[Mr Clive Betts in the Chair]

Bradford & Bingley plc

Motion made, and Question proposed, That the sitting be now adjourned.—(John Penrose.)

9.30 am

Philip Davies (Shipley) (Con): It is a pleasure to serve under your chairmanship, Mr Betts. I hope you will convey my thanks to Mr Speaker for granting this debate.

As the Member of Parliament for the Shipley constituency, which includes the towns of Bingley and Crossflatts, where Bradford & Bingley was based, I have asked for this debate on behalf of the nearly 1 million Bradford & Bingley shareholders and bondholders who still do not know how or why their company was expropriated in a way that destroyed it as an ongoing business, unlike what happened to banks such as the Royal Bank of Scotland and Halifax Bank of Scotland, which had far weaker balance sheets.

I have also called the debate on behalf of the employees of Bradford & Bingley, many of whom had worked there for many years and were also shareholders. This debate is also important for the local community in Bingley and across the Bradford district, which has lost a highly valued brand from the high street. Bradford & Bingley had been in existence since 1851.

I thank many hon. Members for their support, both those here today and the many unable to attend. I particularly thank my right hon. Friend the Member for Mid Sussex (Nicholas Soames), who has been extremely helpful and supportive. He is a champion of the many shareholders in his constituency who lost out when Bradford & Bingley was nationalised in the way it was.

On Friday 26 September 2008, in the foyer of the Oval Office of the White House, the then Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), made the decision to nationalise Bradford & Bingley during a telephone conversation with his Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), who was in the UK. That decision was extremely disappointing for the shareholders, many of whom remain outraged by what they consider to be legalised theft. Indeed, it is a shame that neither right hon. Gentleman is here today to explain the part they played in the scandal.

Days after the telephone call, the Cabinet Office stated in response to a freedom of information request from a shareholder, Mr Jonathan Bloch, that it had no files whatever. David Blundell, the chairman of the Bradford & Bingley shareholder action group, whose main objective throughout has been to secure the truth on the nationalisation—he is also a director of the UK Individual Shareholders Society, a voluntary organisation whose main objective is to protect the rights of private investors—said to me at the time that he had difficulty believing that the Cabinet Office statement was true, and so it has proved.

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After further freedom of information requests, the Cabinet Office finally admitted in 2011 that it did possess the relevant records, but it refused to release them on the grounds of public interest. The Cabinet Office also refused on the grounds of public interest to state whether the nationalisation decision had secured Cabinet approval. I put on the record my admiration for David Blundell’s tireless work on behalf of the Bradford & Bingley shareholder action group and his determination to get to the bottom of the events surrounding the nationalisation.

Alec Shelbrooke (Elmet and Rothwell) (Con): I put on the record my thanks to my constituent, David Blundell. He is fighting for the small person who invested their life savings in those shares and is now faced with nothing because of the decisions made at national level by the then Government. They have had no answers.

Philip Davies: My hon. Friend is absolutely right, and I know that he has been particularly helpful to the Bradford & Bingley shareholder action group. I thank him for all the help and support he has given to the many shareholders.

Surely the public interest demands full disclosure of the facts to secure the truth. How can the refusal even to release whether the nationalisation of Bradford & Bingley was ratified by the Cabinet ever be in the public interest in a democracy? Surely voters are entitled to know, let alone shareholders, bondholders and employees.

How do we know that the Cabinet Office’s original statement was untrue? I am probably one of the few people—I am sure you are another, Mr Betts—who has read the relevant part of “Beyond the Crash” by the right hon. Member for Kirkcaldy and Cowdenbeath, in which he admitted his part in the sorry mess. The shareholders would otherwise still be in total ignorance of the nationalisation process.

Annette Brooke (Mid Dorset and North Poole) (LD): I congratulate my hon. Friend on securing this debate. I have had a vast amount of correspondence from just one constituent. I concur with him that the situation is bad enough, but the lack of openness for savers and investors means that they remain frustrated. It is vital that we make the information public.

Philip Davies: I am grateful for the hon. Lady’s support. I am sure her constituent, who is a shareholder who lost everything, is also grateful for her support. Her point on the lack of transparency is absolutely right.

The full picture of how the banking crisis developed probably goes back to 2003-04, when there were small changes in accounting standards, but the main catalyst was the introduction of the international financial reporting standards, including international accounting standard 39, by the then Government in 2005. IAS 39 proved to be a catastrophically defective standard that may even contravene UK law.

The Local Authority Pension Fund Forum, the universities superannuation scheme, Threadneedle Asset Management and other investor groups sought the opinion of leading counsel George Bompas QC. His opinion suggests that company directors must override the international reporting standards to comply with company law and may need to ignore the advice obtained

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by the Financial Reporting Council. The opinion also states that the defective financial outcomes of the standards, which are still in place, should be overridden by invoking the true and fair view requirement of the law. Those problems remain, as highlighted by the failure of the Co-operative bank and Britannia building society, both of which were audited by KPMG.

The concerns on accounting standards are widely held. In November 2012, the then Governor of the Bank of England, Sir Mervyn King—now Lord King—argued for a £35 billion capital raising by British banks. He is on record as saying:

Bank accounts are dishonest because Britain’s accounting rules are faulty. Reckless lending, inflated profits, irresponsible bonuses have all been possible, not just because of greedy bankers, but because of the rules themselves—and a failure of regulators and politicians to recognise the problems.”

The banks used IFRS and IAS 39 from 2005 onwards, and it appears that the then Government were content to receive corporation tax from the inflated profits rather than exercise a duty of care towards savers and investors. People have blamed the lack of regulation for the excesses of the banks, which led to their demise. That is too simplistic. It was not the lack of regulation—banks had mountains of regulations to meet—but the lack of regulation on important things that was the problem.

I will now address the sequence of events prior to the nationalisation. The Bradford & Bingley 2007 accounts were published in April 2008. The auditors passed Bradford & Bingley as a going concern and a dividend was paid. In August 2008, a rights issue was completed at a price of 55p less than eight weeks before the nationalisation. The auditors KPMG completed extensive audit work on the rights issue, and the interim results announced on 29 August 2008 supported a solvent, well capitalised bank. With net assets of £1 a share and a tier 1 capital ratio of 9.1%, shareholders were entitled to believe that Bradford & Bingley was a going concern when the reality was that it was “going, going, gone” just one month later.

Within days of the nationalisation, the Government provided more than £60 billion of support to the two Scottish banks. Bradford & Bingley had a far stronger balance sheet than those banks, as shown in the banking crisis post mortem published by the Local Authority Pension Fund Forum. Furthermore, the public statements of the board emphasised the balance sheet strength of Bradford & Bingley on 29 August and 25 September 2008, a day before the nationalisation decision. That strength was again confirmed by Messrs Kent and Pym, the chairman and chief executive respectively, at a Treasury Committee hearing on 18 November 2008. Their statements conflict directly with the justification of the nationalisation decision by both the Government and the tripartite regulatory authorities. So who was telling the truth?

In the week after the nationalisation, the savings book and retail branch network were sold—arguably at a fire-sale price—destroying the company as an ongoing business. What shareholders, bondholders, employees and my local community want to know is why Bradford & Bingley was singled out in that way, in stark contrast to the treatment of other banks.

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Every other bank bailed out at the time is still a going concern—even Northern Rock. Shareholders in some of the bigger banks at the time, such as HBOS, still have shares that have value. Why was Bradford & Bingley, uniquely, closed down, especially given that its financial situation was certainly no worse—indeed, all the evidence suggests it was better—than that of the others? Does the Minister not believe that people are entitled to know the answer to that simple question?

Whereas other banks were considered too big to fail, was Bradford & Bingley seen as too small to save? With constant speculation in the media at the time, was it felt that, if Bradford & Bingley was taken out, the speculation about the health of the banking sector would subside? Whatever the reason, and however little we like it, I hope the Minister agrees that we are entitled to know it.

The Treasury appointed Peter Clokey of PricewaterhouseCoopers as independent valuer for the purposes established under the Bradford & Bingley plc Compensation Scheme Order 2008. His nil valuation was published in July 2010, two months after the general election. Like the shareholder action group, I believe that his terms of reference were far too narrow and that the Labour Government concealed the fact that the bank had received funding support before the nationalisation, pretending for many months that the valuation would be fair and independent, when they knew it would not be, because the in-administration approach of the order ensured a nil valuation and prejudiced legal claims and submissions to the independent valuer and the upper tribunal review body.

Many shareholders—the former owners of the company —believe the valuation exercise was a cynical attempt to dampen media, press and public interest, thus kicking the matter into the long grass. I know that David Blundell has a high regard for Peter Clokey and his colleague James Worsnip. He respects their integrity and appreciates the assistance they provided, within the limits of their remit. In his view, their behaviour may be compared favourably with that of certain Ministers, the Treasury, the Financial Conduct Authority and the Cabinet Office. I met Peter Clokey at the time, and I felt he was sympathetic to the plight of shareholders, but the terms of reference the Labour Government gave him left him no alternative but to give a nil valuation.

The Government’s position on the valuation was that Bank of England support through the special liquidity scheme was not ordinary market assistance, despite more than 30 banks having, and some continuing to have, the use of that facility. That interpretation was a key factor in the nil valuation. However, the European Commissioner’s statement giving clearance to state aid following a request from the UK Government in the early part of the financial crisis in banking markets included the following:

“The UK authorities accept that the recapitalisation scheme and guarantee scheme contain State aid elements. In their view the extension of the SLS”—

the special liquidity scheme—

“is part of the essential role of the Bank of England and therefore not a state aid. In the event that the Commission concludes that the Liquidity Measures do contain aid elements, the UK Government submits that they form part of a wider package to remedy a serious disturbance in the economy of the United Kingdom which is compatible with the common market.”

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Therefore, the UK Government argued to the EU that the special liquidity scheme was part of the normal workings of the Bank of England, but they specified the exact opposite in respect of the Bradford & Bingley valuation. Is that a further example of the double standards that have applied in this nationalisation process?

Since the 2008 nationalisation, there have been hundreds of freedom of information requests to Ministers, the Cabinet Office, the Treasury, the FCA, the Department for Business, Innovation and Skills and the Bank of England, but the shareholders still do not know how and why their company was expropriated. The treatment to which they have been subjected has been at best incompetent and at worst mendacious.

Leaving aside the Cabinet Office’s original untrue statement, the shareholders have been subjected to refusals on the grounds of cost and public interest, which, combined with further untrue statements and failures to reply to requests, have made a mockery of the Freedom of Information Act. The action group has made requests to the Cabinet Office and the Treasury for internal reviews in respect of their failure to provide the information requested, and it has appealed to the Information Commissioner’s Office in respect of the FCA’s failure to provide the records we all know it had.

The latter point is of particular interest, as David Blundell has a DVD recording of a telephone conversation in which a Financial Services Authority officer reassures a shareholder of the company’s financial strength just six days before the nationalisation. To date, the FCA has denied knowledge of any such records, which is rather incredible, as the DVD was sent to the shareholder by the FCA.

There is also strong evidence of a substantial level of communication between John Kingman at the Treasury and Robert Peston of the BBC, whose coverage of Bradford & Bingley caused a run on the shares and deposits. The Treasury stated it did not have such information and that Mr Kingman’s records had been cleared. In the interests of balance, I should make it clear that Mr Kingman denies being responsible for leaking any information to Robert Peston, although, as Mandy Rice-Davies said, “He would, wouldn’t he?”

Mr Kingman believes that the sole reason for the allegation is that he worked with Robert Peston at the Financial Times in the 1990s. An FOI request to the BBC was refused on the grounds that Mr Peston’s records were for journalistic purposes. The fact of the matter remains that someone at the Treasury leaked the situation to Robert Peston and to the Telegraph, precipitating a run on the bank from which it did not recover. The suspicion is that that was done deliberately to clear Bradford & Bingley from the decks so that the Treasury could focus on saving the bigger banks.

Recent letters to the then Chancellor, the then Prime Minister and the current Prime Minister have asked whether the decision to nationalise was correct and consistent with the treatment of other financial institutions at the time. The right hon. Member for Edinburgh South West suggested writing to a local MP—a particularly inadequate reply, as he was party to the nationalisation decision. The current Prime Minister passed the request to the Treasury, which responded with the usual stale excuses, similar to those of the past five years. The previous Prime Minister, the right hon. Member for

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Kirkcaldy and Cowdenbeath, has not replied at all. It would appear that the spirit of Sir Humphrey is alive and well in Whitehall and Westminster.

