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New Immigration Statement from House of Commons

22 Mar 2011 : Column 833

House of Commons

Tuesday 22 March 2011

The House met at half-past Two o'clock

PRAYERS

[Mr Speaker in the Chair ]

Oral Answers to Questions

TREASURY

The Chancellor of the Exchequer was asked-

Financial Regulation

1. Bill Esterson (Sefton Central) (Lab): What assessment he has made of the effects on the

economy of the trade in mortgage-backed securities and collateralised debt obligations.[47918]

The Chancellor of the Exchequer (Mr George Osborne): The rapid increase in mortgage-

backed securities and collateralised debt obligations contributed to a build-up of excessive

and unstable levels of private debt in the UK in the years running up to the financial crisis.

Although we would wish to see a properly regulated securitisation market reopened to help

with lending, this must happen under a much more effective supervision regime. That is why

we are abolishing the failed tripartite system and have restored to the Bank of England the

responsibility for monitoring overall levels of debt in the economy. We have already

established a new Financial Policy Committee to assess risks to the stability of the system,

such as the emergence of excessive debt.

Bill Esterson: Although I accept the analysis in the first half of the right hon. Gentleman's

answer, I wonder whether the fact that financial services companies donated 51% of all funds

to the Conservative party has led to a conflict of interests that prevents adequate regulation.

Mr Osborne: I think that I pointed out in an earlier exchange that an ex-Lehman Brothers

and RBS banker contributed to the leadership campaign of the shadow Chancellor, so if the

hon. Member for Sefton Central (Bill Esterson) wants to make that point again, and if you

would allow, Mr Speaker, perhaps he could intervene.

Sir Peter Tapsell (Louth and Horncastle) (Con): Does the Chancellor agree, as I do, with

the Governor of the Bank of England in asserting that if we are to avoid another banking



crisis in this country, we must have a complete separation between commercial and

investment banks, which of course create these collateralised debt obligations?

22 Mar 2011 : Column 834

Mr Osborne: If my hon. Friend will allow me, I will keep my personal views on this matter

private while we await the publication of the independent commission that has been set up to

look at this issue, and which I, the Business Secretary and the whole House will have to

consider. It is producing its interim report in April, and will produce a final report in

September. Let us remember that the commission was set up by this Government to ask the

difficult questions of the kind that he is asking, because we are determined not to repeat the

mistakes of the past.

Looked-after Children (Saving Schemes)

2. Sheila Gilmore (Edinburgh East) (Lab): If he will bring forward proposals for a scheme

to provide looked-after children with a savings account or trust fund funded by contributions

from the Exchequer; and if he will make a statement. [47919]

The Chancellor of the Exchequer (Mr George Osborne): In October, the Government

announced that we will create a new tax-free children's savings account to be known as the

junior ISA. We expect the accounts to be available from this autumn, and will be setting out

details of how they will work next week. As the hon. Lady and the right hon. Member for

Wythenshawe and Sale East (Paul Goggins), who is my constituency neighbour, will know,

Barnardo's and Action for Children have proposed that these accounts be used to support

saving for looked-after children. I know that these children face particular challenges, and Ican tell the House that the Department for Education will work with others to make the

necessary funding available to ensure that we can provide the support that they deserve. We

will work with charities and interested parties to develop detailed proposals funded by the

Government, so that junior ISAs can best support these children.

Sheila Gilmore: There were warm words on this last summer when the child trust funds

were abolished, and there are warms words now, but will the Chancellor tell us when such a

savings scheme, backed by the Government, will be introduced for looked-after children?

Mr Osborne: I have just announced the money for the scheme that the hon. Lady asked me

about, and we will now engage with Barnardo's and Action for Children. I have seen their report, "On Our Own Two Feet", and we will provide the funding to make the scheme a

reality for looked-after children.

Mr Edward Timpson (Crewe and Nantwich) (Con): As chairman of the all-party group on

looked-after children and care leavers, I warmly welcome my right hon. Friend's

announcement today. Is he aware that the proposal has widespread cross-party support? The

fact that the Government have listened to all representations and taken steps to make

provision for the most vulnerable children in our society is extremely welcome.

Mr Osborne: I thank my hon. Friend for those words of support. I know that he has personal

experience, through the work his family have done with children in care, of the contributionthat society can make to helping these children. Frankly, all Governments have struggled to



The Economic Secretary to the Treasury (Justine Greening): The VAT forecast is

estimated on an aggregate basis, as registered traders are not required to record in their VAT

return the type of goods or services on which VAT has been collected.