Three key questions remain unanswered. First, what was the exact reason for the expropriation of the company? Secondly, should the rights issue have been permitted to proceed, and were shareholders wrongly induced to subscribe to it? Indeed, many employees paid their hard-earned money into the rights issue to prop up their company. Many of them lost not only their jobs, but their savings. The Government of the time were encouraging other financial institutions to support the rights issue, only to ensure that they then lost everything as a result of the way the banks were nationalised and a nil valuation was guaranteed. No wonder people do not like dealing with Governments. Thirdly, were the comments from the directors, the investor relations department and the FSA concerning the strength of the company only days before nationalisation true?

The shareholders of Bradford & Bingley believe the nationalisation of their company was a flawed decision made in haste and inconsistent with the treatment of other banks. When the Government confiscate the property of their citizens without reason, explanation or compensation, particularly when they may be seen as at fault in their duty of care to savers and investors for not adequately regulating the companies involved in the banking crisis, all concepts of democracy and equity are laid aside. I submit that that has damaged the Government’s reputation.

I would like the Minister to tell us what the future holds for UK Asset Resolution and the staff at the headquarters in Crossflatts, in my constituency. The mortgage book is being gradually wound down, but what happens then? Many people still rely on UKAR for their jobs, and there is vast experience and expertise there that should not be lost to the banking sector. The Government state they wish to see more competition among the banks, so will the Minister commit to look at whether a new bank—a modern-day Bradford & Bingley—could be born from UKAR and be seen on high streets, bringing much-needed competition to the banking sector and protecting the remaining jobs in my constituency?

In conclusion, an independent inquiry into the nationalisation of Bradford & Bingley is long overdue. The Bradford & Bingley shareholders, bondholders and employees, and the local community, are entitled to know the truth. The Prime Minister has claimed, many times, that he is committed to open and transparent government, and he has opened an inquiry into the Co-op bank failure. I believe it is not too late for the Government to do the same—open an independent inquiry—with respect to the Bradford & Bingley nationalisation. That was, arguably, the best example of what went wrong in the banking crisis, particularly in relation to the flawed accounting standards that are still in place. Justice and the British sense of fair play demand such action, and I hope that the Minister, who is a good man, will do the right thing and agree to it.

The Government rightly claim to be on the side of hard-working people. Hard-working people were the shareholders, bondholders and employees of Bradford & Bingley who all lost out. By agreeing to an independent inquiry and making all the relevant Government papers available to it, the Government can show that they will, indeed, stand up for hard-working people.

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9.50 am

Craig Whittaker (Calder Valley) (Con): It is a pleasure to speak in the debate under your chairmanship, Mr Betts. I thank my hon. Friend the Member for Shipley (Philip Davies) for securing this important debate on behalf of thousands of Bradford & Bingley investors. It finally gives us an opportunity to speak up for those among our constituents—and there are many in Calder Valley—who have been affected by the nationalisation.

The issue has perplexed and bemused many of my constituents who bought shares in the company in a rights issue in 2008, only eight weeks before the Government of the day nationalised it. They bought shares not because they were high rollers who invest in the stock market to make a quick buck, but because many of them are shrewd pensioners who thought they were making safe, long-term investments for their future in retirement. One might say, “Well, if you invest in the stock market, you should be aware of the risks. You should expect the peaks and troughs and be prepared to take the rough with the smooth.” Every one of my constituents who contacted me from Calder Valley has highlighted that very point; but they have gone on to say that the balance sheets of the bank were good, and were definitely in a stronger position than those of many banks that the Government of the day decided to bail out.

One might also argue, as Lord King did a year ago, that it was Britain’s faulty banking accounting rules that failed investors. My constituents would argue that in that case the same faulty rules applied to all banks. Even so, the Bradford & Bingley was still showing a stronger balance sheet than many of the banks that were bailed out. We know that from the banking crisis post mortem published by the Local Authority Pension Fund Forum.

It seems ludicrous that within eight weeks of the bank’s rights issue in 2008, the Government nationalised it. It is even more staggering that within days they provided a further £60 billion of support to two Scottish banks that had weaker balance sheets than the Bradford & Bingley. As my hon. Friend the Member for Shipley mentioned, his constituents, like mine, and thousands of other investors from west Yorkshire and beyond, believe that the decision to nationalise the Bradford & Bingley was a flawed one, made in haste and not consistent with the treatment given to other banks.

How must those investors feel, after the revelations of the past week about low-cost loans secured by a political party and party political donations from yet another failed bank, whose chairman is disgraced? How must they feel when they read the allegations that the Royal Bank of Scotland, one of the very Scottish banks bailed out by the previous Government, forced some customers out of business? Only yesterday I presented the Secretary of State for Business, Innovation and Skills with clear evidence of an attempt to do just that to the business of one of my constituents. How would you feel, Mr Betts, if you had invested in an organisation that was treated totally differently from other banks that have failed or are failing, I expect you would feel pretty miserable and furious. I expect you would feel abandoned by the previous Government and helpless before the current Government, who seem unwilling to launch an inquiry.

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Perhaps I can sum up those feelings in the words of a 65-year-old Calder Valley resident who invested for his retirement. He wrote to me:

“after being encouraged by the Bradford & Bingley rights issue in 2008 I was staggered at the nationalisation that took place only eight weeks later. Since the mortgage books are now in good health the treatment that I have received as a member of the public in 2013 with all of the talk of honesty and transparency does nothing to help me explain to my grandchildren why they should be good members of society. Especially when their role models in government have behaved so atrociously personally with regard to their use of public money for their own ends, in ensuring the protection of our societal structures and in taking accountability for establishing the truth about many travesties that have taken place over the last few decades.”

Mr Philip Hollobone (Kettering) (Con): I congratulate my hon. Friend on his impressive speech. The opening remarks of my hon. Friend the Member for Shipley (Philip Davies) were equally impressive. My constituent, John, a forestry worker on low agricultural wages, was bequeathed 2,400 Bradford & Bingley shares by his late father. They were worth about £11,000 and are now effectively worthless. We talk about the billions of pounds that have gone into saving some of Britain’s banks. However, in the case of the Bradford & Bingley, ordinary people lost sums that to them were very large, although they are inconsequential compared with the billions that the former Prime Minister and Chancellor doled out at the time.

Craig Whittaker: My hon. Friend is right. Many small investors, not just in Calder Valley but around the country, lost hard-earned cash that they had saved all their lives to invest in what they hoped would be a better future in retirement. That is exactly what I am talking about. My constituent whose words I quoted, Mr Anthony Ottery, suffered in exactly the same way as John did.

Mr Ottery’s comments are a small sample of the feelings of many of my constituents who feel badly let down by what happened. It does not help that many questions remain unanswered. People have struggled, as my hon. Friend the Member for Shipley said, to get the information through freedom of information requests. The Bradford & Bingley action group seems to be thwarted at every turn. There are, as my hon. Friend also noted, three key questions that remain unanswered. What was the exact reason for the expropriation of the company? Should the rights issue have been permitted to proceed, and were shareholders wrongly induced to subscribe to it? Finally, were the comments of the directors and the investor relations department about the strength of the company, made only days before nationalisation, at best misleading and possibly untrue?

When, to coin the phrase of my hon. Friend, a Government confiscate the property of their citizens without reason, explanation or compensation—particularly when they have a duty of care to those citizens—surely that alone is a reason to call for an inquiry into what happened. Governments can call inquiries—there are currently three on Co-op bank matters. Surely the citizens who cannot get answers with respect to the failed Government who failed to regulate the banking industry and took away their assets should at least be given those answers and an inquiry into the seeming scandal of the Bradford & Bingley.

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On behalf of my constituents in Calder Valley and thousands of investors in west Yorkshire and beyond, I join my hon. Friend the Member for Shipley in asking the Minister for an inquiry into what happened at the Bradford & Bingley.

9.59 am

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): I have listened with great interest to the comments of the hon. Member for Shipley (Philip Davies), whom I congratulate on securing this important debate, and of the hon. Member for Calder Valley (Craig Whittaker). I was struck by the fact that both referred to a duty of care. I therefore hope they will see fit to support the work that I and colleagues have done to try to get a fiduciary duty of care written into legislation. I have tabled amendments to that effect to financial services Bills on various occasions.

Let me return to some of the issues that have been raised. Hon. Members will no doubt be disappointed that I was not in Parliament or a member of the Government at the time of Bradford & Bingley’s nationalisation, and I am therefore not able to speak from personal experience. The collapse of Bradford & Bingley came about during the worst global economic downturn since the great depression, and we must remember the serious situation that the then Government were facing, which, to be fair, hon. Members have recognised. It is also worth remembering that we had seen just 12 months earlier the first run on a bank for 80 years at Northern Rock. I recall queues of people outside the bank’s branches seeking to withdraw their money, with police having to be deployed in some instances. It was the duty of the Government of the day not only to secure an agreement on the future of Bradford & Bingley but to steady the financial system and to ensure that the country would get through those turbulent times.

We should also remind ourselves of the surrounding circumstances at that time. It was important to take account of the 2.5 million people who had a total of £22.2 billion invested in Bradford & Bingley. A million people had a mortgage with the bank. It had also been particularly exposed to the falling house market after specialising in buy-to-let and self-certification mortgages. I am tempted to go off on a slight tangent and discuss how housing bubbles are created, but that would do a disservice to those concerned about this particular debate, so I will not at this point.

Bradford & Bingley had fallen £26.7 million into the red in the first six months of 2008, so the circumstances were serious. Bad loans increased by 86% between January and June 2008 compared with the same period the previous year. Shares had fallen some 93% in the year before nationalisation, dropping to just 20p the week before. In the first six months of 2008, more than 9,000 customers had their homes repossessed or were more than three months behind with their payments, which was twice the average. Some 370 jobs had been lost, with a further 3,000 at risk. At that time, following various plans to raise funds from shareholders, the confidence of the City had been lost.

Duncan Hames (Chippenham) (LD): I do not envy the position that the hon. Lady finds herself in today. I appreciate that we cannot do anything about what occurred in 2008, but we can today do something about

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the culture of secrecy that followed. Will she commit to the hon. Members gathered here that she will speak with her Scottish colleagues—the previous Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), and the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling)—and ask the two of them to provide answers to the questions posed both here and by our constituents about what happened between the rights issue and the nationalisation of Bradford & Bingley?

Cathy Jamieson: I have not, to date, spoken directly to the previous Prime Minister or the former Chancellor on this particular issue. I was interested to hear what the debate would be about today, and I look forward to what the Minister has to say about any action that the current Government will take. If there is something useful to be gained from my discussing the matter with the previous Prime Minister and the former Chancellor, I would be more than willing to do so, but I do not know whether that would produce the result that the hon. Gentleman seeks.

Philip Davies: I am grateful to the hon. Lady for what she says, and I hope that she will pursue the previous Prime Minister and the former Chancellor. In the unlikely and catastrophic event that there is a Labour Government after the next election, the one thing that the hon. Lady could do is to promise that a Labour Government would actually release all the relevant papers and hold an inquiry. She might not be able to say anything about what happened back then, but she can certainly say what she would do if she had the chance. Will she commit to that?

Cathy Jamieson: I am sure that the hon. Gentleman will be aware of the conventions relating to previous Governments. I am pretty sure that I will not be in a position, even in the likely event that there is a Labour Government the next time around, to discuss releasing papers from a previous Government. I understand that that is the convention irrespective of political parties. It will be interesting to hear what the Minister has to say about the action that the current Government can take.

At the time of Bradford & Bingley’s problems, the Government of the day wanted not only to try to preserve the country’s financial stability but to ensure that ordinary savers were protected. My understanding is that they did that in good faith and believed it to be the correct thing to do. I am sure that it was not an easy decision, but following the Financial Services Authority declaring default on the bank’s borrowings, the Government took decisive action. It is also worth noting that it was not only the previous Government who thought that that was the correct decision. People who were in opposition then and who are now part of the coalition also believed that it was right. The right hon. Member for Twickenham (Vince Cable), who was then the Liberal Democrat Treasury spokesman, said that if there was no private sector rescuer for Bradford & Bingley, which of course there was not, the Government were right to step in. He said at the time:

“In these circumstances, nationalisation is the least worst option. The UK Government is getting these assets for free, so it could turn out to be quite a good deal.”

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Philip Davies: There is a big difference between stepping in to help and obliterating a high street bank. Northern Rock is still out there. People can still visit a Northern Rock branch. That is not the issue, however. The issue is that Bradford & Bingley was treated completely differently from every other organisation. It is not about stepping in to help; it is about how that supposed help was given.

Cathy Jamieson: I appreciate the hon. Gentleman’s comments. He has been a powerful advocate on behalf of his constituents, and I am sure that he will have other questions, but it is important to understand the context. The then Treasury director general wrote in the March 2012 “Review of HM Treasury’s management response to the financial crisis”:

“The Treasury drew on the experience of nationalising Northern Rock to resolve subsequent failing financial institutions, such as Bradford & Bingley, more quickly and decisively.”

That suggests that people thought not only that it was the right decision, but that action had to be taken quickly to avoid further damage to savers and the wider economy.

Craig Whittaker: In light of what the hon. Lady has just said, will she enlighten us as to why Bradford & Bingley was treated entirely differently from other banks, some of which received more than £60 billion in taxpayer money only a short time later?

Cathy Jamieson: I said at the beginning that I was sure that hon. Members would be disappointed that I would not be able to describe the day-to-day dealings of the previous Government. I am looking at the case on the basis of the information currently available.

The role of the European Commission was also mentioned. The Competition Commissioner has said:

“The Bradford & Bingley decision illustrates once again the positive contribution of EU state aid policy to ensuring orderly and effective solutions to tackle the financial crisis. The UK authorities’ market-oriented solution has avoided any disproportionate distortions of competition while enabling the preservation of the viable parts of the business.”

At the time, people seemed to be of the belief that the correct decision was made. It was not easy, but it was taken in good faith and because people thought that it was the right thing to do.

Mr Gregory Campbell (East Londonderry) (DUP): I appreciate the hon. Lady’s position—she was not a Member of Parliament at the time. However, given the context five years ago, which she is outlining in some detail, and the problems with the Co-op bank now, will she commit to a fully independent investigation into how and why it came about, and put in place steps to ensure that it never happens again?

Cathy Jamieson: I want to come on to some of the things we can do to continue to ensure that the things that happened in the past and recently do not happen again. We need to restore confidence in the banking world for customers, consumers and the wider economy. It has given me no pleasure to see yet more allegations and accusations about the practices in RBS in the past few weeks. Various inquiries are looking into those practices.

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As hon. Members are aware, I am a Labour and Co-operative MP, and I have had a long involvement in the co-operative movement. It gives me no pleasure to see the situation that the Co-operative bank is in. I am sure that the inquiries will give us further clues about what we need to do to ensure that such things are not repeated in the future. I understand that what I am saying will not be much of a consolation to those who lost their jobs during the Bradford & Bingley situation, or to the shareholders who lost their money. I understand that the hon. Member for Shipley, who has worked hard as a constituency MP, continues to raise these issues to ensure that his constituents get answers.

The Bradford & Bingley shareholder action group, which speaks on behalf of the former shareholders, has run a lengthy campaign. We must ensure that no one else goes through what the people who lost their jobs and those who lost out in the crisis went through. That is why it is important that we work harder to reform the banking system, to ensure that such situations never happen again, and, as we discussed many times in Committee on financial services Bills, to future-proof against anything that could happen in the future. That is why I am making these points.

I am somewhat surprised that the Government have not given their full support to many of the recommendations of the cross-party Parliamentary Commission on Banking Standards and the Vickers Independent Commission on Banking, which the Government set up. The Financial Services (Banking Reform) Bill was a pretty thin volume in Committee, although it increased exponentially in size thereafter. Labour Members tabled various amendments during the passage of the Bill to ensure more protection for taxpayers and to rebuild consumer choice, financial inclusion and a diverse market. Crucially, we aimed to reform banking standards and the high-risk culture, while boosting the economy. It was disappointing that the Government either watered down or ignored the recommendations of the commissions and voted against most of our amendments. However, there was one victory in the other place yesterday.

I note that in the past couple of days we have heard that the Chancellor has now written to the Bank of England to review the Financial Policy Committee’s powers on leverage ratios. Although it is good news that the Chancellor has belatedly seen the importance of that issue, now that the Bill is in its final stages in the other place, it is a shame that it has taken him so long to do so.

I hope for some leadership from the Minister this morning—I know that he has a thorough understanding of the banking sector. I hope that we will see more of a change of heart from the Chancellor on wider banking reform, so that we can ensure that a similar crisis can never happen again. The Opposition will continue to press for that.

I will conclude on the point with which I started. The hon. Members for Shipley and for Calder Valley talked about a duty of care, which is important for everyone in every sector of the financial services markets. Whether people are in banking, insurance or other institutions, they must realise that they have a responsibility to the customers whose money they look after. I hope that the Government will support the call for a fiduciary duty of care that we have made on many occasions. Will the Minister comment on that, as well as answering the questions that other hon. Members have put to him?

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10.15 am

The Financial Secretary to the Treasury (Sajid Javid): I welcome you to the Chair, Mr Betts. It is a pleasure to serve under your chairmanship.

I thank my hon. Friend the Member for Shipley (Philip Davies) for securing the debate and for his continued commitment and effort in tirelessly pursuing the issue on behalf of his constituents. I have not been long in Parliament, but one thing I noted right from the start, which has been reaffirmed today, is that few colleagues so assiduously pursue their constituents’ causes as my hon. Friend. He is an example to us all. I also thank my hon. Friend the Member for Calder Valley (Craig Whittaker) for his tireless work on behalf of his constituents, as we have seen today.

Before I get into the specifics of Bradford & Bingley, I will give some context on the time, the policies that we have heard reference to today, which contributed to the banking crisis, and this Government’s response, which hon. Members have spoken about during the debate.

The nationalisation of Bradford & Bingley was one of the key outcomes of the financial crisis. The crisis was the biggest failure of economic management and banking regulation in this country’s history. Let me remind hon. Members of the events preceding the crisis. Over the decade before the crash, Britain experienced the biggest increase in debt of any major economy in the world. The total of household, corporate, financial and public sector debt reached a staggering 500% of GDP. UK banks became the most leveraged in the world.

None of that, however, caused concern or invited intervention under the failed tripartite system of regulation created 16 years ago. The Bank of England was stripped of its historical responsibility for regulating the banking system, which was given to a new Financial Services Authority. Let me quote a warning from 16 years ago by the then shadow Chancellor, my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley). During the passage of the Bank of England Act 1998, which created the failed tripartite system, he said:

“The process of setting up the FSA may cause regulators to take their eye off the ball, while spivs and crooks have a field day.”—[Official Report, 11 November 1997; Vol. 300, c. 732.]

Sixteen years later, the consensus is clear. There were fundamental flaws in the tripartite system right from the start, which are today painfully apparent to the whole world.

I respect the comments of the shadow Treasury Minister, the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), and I accept that she was not responsible for the actions of the previous Government. However, she was close to some of the key decision makers at the time, and I hoped that we would hear an apology from her on behalf of the previous Government—that was wishful thinking.

The situation that I have described is why this Government have embarked upon a fundamental reform of our system of financial regulation. We have introduced domestic legislation to increase the resilience of financial institutions to shocks. The Financial Services Act 2012 fundamentally reformed the previous, failed tripartite system by giving the Bank of England clear responsibility for maintaining financial stability; establishing the Financial Policy Committee within the Bank as a strong and

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expert macro-prudential authority; creating the Prudential Regulation Authority, a new micro-prudential regulator, as a subsidiary of the Bank of England; and creating a new independent conduct of business regulator, the Financial Conduct Authority.

Martin Vickers (Cleethorpes) (Con): The Minister is outlining a tightening up of the regulatory regime, which I am sure all our constituents would welcome. However, does he recognise that those who have been let down by the Bradford & Bingley scandal and other financial scandals feel that regulators go native, stand back and, instead of being on the side of consumers, are too close to the people they are supposed to be regulating?

Sajid Javid: My hon. Friend makes a good point that has been brought up by many hon. Members. With the reforms we have implemented, and some that we are still in the process of implementing, the Government have created a stronger, more rigorous system, with regulators with a lot more teeth and a greater degree of independence.

The Government have also set up the Independent Commission on Banking, or ICB, to recommend further reforms to enhance financial stability. The Government accepted the recommendations of the ICB and are putting them into law this year through the Financial Services (Banking Reform) Bill. The Government also supported Parliament in setting up the Parliamentary Commission on Banking Standards and have accepted that commission’s main recommendations.

I turn now specifically to Bradford & Bingley. Following the difficulties Bradford & Bingley experienced in 2008, the previous Government transferred its retail deposit taking business and branch network to Abbey National after a competitive process; its mortgage business was brought into public ownership. At the time of the nationalisation of Bradford & Bingley, the UK was in the grip of a rapidly evolving crisis, as we have heard today. I cannot speak for the actions that the previous Government took to deal with the crisis, as I was not privy to the relevant discussions; nor, rightly, have I seen the papers that relate to the previous Administration, although I understand that the Treasury is handling all freedom of information requests in the proper manner.

Extensive information is already in the public domain: events leading up to the nationalisation have been looked at by both the National Audit Office and the Treasury Committee. But on the matter of information, I have to agree with the comments made by my hon. Friend the Member for Shipley, and, in particular, with the request made by my hon. Friend the Member for Chippenham (Duncan Hames), who asked the shadow Minister to use her good offices to speak to the former Prime Minister, the former Chancellor and others who were Ministers under the previous Government and closely involved in events at that time. That is a reasonable request; I hope she will act on it and get back to my hon. Friend about it. It could lead to further information that many stakeholders would find useful.

Following the transfer of Bradford & Bingley into public ownership, the previous Government made the Bradford & Bingley plc Compensation Scheme Order 2008, which

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was debated and approved by each House. The order provided for a mechanism through which compensation for former shareholders would be assessed by an independent valuer. As we have heard, after conducting a robust and rigorous process the independent valuer determined that no compensation was payable.

My hon. Friend the Member for Shipley asked whether it was right that the valuer should have been asked to work on the basis that there was no Government support. I believe that it cannot be right, or in the best interests of the taxpayer, that the valuer should have been asked to compensate for value that existed only by virtue of support that taxpayers themselves were providing.

Following the determination, all affected parties had the opportunity to submit requests for the valuer to reconsider his decision. The valuer considered all requests before concluding that no compensation was payable. That decision was further upheld in the upper tribunal review.

I believe that due process has been followed at every stage. Transparent and independent arrangements for compensation have been put in place and there has been a proper process in the courts. As I mentioned, there have also been investigations by the NAO and the Treasury Committee. I have to say to my hon. Friend that I have looked at the matter closely using the limited information available to me, and from what I have seen I am not persuaded that there is a case for a further investigation or inquiry.

Before I conclude, I want to respond specifically to a number of my hon. Friend’s questions. He talked about the rights issue that took place just before nationalisation. From the information I have seen, I can tell him that the Treasury had no involvement in that rights issue at all; as we have heard, the rights issue was conducted in the summer of 2008, prior to nationalisation, and was a matter solely for Bradford & Bingley’s board and senior management. Like many banks and building societies at that time or thereabouts, Bradford & Bingley was required to meet FSA regulatory capital requirements in order to continue with those regulated activities.

My hon. Friend also raised the issue of accounting standards, and in particular IAS 39, which he said was problematic and could perhaps take some blame for the financial crisis. He is right to raise accounting standards and the contribution they could have made to the crisis. The issue has been looked at extensively by authorities around the world, including the International Accounting Standards Board. The board has proposed a series of changes to IAS 39 and other, similar accounting practices. Those changes essentially mean that, in future, banks will have to hold more capital or take losses earlier on problematic loans.

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My hon. Friend also rightly expressed his concerns about the future of a number of his constituents who were transferred to UKAR during nationalisation and are currently UKAR employees. He was absolutely right to say that those people have considerable expertise and experience in an important sector. My understanding is that currently over 2,000 staff are still employed in managing the closed mortgage books of both Bradford & Bingley and Northern Rock, and are doing an excellent job.

My hon. Friend may take some comfort from knowing that those people’s skills are such that it seems they will face growing demand for them: the Council of Mortgage Lenders recently said that mortgage lending in the third quarter of this year was at its highest level since 2007 and is growing strongly thanks to the Government’s policies and the economic growth we are experiencing. I am sure that the value of the skills they hold will give some comfort to the constituents he mentioned.

Philip Davies: I am grateful to my hon. Friend for his comments, although clearly I am disappointed that he does not believe that there is a need for an inquiry: we are still no further forward when it comes to knowing why Bradford & Bingley was treated so differently from other banks and building societies.