Albert Owen: I agree with the Prime Minister that VAT is a regressive tax that hits the

poorest hardest. Today's figures show that the rise has also pushed up inflation, hitting peoplein their pockets and at the pumps. Will the Treasury team look again at the VAT rise on fuel-

which is hurting motorists, hauliers, businesses and families across the country-and reverse

it?

Justine Greening: I welcome the hon. Gentleman's concern for motorists. However, I note

that when the VAT rise passed through Parliament on 13 July 2010, he did not vote against it.

I assure him that the Government are looking at what we can do to support motorists, hauliers

and businesses with the cost of fuel, but I have to say that his party's proposal on VAT is

illegal, unworkable and unfunded.

Vernon Coaker: Does the Minister agree with the Transport Secretary-who, on the "DailyPolitics" show on 2 March, dismissed the rise in VAT as a spurious argument-or does she

agree with my constituents that by adding £1.35 to the cost of filling up a 50-litre tank with

fuel, the VAT rise is the wrong tax at the wrong time?

Justine Greening: Perhaps the hon. Gentleman should talk to his former Prime Minister,

Tony Blair, or the right hon. Member for Edinburgh South West (Mr Darling), the former

Chancellor, who both said that our decision to raise VAT was necessary to tackle the huge

deficit that was left by his party. Again, if he is so concerned about the VAT rise, how come

he did not vote against it last July?

Michael Fallon (Sevenoaks) (Con): Will my hon. Friend confirm that the Government

inherited plans for six increases in fuel duty from their predecessor, four of which have yet to

come into effect? Of all the groups of people who are quite reasonably concerned about the

increasing cost of fuel, surely the least qualified is the Labour party.

Justine Greening: My hon. Friend is absolutely right. In fact, the previous Government

introduced 12 duty rises during their time in office. As he pointed out, they also legislated for

a further six rises, bringing in the fuel duty escalator, and these would have been on top of

inflation rises. It was absolutely amazing to see the Labour party table a motion last week

bemoaning the amount of tax that motorists are paying, when they legislated for all-

Mr Speaker: Order. I am grateful to the Minister, but we must concentrate on the policy of

the Government.

Stephen Williams (Bristol West) (LD): I am sure that the Chancellor will respond to the

concerns of the motorist tomorrow in a fiscally responsible and environmentally sustainable

way, but does the Minister agree that road

22 Mar 2011 : Column 837fuel duty is a blunt instrument for taxing motoring, and that what we need in the long run is a

more flexible, market-oriented mechanism for taxing road use?

Justine Greening: Obviously, my hon. Friend has his ideas about how he would like to seemotorists being taxed in relation to the environment. He will be aware that the way in which



vehicle excise duty is structured encourages motorists to purchase and use cars with lower

emissions.

Ms Angela Eagle (Wallasey) (Lab): On the day that diesel prices have hit a new high and

inflation has jumped higher still, making the squeeze on living standards even worse, why do

not the Government admit that they got it wrong on VAT and give struggling working peoplesome much-needed support by reversing the Tory VAT rise on petrol, which would take 3p

off the price of a litre? Just do it!

Justine Greening: The hon. Lady says, "Just do it!", but she should know that that is simply

not legally possible. She fully understands that. The reason that the Opposition are talking

about that is that the fuel duty rises that are coming through were legislated for by Labour, so

they are desperately looking for something to say about an issue that they themselves created.

She knows that her policy on the VAT rise is illegal, totally unworkable and completely

unfunded. Labour wants to take seven years to support motorists; we want to see what we can

do to support them now.

Charlie Elphicke (Dover) (Con): Will the Minister tell us by how much duty has risen in

recent years, and whether the person who put the duty up is in the House today?

Justine Greening: When the Labour Government came to power in 1997, fuel duty was

36.86p per litre. By the time they left office, it had risen to 57.19p per litre. As I am sure my

hon. Friend is aware, one of the architects of those tax rises was then the chief economic

adviser to the Treasury; he is now the shadow Chancellor.

Employment (VAT Rise)

4. Lindsay Roy (Glenrothes) (Lab): What assessment he has made of the effect on levels of

employment of the increase in the standard rate of value added tax. [47921]

8. Mike Gapes (Ilford South) (Lab/Co-op): What assessment he has made of the effect on

levels of employment of the increase in the standard rate of value added tax. [47925]

The Chief Secretary to the Treasury (Danny Alexander): The Government have taken

urgent and unavoidable action to tackle the deficit and to put the public finances on a

sustainable footing. That is essential for jobs and growth. Raising the standard rate of VAT is

an important element of the plan and, in November, the Office for Budget Responsibility's

forecast, which took full account of the VAT increase, was for total employment to rise by1.1 million in 2015.