In the light of the comments my hon. Friend has just made about the future of Bradford & Bingley, will he go away and think about whether a new Bradford & Bingley could be born out of what is there at the moment to be a new challenger to the banking sector on the high street and to introduce the competition that we all want?

Sajid Javid: I will give a commitment to my hon. Friend that I will think about that further. In fact, I will do more: he will know that UKAR is part of United Kingdom Financial Investments Ltd, the agency that acts as the Government’s shareholder in the former assets of Bradford & Bingley, and of the Royal Bank of Scotland, Lloyds and others. I will write to the head of UKFI and to the head of UKAR to ask them to consider the case that my hon. Friend has made today.

I congratulate my hon. Friend once more on securing this debate. This is an issue that he, rightly, feels very strongly about. I assure him that we are taking what we believe are the right steps to ensure the future stability of our banking system.

Mr Clive Betts (in the Chair): I now suspend the sitting until 11 o’clock, although if the hon. Member responsible for the next debate and the Minister responding both arrive a little early, I am happy to start the debate a few minutes earlier.

10.28 am

Sitting suspended.

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Skills (North-East)

10.56 am

Guy Opperman (Hexham) (Con): It is a pleasure to serve under your chairmanship, Mr Betts, and a great privilege to introduce this debate about how we create skills and apprenticeships in the north-east.

The north-east has a proud manufacturing heritage. We are home to Stephenson’s trains, Armstrong’s hydraulics, ships and artillery, Swan’s electric light bulbs and Parsons’ steam turbine, to name but a few of the great key inventions derived from the north-east. Today, we need to ensure that the next generation have the training and resources to put skills in manufacturing and engineering, in all its forms, once again at the heart of our growing private sector economy.

Those great engineers of the north not only built our region, but shaped Victorian Britain. This matters. It is great that the North East local enterprise partnership is one of only three LEPs in the country to pilot the new approaches to skills development. The key point is that the north-east is showing the way, whereas sometimes in the past, it is fair to say, we have been at the back of the bus. We have, I suggest, little to fear from our co-pilots: the Stoke-on-Trent and Staffordshire LEP and the West of England LEP. Frankly, we welcome the competition—but I would say that, wouldn’t I?

In the north-east, we have a number of strong sectors: manufacturing, engineering, subsea, oil and gas, and renewable construction—I could go on. The success of the skills pilots must be in matching the appropriate skills to the relevant sectors, where the growth and the jobs will be. This pilot will, I believe, allow that to happen, but I ask my hon. Friend the Minister, in his response to the House today, to set out the details in relation to the skills pilot, so that we can fully understand the direction of travel and what he wishes us to do. I want to address the Minister also on the issue of a university technical college in Northumberland, Tyne and Wear.

For me, this debate is part of a personal crusade. I was the first Member of Parliament to hire, train and retain an apprentice—Jade Scott, who is now the business administrator in my Hexham office. Along with Jacqui Henderson, I opened the new Hexham office of Northumberland college in 2012. It is a state-of-the-art local facility in rural west Northumberland and provides a multitude of courses, including hairdressing. I have taken the plunge and had a haircut there myself—I probably need another one now.

We have also led the charge with Ministers. I was pleased to welcome my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), when he was the jobs Minister, to the Fuse media centre in Prudhoe for a jobs summit. I then invited the present Minister to Kirkley Hall on 9 February this year to preside over the apprenticeship awards, with the wonderful Jacqui Henderson and her team, and hear at first hand about the difference that apprenticeships are making in the north-east.

I regularly meet representatives of Newcastle college, and only two months ago I sat down with Angela Allan and her team to discuss how we can help them, both from the skills point of view and on the issue of international student visa numbers. I also took this

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Minister to see for himself the huge investment going into Newcastle college. The building that he and I looked around in February of this year was a shell; it is now up and running and a thriving, bustling hub for students.

I will give three specific examples from business later in my speech, but I want to start with a strategic overview of where we are and where we have come from, and the lessons we can learn from the past three years. Apprenticeships are, as everybody acknowledges, key to securing the prosperity of the north-east economy. We are moving in the right direction. The number of apprenticeship starts in 2011-12 in the north-east was 38,340, an increase of 11% since 2010-11. That, in turn, was up from 18,510 in 2009-10 and 13,500 in 2005-06. In my constituency, the number of apprenticeship programme starts rose from 430 in 2009-10 to 800 in 2011-12, which is the last fully assessed year. There is not a single one of the 29 constituencies in the north-east in which apprenticeship starts have not increased dramatically since 2010.

James Wharton (Stockton South) (Con): I congratulate my hon. Friend on securing this debate, which is incredibly important for our region. Does he agree that we need not only a high number of apprenticeship starts, but the right types of apprenticeships to replenish the skills base that has built the industry in the north-east over so many years? It is welcome that numbers are up, but it is also welcome that we are starting to get the right sort of apprenticeships, because of the good work that the Government are doing.

Guy Opperman: With amazing ability, my hon. Friend has touched on the next key point of my speech. It is not just about numbers; it is about the quality of apprenticeships. It is also about the skills pilot that we have managed to secure in the north-east matching the types of apprenticeship starts to the sorts of businesses in the north-east, to ensure that they are specifically focused and provide what business needs. The Adonis report talked about exactly that point.

In preparation for the debate, I blogged, tweeted and invited comments on the matter. Who says that social media do not work? I was deluged with ideas and contributions, and I thank everyone for taking the trouble to get involved. I was contacted by businesses, trade organisations such as the north-east chamber of commerce, health trusts and even the Department for Education, which was keen for me to advance and support some of its ideas. I spoke to three businesses in particular. SCA is the second largest manufacturer in my constituency. It employs some 400 people, and it is a manufacturing success. Richard Sutcliffe, the factory manager at SCA, has said:

“There is a need to acknowledge that the technical skills/engineering skills that are needed in manufacturing are not currently in place; we are continually striving to encourage and develop the young talent of today.

As the number of apprentices over many years has reduced and many employees come towards their retirement we have a challenge in industry as a whole to plug these gaps. By linking with schools and educational establishments we are keen for people to realise and see that an apprentice scheme is a great/equivalent alternative to university and we must remove the stigma that still exists in some areas.

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An apprentice at SCA can also move on after their initial training to complete a degree, giving the person a solid footing in a working environment, a keen skill that can take them in many directions and the opportunity to start life without the burden of excessive debt. We need to encourage and help people realise apprentice schemes are key, current and available for all types of people, whatever their ambitions might be.”

I could not have put it better myself.

I want to give examples of two other local businesses. The first is Egger, in my constituency, which is the biggest private sector employer in Northumberland, with more than 550 employees. Recently, £4 million has been invested in an engineering academy for more than 40 apprentices and other engineering staff, which I opened last month with Michael Egger. He clearly sees his employees as the key to the future prosperity of the business, and the academy is the latest phase in more than £100 million of investment in the Hexham plant over the past six years. Egger’s importance cannot be overstated; it is responsible not only for 550 local jobs, but for 1,500 other jobs that are linked in through forestry and other businesses. I was lucky enough to work on the factory floor as part of Children in Need. I was not very good, but it was a great experience. I particularly liked meeting the apprentices, who were, by and large, from Hexham. They had started in Queen Elizabeth high school and been on away days and visits to the factory, after which they followed the apprenticeship path, which enabled them to get a local job with a local firm and live at home. That, surely, is the way forward.

Ian Lavery (Wansbeck) (Lab): I congratulate the hon. Gentleman on bringing this important debate to Westminster Hall. Are the valuable apprenticeships that he has mentioned ones that last for three or four years, in which apprentices work on the shop floor and in college, and are guaranteed a job at the end? In other words, are they indentured apprenticeships as we knew them, or do the apprenticeships last only six months, with only the possibility of the job at the end?

Guy Opperman: I thank the hon. Gentleman for his contribution; it is a perfectly fair point, which the Adonis report deals with. The north-east skills pilot is an attempt to achieve that. Some are shorter apprenticeships—no one would deny that—but the majority are exactly what he and I, who are of venerable years, would understand to be a traditional apprenticeship. [Interruption.] The hon. Gentleman is looking at me as though I am ageing him too much. I am sure he is still a stripling.

Yesterday I spoke to Bob Paton, another of my constituents from the Hexham shire, who took time out to come and talk to me on exactly that issue. He described the apprenticeships offered by Accenture, a big multinational of which he is a director. Accenture’s IT apprentices spend three years in the business and complete coursework and college work on a repeated basis, at the end of which they can achieve a university degree. The apprentices are working and learning, and they achieve both an apprenticeship and a degree.

Sir Alan Beith (Berwick-upon-Tweed) (LD): In this context, is it not vital that we ensure that further education linked with apprenticeships is spread more readily around

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the rural parts of Northumberland? Access to further education is essential to making good apprenticeships work.

Guy Opperman: I thank my right hon. Friend for that point. He was not quite in his place when I said that my key desire arising out of this debate was for a technical college for Northumberland, Gateshead, Tyne and Wear. At the moment, there is the potential for a college linked to Hitachi in Durham, but we need something in the northern part of the north-east to address the skills gap between school and a job, which is central to fulfilling the manufacturing and engineering demands of our businesses.

Ian Lavery: I apologise for missing the start of the debate; I was not late, but it started slightly early. I have not heard the hon. Gentleman mention Northumberland college in Wansbeck, which has developed into a really good force for further education, apprenticeships and meeting the skills gap. We really need to encourage Northumberland college and the Kirkley Hall campus in the hon. Gentleman’s constituency, because the college has great potential.

Guy Opperman: It is in no way the hon. Gentleman’s fault that he missed my elaborate description of how wonderful Northumberland college is, because we started early. The Minister and I went to Kirkley Hall and visited parts of the site. As the hon. Gentleman knows, another branch of Northumberland college has opened in Hexham, so quite a small hub has expanded to other parts of the region. That addresses the hon. Gentleman’s point and that made by my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith).

When Bob Paton came to see me yesterday, he told me that Accenture is not only increasing its job numbers, but recently took on 38 new IT apprentices, working with the local college. He reckoned that he had

“the biggest and best…higher level IT apprenticeships in the country,”

and the programme is expanding. We do not just need manufacturing and engineering apprenticeships, but IT apprenticeships. We need to encourage people to take on such jobs.

I could give other examples, but I do not want all my speech to be about the fact that Nissan is offering enhanced apprenticeship programmes, enabling new recruits to work in manufacturing production; the fact that Sembcorp Utilities UK is recruiting 100 new apprentices aged 16 to 18 to do three-year apprenticeships from 16 onwards; the fact that we need more work like that of the North East Skills Alliance for Advanced Manufacturing, chaired by Nissan and the Engineering Employers Federation; or the fact that the North East Skills group does good work.

I cannot praise enough the campaigns run by The Journal and my constituent, Brian Aitken, who has pushed the excellent “Proud to Back Apprentices” campaign in the past year. Nor can I praise enough events such as the north-east engineering and manufacturing careers conference, which brings teachers from across the region together to hear first hand about opportunities in the sector, or schemes such as the primary engineer scheme, which encourages girls and boys from a very young age, in first and primary schools, to become the engineers of

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the future, by forging links with local businesses. I welcome the work of the local NHS trust and the Department for Education in boosting schemes such as the apprenticeship bursary scheme for the early-years profession.

I want to turn to the North East local enterprise partnership, because we cannot discuss skills and apprenticeships without addressing the role of the LEP and the Adonis report. I pay tribute to everyone involved in both the organisation and the report—in particular, Ed Twiddy, Paul Woolston, Justin Welby and Andrew Hodgson, the latter of whom specifically addressed the problem area of skills.

We in the north-east welcome the fact that we have been chosen for the skills pilot. That sends a message that the north-east is not only open for business, but a skills hub and a destination for the sorts of jobs we wish to see. I call on the Minister to set out what the skills pilot is doing and what the next steps will be if it is successful. How can key local businesses and stakeholders influence the development of the skills revolution in the north-east? We do not need a route map set in stone by Government, but we do need a clear direction of travel, allied to the Adonis report, setting out the hurdles we need to cross along the way.

No other region has addressed its strengths and weaknesses as the north-east has with the Adonis report. It was business-led, written by experts, apolitical, hard-hitting and realistic. It pulled few punches. It celebrated the region’s assets and successes, but acknowledged that successive Governments have struggled to improve job numbers, the skills deficit and university starts, or to grow the regional economy, which was such a powerhouse in days gone by. At the heart of the report lies a desire for more and better jobs. It identified the crucial lack of private sector employment, but, to quote from the report:

“More jobs alone will not re-balance the economy. The North East needs higher skilled and higher paid jobs to produce an economy which matches others and provide the quality of opportunities its residents and young people need to prosper.”

An alternative way of looking at the problem was provided by the recent debate on how Governments, of any form, can address the cost of living as the election approaches. I was interested by the comments of Ross Smith from the North East chamber of commerce and industry, who tweeted, following an article in the New Statesman:

“My answer to this is ‘it’s skills, stupid’—alas that doesn’t fit with easy election messages or election cycles.”

That builds on the famous Bill Clinton comment—“It’s the economy stupid.” I asked Ross to expand on his comment yesterday, as part of the consultation for my speech, and he said:

“The most important factor in raising living standards in the long term is to increase skill levels, so that people can play a more productive part a stronger economy, and be rewarded accordingly.”

He is right and his tweet was right.

My copy of the Adonis report is well thumbed and much written on. I urge everyone interested in addressing the problem to read the report. We need action from big employers, and I have set out what some have been doing. We need the support of media and key partners; it is welcome and expanding. I will address university technical colleges briefly in a moment.

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We also need a north-east schools challenge, based on the successful London challenge, to support local partners to achieve a step change in local education. I support the efforts of the local authority seven, and we will talk in the House on another occasion about how the LA7 should be fully supported by one and all. I will, however, make one particular point now. There is a slight problem for small businesses, which are struggling to get the niche, tailored skill sets for their apprenticeship demands. Given the lack of time, I will write to the Minister on that point to set out the issue in more detail.

I shall finish on the point about university technical colleges or UTCs. We need to encourage more people to build vocational skills and not to stop doing so at 16. A key solution in the Adonis report is the creation of UTCs in the north-east. The Adonis report demands four UTCs, but frankly I would take two. We have one in Durham, and I would very much like one in Northumberland or Tyne and Weir. As UTCs have been established across the UK, their success has been dramatically transformative. I will make it my mission to see a UTC created in the northern part of the region. I hope that is something for which the Minister can offer his support. Although the south of the region is making progress, the message is obvious: we need far greater links between business and schools. UTCs make a difference, so we need one.

We can be in no doubt that skills, and apprenticeships in their many forms, are the key to the further improvement of every bit of the north-east, job numbers and growth. The north-east is the cradle of manufacturing, engineering and much more. We are powering the country out of recession. We are the only region with a positive balance of payments. Give us the tools to do the job.

11.16 am

The Minister for Skills and Enterprise (Matthew Hancock): It is a pleasure to serve under your chairmanship, Mr Betts. I will respond to as many of the points that my hon. Friend the Member for Hexham (Guy Opperman) made in his excellent speech as I can. He is a passionate supporter of not only Hexham, but the whole north-east. He made a strong case in an important debate. One particular reason why it is good news that we are debating the north-east approach to skills and apprenticeships is that the region is blazing the trail and is at the forefront of some of our policy thinking, which I shall come to later.

I thoroughly enjoyed my visits to Newcastle college and Northumberland college earlier this year with my hon. Friend. We were photographed in an empty shell of a building and I very much look forward to seeing the college now the new building is up, running and, I understand, buzzing with learners. That is just as well, because the number of over-19s in further education in the north-east went up by 6% in the last year for which figures are available. There is clearly an increasing demand for education and skills at that level, among not only employers—we heard a lot of stories that corroborate the evidence I have on the demand from employers—but students as well.

My hon. Friend mentioned the need for university technical colleges in the area. We warmly welcome all applications for UTCs. We approve those proposed by

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the strongest groups in areas where new schools are needed most and those that have rigorous education and recruitment plans. I am sure he agrees that it is important to ensure that new provision is rigorous and responds to the needs of local employers, not least because UTCs provide the opportunity for employers and universities to work together, and therefore drive up the standard of technical education between 14 and 18. We are considering the south Durham UTC application, with others we have recently received, and we have interviewed the applicant group. Applicants will be notified of the outcome in the new year. Lord Nash and the Secretary of State will make the decision in due course.

My hon. Friend also talked about the need to improve standards and quality in the skills system. I strongly endorse that point. Last month’s report by the OECD, comparing skills levels across the whole developed world, was a stark reminder of how much more we need to do. We—England and Northern Ireland—were the only country in which the skill level in maths and English of our 15 to 25-year-olds was no higher than that of our 55 to 65-year-olds. In the long-running debate about whether more exam passes mean better education, that is extremely strong independent evidence that we have to stop that flatlining and start improving our standards, because every other country in the developed world is doing that. That is hugely motivating in the task of driving up standards, especially when youth unemployment is far too high, although thankfully it is now falling. At the same time, there are increasing skills shortages, some of which my hon. Friend mentioned.

We have introduced faster and more robust intervention processes for failing colleges and we driven up the quality of provision through a new and more rigorous Ofsted inspection framework. We are reforming qualifications so that we fund only those that employers sign off. I do not know whether my hon. Friend has managed to read Nigel Whitehead’s report, but its recommendations are sensible and are about driving rigour and responsiveness through the adult qualifications system.

That brings me to the proposal by the north-east LEP. My hon. Friend mentioned that it is one of three LEPs through which we are piloting a new mechanism to ensure that there is local influence over the use of the skills system. He said that he was thrilled that the north-east LEP was chosen for the pilot. I would go further: the north-east LEP invented the idea and brought it to us. We were impressed by it, and two other LEPs came on board to ensure that the mechanism was piloted in more than one area. The north-east LEP is not only a leader on piloting; it is a thought leader on how we can ensure that the skills system is responsive to local need.

My hon. Friend asked for details on how the proposal will work. The proposal is that 5% of funding for all adult provision outside apprenticeships will be allocated if, and only if, the provision is in line with LEP priorities. The LEP will have sign-off. Rather than giving 5% of the funding to the LEP, we have instead said that the LEP will have the final say over what is essentially a quality payment—the final 5% of all adult skills funding outside apprenticeships. That will ensure that the whole provision is targeted at LEPs’ needs. There is good

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collaboration in the north-east between the LEP and colleges, and the proposal will help to incentivise education providers to look to the strategic needs of business—not only directly but through the LEP—and ensure that the LEP focuses on that. Our job is to ensure that there is enough flexibility in the funding system to allow providers to switch provision according to the needs of local private or public sector employers. That will ensure that the system is filling skills shortages.

In the past, when there have been shortages of training in one area, people have come to the Minister and said, “There is a shortage in this area. Can you fix it?” There is one thing I know for sure, and that is that I do not and cannot know, through a central bureaucracy, the skills needs of every area. It is far better to try to make the system responsive to local need, instead of trying to direct solutions to skills shortages from Whitehall. The proposal is about making it easier for colleges to respond to the needs of employers.

The proposal is also about providing capital for skills provision. Capital funding will follow LEP priorities from 2015-16. Very recently, the Secretary of State for Business, Innovation and Skills announced that we would be financing a further £330 million of skills capital in 2016-17, which provides the long planning horizons that many crave. Those horizons have been too short term in the past.

I pay tribute to the work of all those involved in getting the pilot with the north-east LEP up and running as a policy. It will hit the ground running from September 2014. That policy is part of a broader attempt at making the skills system more responsive to employers. I mentioned that it does not cover apprenticeship funding, which is because we have a broader set of reforms on how apprenticeships are funded to ensure that funding is directly responsive to employers’ needs. We will be working through employers. The taxpayer rightly pays a subsidy towards apprenticeships, because if someone is in an apprenticeship, they are not only doing the job but learning. Apprenticeships benefit the employer, the apprentice and wider society. Recognising that, the taxpayer subsidises apprenticeships. We are changing how they are delivered so that the employer has more of a say over what training happens within an apprenticeship. That will ensure that the training fits the needs of the apprentices and the employer, which will drive up standards.

My hon. Friend quoted the views of a local site manager and talked about spreading the word on the benefits of apprenticeships. As the Minister responsible, I could not agree more. It is just as competitive to secure an apprenticeship at a top employer, such as Rolls-Royce or BT, as it is to get into Oxford or Harvard.

Ian Lavery: Does the Minister, like me, welcome the announcement by Northumberland county council earlier this week that it has an ambition to double the number of apprentices linked to the council? It is looking to employ 360 apprentices directly with the council. Some 23 apprenticeships will be immediately created, adding to the total of 134 already on the council’s books already.

Matthew Hancock: I had not heard that, but at face value that sounds absolutely terrific. We have a goal of making it a norm in this country that every young

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person who leaves school goes to university or into an apprenticeship. Rather than trying to push them one way or the other, we want to ensure that there are good choices available on either side. Increasingly, employers, whether private or public sector—including Northumberland county council—are introducing an apprenticeship stream in addition to a graduate scheme. The civil service has just brought in an apprenticeship fast stream to match its graduate fast stream. This week, MI5 and MI6 announced that they are introducing an apprenticeship scheme in addition to their more traditional graduate recruitment. That is happening across different businesses and different parts of government. Someone can now become an apprentice spy, which is interesting, although MI5 and MI6 have not yet told me all the details that someone would learn.

We have an ambition, but we will only be able to persuade people that it is the right ambition so long as we continue to drive up the quality of apprenticeships. The very best apprenticeships are world class, but we have to ensure that quality goes up across the board. We have brought in some tough measures to increase quality by ensuring that all apprenticeships last a minimum of a year, that the English and maths requirements are stronger and that there is actually a job. In the past, some apprenticeships happened without a job attached. Those measures have meant that we have had to remove some low-quality provision. In the medium to long term, that is undoubtedly worth it and will ensure that the apprenticeship brand remains strong.

I agree strongly with the point that several hon. Members have made, including my hon. Friend the Member for Stockton South (James Wharton), that apprenticeships need to reflect the whole economy. The old industries in which apprenticeships were strong, such as engineering and manufacturing, are important, but it is also important that apprenticeships cover the whole economy as it is today. They should include professional services and computing, for instance, in a way that they did not in the past.

The north-east LEP is one of our thought leaders, and we listen carefully to its suggestions. I am watching the pilot’s progress closely to see whether it should be spread more broadly. There is no stronger advocate for the passion with which the north-east is coming together to deliver on skills training and ensure that everyone reaches their potential than my hon. Friend the Member for Hexham, although my hon. Friend the Member for Stockton South and all the other hon. Members who have spoken in this debate are strong advocates, too.

11.29 am

Sitting suspended.

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[Jim Dobbin in the Chair]

2.30 pm

Nic Dakin (Scunthorpe) (Lab): Let me start in the past. In 1821, Maria Brontë died of consumption. Two of her daughters died of the disease in infancy and her four older children—Bramwell and his famous sisters, Anne, Emily and Charlotte—also died of it. According to the history books, they became

“ill from dampness and terrible living conditions”.

Consumption, or tuberculosis, is a disease that many people believe belongs to the past. Nothing could be further from the truth. TB kills more people in the world today than any other infectious disease. Every day, 3,800 people die from it. Sunday is world AIDS day, so it is worth remembering that TB is the leading killer of people living with HIV. At least one third of the 35.3 million people living with HIV worldwide are infected with latent TB. People co-infected with TB and HIV are about 30 times more likely to develop active TB disease than people without HIV. Given the devastating synergy that exists between the two infections and the impact that they have on people living in the developing world, it is absolutely vital that resources are stepped up now so that we not only effectively tackle TB-HIV co-infection but ensure that the health-related millennium development goals are achieved. The Department for International Development is about to launch its policy review paper on HIV/AIDS. I hope that it will make clear the importance of linking the approaches to TB and HIV, and that it will have clear commitments to tackle those diseases.

In the UK, we can be tempted to believe that TB no longer poses a threat to public health. There is a widespread belief that the BCG vaccine is effective and that today TB only affects other countries. However, in a connected world of global travel, TB is never far away. That came home to me forcibly when an English student returned from foreign travel with the disease and subsequently infected other students attending the college of which I was principal. Students and staff found dealing with the anti-TB drugs to be an ordeal. For a standard, non-drug-resistant case, the treatment regime can require a six-month course of a cocktail of four drugs. Those “front-line” drugs are more than 40 years old now and have unpleasant side-effects. It was a challenge for me as college principal, working with the local NHS, to get people to take the drugs they had to take. It must be an even bigger challenge to help patients in the developing world who not have access to the type of care and support offered by the NHS.