22 Mar 2011 : Column 838

Lindsay Roy: I thank the Minister for that answer. Will he tell us what impact the VAT rise

has had so far on himself and his family?

Danny Alexander: The VAT rise of course leads to increased prices in the shops, and that

affects everyone in the House.



Mike Gapes: The Chief Secretary to the Treasury had a meeting-a crisis meeting, according

to The Daily Telegraph-with senior retailers a few weeks ago. Was there any discussion of

the impact of the VAT rise at that meeting?

Danny Alexander: I did indeed meet senior retailers from the British Retail Consortium and

we discussed a whole range of issues in a private meeting. If the hon. Gentleman is interestedin the consortium's views, he should listen to what its director general said on 20 October, the

day of the spending review. He said that delays in public expenditure cuts

"would just store up more pain for later, risking increased borrowing costs, higher

taxes and more job losses."

Alec Shelbrooke (Elmet and Rothwell) (Con): Which does my right hon. Friend think is

the lesser evil: a rise in VAT that does not apply to food or children's clothes, or taking

almost 1 million of the lowest paid workers out of income tax altogether?

Danny Alexander: I certainly think that our Government have got their priorities right whenit comes to lifting the burden of income tax on low-income workers. The increase in the

personal allowance by £1,000, which will come into effect in April this year, will ensure that

880,000 low-income workers will no longer pay income tax. Furthermore, 23 million basic

rate taxpayers will see a tax cut of £200 next year.

John Thurso (Caithness, Sutherland and Easter Ross) (LD): Has my right hon. Friend

considered the letter sent to him by the chair of the tourism group of the Sutherland

Partnership, which outlined the importance of tourism for employment in the area and the

barriers that VAT is creating, particularly in relation to road fuel? Is there anything that the

Government can do to mitigate that effect?

Danny Alexander: I have seen that letter and, as a fellow highland MP, I am fully aware of

the impact that high fuel prices have on families and individuals. We have already taken steps

to deliver a 5p duty discount to island communities, and I hope that we will be able to do

what we can tomorrow, but that will be a matter for the Chancellor to announce in the Budget

statement.

Mr Speaker: Eric Joyce is not here. I call Andrew Stephenson.

Manufacturing

7. Andrew Stephenson (Pendle) (Con): What fiscal measures he has taken to support

economic growth in the manufacturing sector. [47924]

22 Mar 2011 : Column 839

12. Stephen Metcalfe (South Basildon and East Thurrock) (Con): What fiscal measures

he has taken to support economic growth in the manufacturing sector. [47929]

The Chancellor of the Exchequer (Mr George Osborne): Manufacturing is now expanding

after years of contraction. In order to support it, the June Budget contained four reductions inthe main rate of corporation tax and a cut in the small companies rate from 21% to 20%. The



allowances, which would be just the thing to help and support a small and vital manufacturer

like the one in my constituency?

Mr Osborne: Manufacturers, including the one to which the hon. Lady has referred, benefit

to the tune of £250 million from the reductions in corporation tax that we announced in the

June Budget. That is what we have done to support British industry. As I have said, under theLabour Government British industry shrank: while the share of the economy taken by

financial services grew by a third, the manufacturing share halved.

George Freeman (Mid Norfolk) (Con): Does my right hon. Friend agree that, as we see

signs that business confidence in the economy is being restored, tomorrow's Budget presents

a key opportunity to support the high-technology entrepreneurs who put their own wealth at

risk in starting the businesses of tomorrow?

Mr Osborne: Yes, we will support enterprise and innovation in tomorrow's Budget, but my

hon. Friend will have to be patient and wait until then to hear about the precise measures that

are involved.

Ed Balls (Morley and Outwood) (Lab/Co-op): Manufacturers up and down the country and

the whole House are awaiting the Chancellor's long-delayed growth strategy to be published

tomorrow, but I have a copy of that document with me today. It says:

"Growth comes first for this Government"

and that their strategy will

"underpin private confidence, investment and job creation."

The Chancellor has no need to worry however, as I will not be handing this document to the

press. I read it last night and, frankly, there is nothing in it worth leaking. Has this document

been audited by the Office for Budget Responsibility? Is the Chancellor really clear that

getting rid of maternity and paternity rights and enterprise zones will boost jobs and growth

in our economy? Is this going to be enough to stop the Budget growth forecast tomorrow

being downgraded for this year and next?