The stigma attached to the disease here was a barrier to patients accessing treatment. In sub-Saharan Africa, the stigma is even greater. Dr Simon Blankley, a Voluntary Services Overseas chest physician working in Uganda, reported that patients could often be locked away in cupboards or forced to leave their villages, and that health care workers were worried for their own health when TB patients were admitted to wards. TB needs to be tackled in a sustainable way that reassures people and builds community resilience. Dr Blankley was able to use a team of VSO volunteers to provide education and reassurance, and to get TB patients in and around

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Kampala to complete their eight-month course of treatment. The team’s work drastically increased completion rates. He then expanded the work, adding work on TB to the community health education that was already in place. That sustainable approach can be replicated elsewhere.

Dr Mario Raviglione, director of the global TB programme at the World Health Organisation, said just last month, when he launched the WHO’s global TB report in partnership with the all-party group on global tuberculosis, that

“at the current rate of progress, we will not be rid of TB for over a century.”

The efforts of the global health fund and its partners have made fantastic progress against TB, HIV and malaria, and the Government are to be applauded for their recent pledge of up to £l billion for the fund. However, we need absolute urgency, unremitting determination and co-ordinated effort to tackle TB.

Andrew George (St Ives) (LD): I congratulate the hon. Gentleman on securing this debate. I also warmly applaud the Government on the contribution and the commitment that they have made to the global health fund, which continues the work of the previous Government.

The hon. Gentleman mentioned the HIV position paper, which in fact was published only moments ago. He may be disappointed to note that the Government appear not to be putting quite as much emphasis on ensuring that they make the connection between HIV and TB. Will he insist that the Government continue a commitment to TB REACH and other programmes that address that serious problem?

Jim Dobbin (in the Chair): Order. I suggest that when we have interventions, they are short.

Nic Dakin: Thank you, Mr Dobbin, and I thank the hon. Gentleman for his contribution. I am sure that the Minister will reflect on his point when he responds to the debate. It reinforces the point that I made earlier about the importance of the Government taking the opportunity to co-ordinate their efforts in relation to both HIV and TB, and the Minister will have heard those points.

Mr Peter Hain (Neath) (Lab): Is my hon. Friend aware that 750,000 TB cases—the most lethal ones—come from South Africa’s gold mines, and contribute 9% of the global total of TB cases, which are often linked to HIV? If so, does he agree that it is vital for the British Government to talk to British-owned companies that are mining gold in South Africa to try to resolve that terrible epidemic?

Nic Dakin: I thank my right hon. Friend for that intervention. He is absolutely right that the Government have a leadership role to play both globally and in relation to British companies involved in South Africa and elsewhere. I am sure that the Minister will also pick up on that point when he responds to the debate.

Dr Raviglione said that it would take more than a century to get rid of TB. Waiting a hundred years to get rid of this disease is just not good enough. Dr Raviglione

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also drew attention to the shameful fact that one in every three TB cases on the planet is not properly diagnosed or treated, which equates to 3 million people every year going undiagnosed, the majority of whom will have infectious pulmonary TB. Many of them are estimated to have drug-resistant strains. That is 3 million people a year going undiagnosed for the past six years—that is not good enough, either. Until everyone in the world with TB is diagnosed and correctly treated, we will never succeed in bringing the global TB epidemic under control and it will continue to blight our world, ruining millions of lives every year.

TB has killed more people than every other pandemic in history combined, by a margin of several hundred million. It is a global disease of the here and now. It affects every country, and every country must have a role to play in tackling it. It requires global leadership from our Government and every other Government. Tackling it requires support and investment through multilateral organisations such as the global health fund, as well as through targeted interventions. We need important technical and co-ordinating agencies, such as the WHO’s global TB programme and the Stop TB Partnership, to work together to enhance co-operation and cohesion across the world’s responses to TB. We need the brightest and the best of the scientific and business communities to work with high-burden countries, in order to step up the fight against this disease and save as many lives as possible.

Consumption, or TB, is a disease of the present. It is a scourge on our humanity and deserves the full force of all our efforts. Although new tools to tackle HIV and TB are badly needed, if we scale up the use of the tools that are already available we have the opportunity to save an additional million lives in the next few years.

I hope that the Minister, when he responds to the debate, will take the opportunity to reaffirm the Government’s commitment to ensuring full replenishment of the global health fund; to continuing to fund TB REACH to a level that allows it to carry on supporting new and innovative projects to find “the missing 3 million”; and to continuing to push for the development and uptake of better diagnosis, treatment and prevention treatments for TB, in a way that can be sustainable.

Finally, let us recognise the work done by all those people across the globe on the front line of the fight against this terrible disease. Their effort is a call to arms for us and a call for us, as policy makers, to step up to the mark and provide them with the tools and the wherewithal to eradicate TB and place it firmly in the past.

2.40 pm

Nick Herbert (Arundel and South Downs) (Con): I congratulate the hon. Member for Scunthorpe (Nic Dakin) on securing this debate. I am delighted to be taking part in it, particularly as I have resumed the co-chairmanship of the all-party group on global tuberculosis, now that I am free to do so. It is, quite properly, a cross-party co-chairmanship, which reflects growing concern in the House about what is often a “Cinderella” disease—one that is not talked about as much as some other diseases that are still claiming lives today.

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We are, properly, concerned about the terrible tragedy in the Philippines and the loss of thousands of lives and we are, properly, marking world AIDS day on Sunday and the millions of lives that have been claimed by that disease. There is a strong overlap, as the hon. Gentleman pointed out, between HIV and tuberculosis, which many still believe is essentially a disease of the past. Indeed, before I became involved in this movement, I thought so too. In the 19th century, tuberculosis—consumption—was regarded sometimes even as a romantic disease, as featured in many operas of that era, yet one in four people in Europe were dying of consumption at that time. It was only with the advent of modern medicine—antibiotics—and the west’s attack on poverty in the late 19th and early 20th century that the disease was brought under control.

There are some sobering observations to make about the rate at which TB—which, as the hon. Gentleman said, has now resurged here, as a disease of the present—is being tackled, compared with the rate at which the west dealt with it in that era. At the current level of progress that the west in making in dealing with a disease that is still claiming 1.3 million lives a year—unnecessarily, because in the main it is easily and cheaply curable—we will have to rapidly step up the efforts that are being made, because the incidence of this disease is currently declining by 2% a year. If we continue at this rate, it will take more than a whole lifetime—a whole generation—and it will be more than 100 years before we tackle this disease properly and get it under control. That will mean that millions of lives will needlessly be lost.

On top of that, there is a growing threat—one that now amounts to a serious issue for this country as well—of drug-resistant TB, the emergence of which is entirely a reflection of the ancient way in which we treat this disease. Were it not for the fact that people with TB require lengthy treatment with antibiotics, because the drug regimens are old-fashioned and no new drugs have been developed, and were it not for the prevalence of counterfeit drugs and the inadequacy of health regimes, drug-resistant TB might not have developed with such ferocity. However, it is now a serious matter of concern, and not just in developing countries, where people unlucky enough to be diagnosed with drug-resistant TB—and few are—almost always face a death sentence. Acquiring drug-resistant TB in a developed country with an advanced health system would still require an expensive and extremely painful course of treatment over months and years.

Mr Gregory Campbell (East Londonderry) (DUP): While the right hon. Gentleman is elaborating on the complications that follow diagnosis, does he agree that there is a shocking compounding of the problem worldwide, because in some countries lung cancer is being diagnosed to a considerable degree in people who are subsequently diagnosed with TB?

Nick Herbert: The hon. Gentleman raises an interesting point. The starting position has been that we need the means to diagnose this disease.

Let us face up to the fact that if the resurgence of this disease had been in the west, it would already have been tackled by now. The pharmaceutical companies would have had a commercial interest in developing better diagnostics and tools, better drugs and, indeed, a vaccine. Another common misconception is that a vaccine is

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available to deal with TB, but only the BCG vaccine exists, and that is generally ineffective for most forms of TB and works for children for a limited time. Had this disease resurged in the west, by now we would already have these things, but we do not, because the drug companies did not have a commercial interest in developing them, essentially because the disease was found in developing countries without the economies or the wherewithal to pay for these new tools.

There can be no better example of the necessity for intervention by wealthy western Governments, who have the resources to ensure that such a disease can be tackled, not just in the interests of ensuring that lives can be saved—there is a profound moral reason to tackle this anyway—but in the west’s interests in securing the economic development of high-burden countries that are afflicted with this disease, which is a tremendous brake on economic development. Of course, TB is a disease that knows no borders, and with migration, and so on, we face the prospect of it resurging in our country. We have higher rates of TB in this country now—although they are low by comparison with high-burden countries in the rest of the world—than in the rest of Europe. We have failed to reduce rates in the past 10 years, as compared with the United States, for example, which has got on top of the problem. This is a pressing public health issue in this country.

There are lots of reasons for western Governments to be concerned about this issue. Therefore, I strongly endorse what my hon. Friend the Member for St Ives (Andrew George) said about the UK Government’s recent commitment, which has not been sufficiently noticed, to replenish the global health fund. That is a fantastic commitment, not just because of the absolute sums pledged to the global health fund—which is an effective means of tackling TB and is responsible for 80% of the funding for TB programmes across the world—but because it sends a powerful message, ahead of the replenishment summit next Monday, to other potential donor countries about the value of stepping up our efforts at this time.

The west faces a choice. We have the opportunity, with the potential emergence of new treatments, diagnostics, and so on, to get on top of this disease. If we relax our efforts and fall victim to the idea that, at a time of austerity, the west might pull back from some commitments that it is making, our efforts to tackle TB would go into reverse. This is an important moment to step up to the plate. Britain has done so admirably. I commend the work of the Secretary of State for International Development and Ministers in making that commitment, and I encourage other countries to do the same.

Andrew George: Again, I congratulate the Government on their efforts regarding the global health fund, which sets the tone, but is my right hon. Friend and co-chair of the all-party group aware that just before this debate the Government published the HIV position paper, which appears to suggest that the UK’s contribution to eradicating TB can largely be delivered through the global health fund, whereas for HIV it can also be delivered by a significant strategy pursued by the Department?

Nick Herbert: I hope the Minister has noted my hon. Friend’s point, because TB control programmes rely on funding from the global health fund. We need to send

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that message to the global health fund as it determines resource allocations and to other countries as they consider replenishing their support.

My final point is that although the Government’s support for the global health fund is welcome, it is important to understand that that is not the only thing we need to do if we are to get on top of TB globally. Setting aside the action that needs to be taken domestically—Health Ministers are making progress on what needs to be done through a TB control programme—we cannot rely on the generous commitment to the global health fund for the international effort that is needed.

I want to raise the cause of an important programme run by the Stop TB Partnership called TB REACH, which addresses the problem of the missing 3 million cases to which the hon. Member for Scunthorpe referred. Until we find those who are affected by TB, we have no chance of treating them or getting hold of the disease. The power of TB REACH is that it funds innovative programmes on the ground that are finding new ways to go out and identify the missing 3 million cases. TB REACH has been robustly evaluated and shown to deliver value for money. It is relatively cost-effective, but its funding is coming to an end. TB REACH was largely set up with funding from the Canadian Government and now does not have sufficient funding to identify all the necessary cases. TB REACH has helped to identify some 500,000 cases in the past year, and it needs to do more. If we are serious about the level of the challenge we face, it would be worth while for the Government to seriously consider contributing to the ongoing work of TB REACH to ensure that the programme can survive.

Mr Kevin Barron (Rother Valley) (Lab): Earlier this year I was a member of the parliamentary delegation that visited TB REACH in Awasa, in Ethiopia. TB REACH is doing outstanding work to find those missing people. I concur with the right hon. Gentleman and add my support. Hopefully the Government can find money to put into TB REACH, as it is not funded through the global health fund.

Nick Herbert: I am grateful to the right hon. Gentleman, because that is precisely the point I am trying to make. I understand that TB REACH has helped to identify some 750,000 cases of TB and prevent those people from becoming infectious, as they would otherwise have continued to infect others.

The budget of TB REACH is relatively small. It is asking for $40 million a year. In the overall scale of the interventions that the west is now making to control the major diseases of HIV, malaria and TB, the funding is relatively small, although obviously it is not insignificant. The programme is worth while; I therefore ask the Minister to address that point. I have just written to the Secretary of State for International Development and hope to meet her to discuss TB REACH at this important moment, as the programme’s future is being considered.

I am grateful to the Government and to hon. Members on both sides of the House for the interest they have shown in TB. A few years ago, very little interest was shown in the disease, despite the huge interest shown in other international development issues. That has changed. I believe that the work of the all-party group has

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helped, as have the many non-governmental organisations that are supporting us—in particular, Results UK has played an important role in raising the profile of TB. We have a moral imperative to tackle the disease, and doing so is within our reach. It is now essential that we step up the efforts to ensure that it is not another 100 years before we beat a disease that the west once thought it had beaten.

Several hon. Members rose

Jim Dobbin (in the Chair): Order. We have five speakers left, and I intend to call the shadow Minister at 3.40 pm.

2.54 pm

Grahame M. Morris (Easington) (Lab): It is a pleasure to serve under your chairmanship, Mr Dobbin.

In the last three Westminster Hall debates that I have attended—on the privatisation of the east coast main line, the privatisation of blood products laboratories and free schools—I have found myself at loggerheads with Government Members. Unusually, however, today I find myself nodding in agreement with the excellent contribution of the right hon. Member for Arundel and South Downs (Nick Herbert). I pay tribute to my hon. Friend the Member for Scunthorpe (Nic Dakin) for securing this timely, important and significant debate.

I echo the right hon. Member for Arundel and South Downs in paying tribute to the work of the all-party group on global tuberculosis and its members and officers, including the hon. Member for St Ives (Andrew George), who has been an absolute stalwart of the group for a number of years.

I will concentrate on one aspect of this terrible condition that is close to my heart. As Members know, I have the pleasure of representing Easington in east Durham. Easington is a coal mining constituency with a long and distinguished history as one of the great heartlands of the north-east coalfields. I thought it would be poignant in this debate to reflect on why our pits were closed and why Britain now imports more than two thirds of the coal burned in our power stations, when once we imported none.

The UK coal industry was modern, efficient and very health conscious. My right hon. Friend the Member for Neath (Mr Hain) spoke about the incidence of TB among South African miners, which is relevant. I have just come from the annual general meeting of the all-party group on coalfield communities, where we talked about the problems that we face in coal mining communities, the physical legacy of pollution and the ill health associated with mining. That is another reason why this debate is close to my heart.

Although, by its very nature, mining will never be completely safe—it is an extractive process—our mines were about as safe as they could be, and the health, safety and well-being of miners was paramount. There are those who would argue that that drove up costs.

Today, much of the world’s coal production has been offshored and outsourced to countries where health and safety standards are minimal and labour is cheap. There is still blood on the coal, but nowadays it is more likely to be the blood of miners in Colombia, China or South Africa. The price of the irresponsible pursuit of profit and cheap labour is the health and safety of mineworkers worldwide.

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Mining is one of the biggest employers of men in South Africa. Tens of thousands of those miners are migrant workers, from neighbouring countries such as Mozambique, Lesotho and Swaziland, who work and live in crowded townships in mining areas. As has been said, diseases such as malaria, TB and HIV/AIDS are rife. South Africa’s mining industry has been the subject of intense international and national media scrutiny due to the recent industrial unrest. Members will be aware of the appalling shooting of striking miners by armed police in scenes reminiscent of the worst days of apartheid. Mining is one of the driving forces of the South African economy; it contributes some 20% of the country’s gross domestic product and is a major employer.

What has not been subject to the same degree of media attention is the devastation caused to miners and their families by TB. The disease remains the leading cause of death in South Africa today. One third of all cases in sub-Saharan Africa have a link to the mines. TB is an airborne disease, spreading through the air when people who have it cough or sneeze, and it is often fatal if left untreated. Rates of TB among South African mineworkers are estimated to be as high as 7,000 per 100,000. That huge figure is 28 times the World Health Organisation’s definition of a health emergency and is the highest such figure in the world.

As we have heard, TB is closely linked to HIV, which is also a challenge in the mines. It is estimated that people with HIV are 21 to 34 times more likely to develop active TB. As we approach world AIDS day, it is important to reflect on that and on the interactions between the two. Such high HIV infection rates, coupled with cramped living conditions and exposure to silica dust, which damages miners’ lungs, creates a perfect breeding ground for the disease. The effects are devastating not only for the families of the many miners who die from TB, but also for communities, companies and Governments.

From a commercial point of view, the disease dents productivity—the issues I am raising are relevant to the British mining companies involved in South Africa—puts a drain on health budgets and spreads far into the rural areas that miners migrate from. Migration also means that the problem is not exclusive to South Africa, which is one reason why sub-Saharan Africa is not on track to meet the target of reducing deaths from TB by half by the expiration of the United Nations millennium development goals in 2015.

Jim Shannon (Strangford) (DUP): I apologise for not being here earlier; I had other business and could not get here any quicker.

The hon. Gentleman mentioned world figures for TB, but the exact number of TB sufferers is not known and many of them cannot be found. How does he think we can best address that problem?

Grahame M. Morris: I am grateful to the hon. Gentleman for that relevant point. An estimated 3 million people with TB in southern Africa have not been reached, but programmes, such as TB REACH and those supported by the Department for International Development, exist to identify those people and to secure treatment for them. My point is about the incidence of known TB among miners in South Africa.

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TB is curable with drugs, and the costs are relatively modest. Spending £15 a person should be easily affordable. Global underinvestment and indifference mean that the disease killed an estimated 1.3 million people globally in 2012. The failure to deal decisively with TB has allowed drug-resistant strains of the airborne disease to develop, which are much more difficult and significantly more expensive to treat.

Earlier this year, members of the all-party parliamentary group on global tuberculosis, including me, met the Secretary of State for International Development. I want to echo the words of Government Members and compliment the Minister and the Secretary of State for their commitment on this issue. We met them to put TB at the forefront of their dealings with major Anglo-American mining interests, particularly in the gold mining industry, which has a high incidence of TB as well as high rates of HIV. As my right hon. Friend the Member for Neath mentioned, an estimated 750,000 cases—I had to check that incredible figure, as I thought it was a printing error—of TB each year, 9% of the global total, come from South Africa’s gold mines.

Colleagues who represent former British mining communities, such as my right hon. Friend the Member for Rother Valley (Mr Barron), and I are determined to push the battle against TB up the political agenda here in the UK. Along with the South African mining unions, I want to see the British Government make the British mining companies involved in South Africa sign up to a new protocol launched by the South African Department of Health. That would help ensure that mining companies abide by a legal framework governing the treatment and compensation of occupational TB.

In the past, too many stricken miners simply returned to their towns and villages to die lingering and often painful deaths. In the 21st century, it simply cannot be acceptable that mining companies, or any other employers, should systematically endanger the health of their workers. Rates of TB in the mines have been estimated at 28 times the World Health Organisation’s definition of a health emergency. This is a global health emergency. We need Governments, employers and drug companies to act accordingly.

People do not have to live in a mining constituency to know that keeping the lights on should not come at the expense of the health and lives of South African miners and their families, or those in any other countries. That is simply wrong. Global mining operations headquartered in the UK must accept their social, moral and ethical obligations to address the issue as a matter of urgency.

3.5 pm

Annette Brooke (Mid Dorset and North Poole) (LD): It is a pleasure to serve under your chairmanship, Mr Dobbin. I congratulate the hon. Member for Scunthorpe (Nic Dakin) on securing the debate. Discussing the link between tuberculosis and HIV/AIDS is particularly pertinent given our proximity to world AIDS day.

I would like primarily to focus on the need to ensure the consistent global provision of cheap, effective, high-quality drugs. I also want briefly to reflect on the past in a slightly different way from other hon. Members. More than 50 years ago, I actually caught TB, just while I was waiting for my BCG vaccination. If the timing had been otherwise, my life would obviously have been rather

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different. It is important to reflect on the fact that the BCG vaccination is over 90 years old, and it seems incredible that we do not yet have an effective vaccination. I really want to stress that aspect of the problem today.

I was in the sanatorium for seven months and can still remember the awful drugs, which I think are exactly the same as those given today. Day after day, I received injections and the most appalling tasting medicine. To make things slightly better for us young teenagers, we were given a book to read about how TB was treated in this country at the beginning of the 20th century, which was also pretty awful. Things moved on pretty quickly from the time when I was ill, however, and it was not long before the sanatorium was closed down and TB stamped out. That experience drives my interest in tackling worldwide TB.

It seems incredible that, as we have heard, an estimated 1.3 million people died from TB last year. It is most distressing to think that we are still relying on the same drugs for standard TB. We need rapid developments across the range of drugs. As has been mentioned, drug-resistant TB and extreme drug resistant TB also exist, both of which require a cocktail of drugs with horrendous side effects. The duration and difficulty of treatment represents a major challenge to patients completing treatment and therefore being fully cured. I was fortunate enough to go on a trip with the organisation Results UK to a village in Rwanda to meet patients who could not afford the transport to access the slightly more advanced drugs. There is so much more to be done.

We must also look at diagnosis. For the most part, just as when I had TB, the diagnosis is through sputum smear microscopy, which can take months, does not detect drug resistance and is ineffective at diagnosing TB in children and among HIV-positive patients. A new machine, GeneXpert, can detect some forms of drug resistance and can provide an accurate result in two hours. It has been approved by the WHO and rolled out across the world, but it is heavily dependent on local infrastructure. A point-of-care, cheap, easy-to-use diagnostic remains absolutely vital to achieving the quick diagnosis required to reduce transmission.

I, too, congratulate DFID and the Government on making a real commitment to UK aid overseas and, in particular, on topping up the global fund. However, what we are really saying, beyond congratulating the Government, is that much more needs to be done. Every year, 3 million TB patients globally are not officially treated, so we need other countries to add to the contribution we are making. We need to support important programmes such as TB REACH, which other Members have mentioned. We need the maximum provision of high-quality drugs at affordable prices. The Government must use their connections at the highest level to encourage countries to take a harder line on the quality control of drugs.

Global drug provision remains a challenge. The UK needs to increase the number of countries engaged in pooled procurement programmes such as the Global Drug Facility. That will increase demand and draw together a fragmented market, thus helping to ensure a more economically appealing market for manufacturers and suppliers.

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Poor health is a driver and a consequence of poverty; we can look back at our history and see that, and we see it today worldwide. The Prime Minister co-chaired a UN high-level panel on the post-2015 framework, which reported earlier this year. Its report revealed that TB case finding and treatment was the most cost-effective intervention measured, returning £30 for every £1 spent. With its record, the UK is in a unique position that enables it to continue giving leadership and to do much more to tackle this big global problem.

3.11 pm

Mr Kevin Barron (Rother Valley) (Lab): I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin) on applying for and securing the debate. We have heard some of the dreadful statistics on TB throughout the world, and I want to spend a few minutes looking in detail at the cost of treating TB when it has not been caught first time round.

Last year, there were an estimated 450,000 cases of multi-drug-resistant TB. It is believed that 10% of those involve extensively drug-resistant TB and are, effectively, impossible to treat. Drug resistance is really a man-made problem resulting from the misuse of anti-TB drugs and the poor management of the disease. Drug-resistant TB can be passed from person to person in the same way as TB that is not drug-resistant. Clearly, early and rapid diagnosis and treatment completion are essential to control TB. As many Members, including my hon. Friend the Member for Scunthorpe, have said, TB is the leading killer of people living with HIV/AIDS and accounts for one in five AIDS-related deaths.

Drug-resistant TB develops primarily because it is treated with a number of drugs taken over six to nine months. If medication is taken incorrectly or stopped prematurely, the TB bacteria can re-emerge and become resistant to the drugs used to treat TB. That sometimes happens because of the provision of substandard drugs, because patients do not complete their treatment or because the drugs are available only intermittently.

Multi-drug-resistant TB is a form of TB that does not respond to the standard treatment using first-line drugs and that is extremely difficult and expensive to treat. As I suggested earlier, extensively drug-resistant TB occurs when resistance to second-line drugs develops on top of multi-drug resistance. Drug-resistant TB can take two years or more to treat with drugs that are less potent, more toxic and much more expensive than those used to treat a standard case of TB. The drugs are toxic and are commonly associated with severe side effects, of which permanent deafness is the most common. Almost all of them have limited effectiveness, and most are more than 40 years old, as the hon. Member for Mid Dorset and North Poole (Annette Brooke) said. Fewer than 50% of multi-drug-resistant TB cases are successfully treated and considered cured.

On costs, multi-drug-resistant TB can be up to 450 times as expensive to treat as a standard case of TB. In all 27 high-burden multi-drug-resistant TB countries, the treatment cost is greater than the annual average income. If multi-drug-resistant TB is not correctly treated and develops into extensively drug-resistant TB, the chances of someone being successfully cured are less than one in 10. The world needs to recognise that. Extensively drug-resistant TB patients are practically

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impossible to treat, but they often remain infectious and capable of transmitting the disease to others. That scenario is often described as a time bomb.

Jim Shannon: Everyone is aware of the high prices of the normal drugs, but a number of countries—India is one—can produce similar, effective drugs more cheaply. Should we source those similar, cheaper drugs to help spread the cost?

Mr Barron: I am sure that is the case; indeed, the global fund does do that. However, that does not prevent the supply of drugs, even if they are affordable in part, from becoming intermittent. As a consequence, we end up with the more extreme cases of TB.

The UK Government have played a leading role in the response to TB globally, investing in research and development on new tools to tackle TB, supporting efforts to increase the profile of the disease through the Stop TB Partnership and supporting key institutions such as the global fund, which accounts for more than 80% of donor funding to tackle TB in developing countries.

I mentioned in an intervention that I visited Ethiopia earlier this year. I went there with Results UK in the February recess, along with the hon. Member for South Derbyshire (Heather Wheeler), my hon. Friend the Member for Workington (Sir Tony Cunningham) and two Members of the other place. In Addis Ababa, we visited St Peter’s hospital, which is Ethiopia’s national TB referral hospital. With support from the global fund, St Peter’s provides care for TB referral cases and patients with multi-drug-resistant tuberculosis. It also provides care and treatment to people living with HIV/AIDS, which is of course closely linked to TB.

The hospital demonstrated that, with proper funding, low-income countries can use minimal resources efficiently and effectively to respond to the threat of drug-resistant TB. As I said in my intervention on the right hon. Member for Arundel and South Downs (Nick Herbert), we also visited Awasa and looked at the great work TB REACH was doing there to find the missing 3 million cases.

While we were in Ethiopia, we did not look just at TB, although that was our primary aim. We also looked at Ethiopia’s strong planning and innovative response to its human resource crisis. It is using its health extension programme, which quite a lot of our money has gone into developing. Funding to support such successful interventions has been provided by key multilateral organisations, including the global fund and TB REACH. I reiterate that, in addition to what they have done already, the UK Government have put £1 billion over three years into the global fund, and they are much to be credited for that.

Finally, I have travelled the Commonwealth on many occasions over the years. When we were out in Addis Ababa, we had a meeting with DFID—I say this because the Minister is here—and it was one of the most positive meetings I have ever had. The DFID people knew exactly where global fund money and our taxpayers’ money was going: to help people in dire need of an improvement in their health, as well as in their quality of life, through water supplies and things like that. We

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always hear negative views about what happens to taxpayers’ money when it goes to the developing world, so it is worth putting on record that that was the most positive experience I have had since becoming a Member of the House.

3.19 pm

Stephen Mosley (City of Chester) (Con): I congratulate the hon. Member for Scunthorpe (Nic Dakin) on securing this debate on tuberculosis, a disease that 8.6 million people catch, and of which 1.3 million people die, every year. It is a huge issue.

I was fortunate enough to join the Results UK delegation to Zambia last year, when we examined the link between HIV and TB. We visited Lusaka central prison. I do not know whether you have ever been to a prison in central Africa, Mr Dobbin, but, a couple of months before we attended, the vice-president of Zambia, Guy Scott, visited another prison and described it as hell on earth. I must say I have never been anywhere like Lusaka central prison. It was shocking.

The prison was built by the colonial authorities in the 1920s to house between 180 and 200 prisoners. Now it houses almost 2,000. We were taken to cells no bigger than my bedroom at home. They were designed to sleep between six and 10 people, but now there are 80 to 100 prisoners locked in those rooms for up to 14 hours a day. I looked at the room and wondered how they even fitted so many people in it. Apparently the sleeping arrangement is to line up 12 people against the wall, who crouch down with their backs to it. They sit down and open their legs and the next 10 or 12 come and lie between their legs, and so on, to cram them into all the available space. Mattresses and blankets are completely lacking. The toilet facilities are completely inadequate for the number of prisoners, and an open drain or sewer, containing a disgusting-looking brown liquid, runs through the middle of the courtyard. Medical facilities are lacking—the site has no health clinic and sick prisoners lack medicine—and so is food. There is one basic meal a day, which is completely lacking in protein. It is fair to say that the conditions in the prison are not conducive to general health.

Catching TB should not be part of someone’s prison sentence, but in that prison it was. At one stage the TB infection rate was almost 100%. TB is one of the fastest-growing epidemics in sub-Saharan Africa’s prison populations. It presents a threat not only to the inmates but to the wider population, because the prisons act as a reservoir for TB. It gets into the wider community through visiting, staff visits and the fact that prisoners who leave have been inadequately treated. TB does not respect prison walls.

There was a bright spot to the visit. We were taken to the prison by the commissioner of prison services, who was very open, and keen for us to see the reality. Several hon. Members have mentioned TB REACH, and we were shown a project that it had set up in the prison together with the Centre for Infectious Disease Research in Zambia. That programme included TB and HIV screening, treatment, and the introduction of isolation cells for prisoners with multiple drug-resistant TB. A prisoners’ drama group had been organised to teach prisoners to look for the signs of TB and understand how important it is for those with the disease to make

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people aware of it and get the required treatment. The programme was massively successful. The TB infection rate was down to 30%. That is still huge, but it is an awful lot better than it had been a year before.

Early diagnosis and treatment are essential for the control of TB. As we saw in Zambia, TB REACH runs pretty much the only mechanism designed to target and treat the 3 million missing TB victims we have heard about. One of its advantages is that it can react very quickly. It can provide fast-track funding for projects, to get them up and running quickly—often within six months. It is also willing to fund new and innovative approaches. That is important, because organisations such as the Global Fund to Fight AIDS, Tuberculosis and Malaria will fund projects only if they have been proved successful. They will not finance new ideas or do experimental things to see whether they will work.

We need new approaches. Many places that we visited in Zambia—whether clinics, hospitals, or community groups—were in isolated communities. There is a need for new, mobile technology, and we need to roll out new diagnostic tests. That can happen only when testing and experimentation has been carried out, and when an organisation such as TB REACH is willing to provide funding. We saw that process in action when we visited Kanyama clinic, run by the Zambia AIDS Related Tuberculosis Project. Like my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke), we saw the GeneXpert machine in action.

For hon. Members who do not know what the GeneXpert machine is, the relevant website describes it as follows:

“The GeneXpert System automates and integrates sample preparation, nucleic acid amplification, and detection of the target sequence in simple or complex samples using real-time Polymerase Chain Reaction”.

In basic terms, it is a diagnostic tool that can diagnose TB much more accurately than the use of a microscope, as well as more quickly—often within two hours. It can detect TB in HIV-positive patients too. That of course is a massive advantage in rural clinics, because people can have the test and wait for the result. At the clinic, people from the community were encouraged to become involved as volunteers and to help people by talking them through the process, the results, and what the treatment would entail, and by going out into communities to ensure that they continued taking the treatment in the weeks ahead.

The GeneXpert machine works well in some environments, but it is not perfect. It can be difficult to use in isolated rural areas, because it requires a constant electricity supply, so on our visit we looked at how alternative energy supplies such as solar power could be used to power medical equipment in rural areas.

On our visits to Kanyama clinic and Lusaka central prison we saw at first hand the effect of TB REACH projects—improving TB diagnosis and providing fast treatment. However, as we have heard from my right hon. Friend the Member for Arundel and South Downs (Nick Herbert), the project is time-limited, and new funding is required now that its grant is coming to an end. There is concern about how some of the projects can be integrated into national health care systems. TB REACH grants are for short periods, to get a new

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technique into use in a locality. For permanent solutions it is necessary to integrate an approach into the relevant national health scheme, or to reach a position where it can be funded by the global health fund or donor countries will be willing to continue to support it.

As we have heard, the majority of the TB burden is concentrated in countries that often receive less donor funding. Whether it is the burden of drug-resistant TB in eastern Europe, TB in prisons in Zambia, or the epidemic, on an enormous scale, in India, domestic Governments must step up their own response. The UK has a unique opportunity to use its global leadership position to call on those Governments to increase their investment in the fight against TB, especially given our strong links to southern Africa and India, which account for the greatest part of the missing 3 million—the ones missed by their health systems. TB is a global disease on which the UK can have an impact.

The Minister and DFID have done a fantastic job and have made Britain a world leader in the battle against malaria. The UK Government should also use their position to become a global leader in the fight against TB, which is another of the top infectious disease killers. Global political commitment to that fight has so far been missing.

3.29 pm

Mr Virendra Sharma (Ealing, Southall) (Lab): It is a pleasure to serve under your chairmanship, Mr Dobbin; I thank you for giving me the time to speak in the debate. I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin) on securing the debate, which is close to my heart, as I am the co-chair of the all-party group on global tuberculosis. I also congratulate and thank the many agencies and non-governmental organisations that work in this field, which have helped to raise the issue and bring it to the top of the world agenda.

There is an urgent need to address TB worldwide, but we must not forget that it is still a big concern in the UK, where the rate of TB cases is the highest in western Europe, with 9,000 cases last year alone. My constituency has the second highest rate in the country—156.8 cases per 100,000 people, roughly six times higher than the UK average and equivalent to the rate in Tanzania. It is important to remember that TB is very much a public health threat in parts of the UK, and that it affects people’s health every day, often with long-lasting consequences.

One of the key barriers to treating and eliminating TB in this country is stigma. TB is an airborne, infectious disease, which is deemed incurable and is associated with poverty. Many people are reluctant to tell their families, partners and community when they have the disease, which means they are much less likely to be treated. In the UK, stigma is a barrier that prevents people from seeking treatment when they start to feel ill. It also makes it difficult for health workers to identify other people who might have been exposed, because patients are often reluctant to admit to the possibility of their having infected others.

We cannot afford to ignore TB. It needs to be prioritised and talked about so that people do not feel marginalised and ashamed. We need to ensure that they are aware that TB can be treated and that they seek treatment when they fall ill.

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We have a great health centre in Southall that offers TB screening, diagnosis and treatment. However, a third of patients in the area had a delay of more than three months between symptom onset and diagnosis. Although the proportion of people completing treatment was similar to the London average, slightly more were lost to follow-up.

We need to support social outreach projects in high-risk areas as a means of engaging directly with the community, rather than wait for people to come to the health services. That will help to raise awareness and stymie stigmatising, and will enable us to diagnose and treat TB earlier in at-risk communities. Case finding needs to be an active process to ensure that cases of TB do not fall between the cracks and remain untreated.

On a local and community level, outreach projects are crucial, but it is essential that we also have a national strategy on TB. The all-party group on global tuberculosis led the way in calling for a national strategy on TB. It is encouraging that Public Health England is currently developing such a strategy, which will be published in 2014. The national strategy will drive best practice throughout the UK’s clinical and social care for TB, but we must ensure that it is closely integrated with other Government policies on TB, including those of the UK Border Agency and the Department for International Development.

An interdepartmental ministerial group on TB performed that task at the turn of the century, but unfortunately it produced only one report before folding. That group should be revived. TB affects a wide range of Departments, and efforts must be made to enhance co-operation and co-ordination across their policies and interventions to provide the most effective response to TB in this country. A formalised, recognised structure with appropriate support is the best way to make that happen.

TB has been neglected for too long. It is a disease that people do not talk about and have forgotten, which increases stigma and reduces the likelihood that those in need will receive treatment and care. The UK does not need to commit finances to make a difference to how the disease is perceived, but it does need to show leadership and commitment domestically and abroad. It can do that by reaffirming that TB is a serious threat and a priority, and by committing to a local community strategy accompanied by a national, co-ordinated interdepartmental approach.

Jim Dobbin (in the Chair): I have enjoyed the debate very much. In a former life, I worked in an infectious diseases hospital, specialising in TB.

3.36 pm

Alison McGovern (Wirral South) (Lab): It is a pleasure to serve under your chairmanship, Mr Dobbin. I was going to mention your experience, which I am well aware of. Perhaps you should have spoken in the debate, rather than being in the Chair.

I congratulate my hon. Friend the Member for Scunthorpe (Nic Dakin)on securing such an important debate. The unity that we have heard in the contributions is telling. We often spend our time disagreeing, but today we have not. That should be a message to everybody who cares about this incredibly important issue.·

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