Mr Osborne: I am not sure that that is the document in question-but if the right hon.

Gentleman hands it over, I will have a look-because we are not getting rid of maternity and

paternity rights, so I do not know where he got that from. Besides, I have a copy of his22 Mar 2011 : Column 841document, and it contains all the spending commitments he has been making. If he cannot

control his own Front-Bench colleagues, how on earth is he going to control the nation's

finances?

Ed Balls: Is this really the best the right hon. Gentleman can do? I bet he will have Treasury

officials scrabbling around all afternoon trying to deliver a further 1p cut in corporation tax

tomorrow and a further tax cut for the banks. Let us wait and see. The fact is that a year ago

inflation was low and unemployment was falling, and a year on, as we see today, inflation is

up to 4.4% and borrowing is higher than a year ago, not to mention unemployment. If the

Chancellor will not listen to me, will he listen to his colleague who said:



"We must not cut Government spending too soon and risk plunging a fragile recovery

back into recession. Cuts without economic growth will not deal with the deficit"?

The Business Secretary was right. Why will the Chancellor not listen?

Mr Osborne: The right hon. Gentleman really needs to brush up on his question practice, butlet me say this to him: the idea that we were somehow left a fantastic economy by the Labour

party is quite the most ludicrous claim in the country, and the only reason he makes it is

because he was responsible for the economic mess that left this country on the brink of

bankruptcy.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): One of this country's great

manufacturing success stories is world-leading subsea engineering that has grown up on the

back of investment in the North sea oil and gas industry, based in my constituency but

working throughout the United Kingdom. What reassurance can the Chancellor give my

constituents that the Government will build on their constructive relationship to ensure a

fiscal regime that maximises investment in North sea oil and gas production and explorationand that boosts the manufacturing that supports that?

Mr Osborne: Of course we want to ensure that we prolong the life of the North sea fields.

One area on which we can work with the industry is ensuring greater certainty about

decommissioning costs and about the tax regime that was operated under previous

Governments and how that will apply over the next 10 years. I hope to work with the industry

on that.

Public Expenditure Reductions

9. Debbie Abrahams (Oldham East and Saddleworth) (Lab): If he will review the pace of

proposed reductions in public expenditure to take into account GDP figures for the fourth

quarter of 2010. [47926]

The Chief Secretary to the Treasury (Danny Alexander): I welcome the hon. Lady to the

House. The short answer to her question is no. Of course, growth in the final quarter of last

year was disappointing, but, as we always said, the recovery in the early stages would be

choppy. Deficit reduction is the essential precondition for growth, and the OBR's November

forecast stated that we would see growth in every year of the forecast.

22 Mar 2011 : Column 842

Debbie Abrahams: Will the Chief Secretary explain to my constituents who are either

unemployed or facing redundancy how his Government's catastrophic economic policy is in

the interests of the country? Clearly, we are not all in this together.

Danny Alexander: I hope the hon. Lady will take the opportunity to explain to her

constituents that it is the legacy of the previous Labour Government that has caused the

enormous mess and all the problems in our economy. They left us with the largest Budget

deficit in Europe, and one of the largest in the world. Countries in our position have to take

the sort of action we have taken, or risk being in a much deeper mess. If that is what she isadvocating, I suggest she tells her constituents.



Margot James (Stourbridge) (Con): We are spending £120 million a day on debt interest-

£1 billion by the end of next week. How many representations has my right hon. Friend

received from reputable international and national organisations advising him to slow the

pace of deficit reduction?

Danny Alexander: None. The hon. Lady will be aware of the report that the OECDpublished last week, which strongly endorsed our plans. Its general secretary, Angel Gurría,

said that the fiscal position we inherited was "clearly unsustainable" and that the

"consolidation measures and plans that the"-

Government-

"have put in place were therefore vital."

I agree with that.

Chris Leslie (Nottingham East) (Lab/Co-op): Today's inflation figures show a sharp leap

in the retail prices index to 5.5%, the highest level in 20 years. That hits not only living

standards, but public service expenditure plans. Is the Chief Secretary sticking to the coalition

agreement guarantee of real-terms growth for the NHS in each year or is he resolutely

sticking to his plan A, regardless of economic realities?

Danny Alexander: We are sticking to the spending plans that we set out in the spending

review, and that is the right thing to do. Of course I understand that inflation has an effect on

people's living standards, which is why it is particularly important to emphasise the increase

in the personal income tax threshold-£1,000 extra on the threshold-that comes into force thisApril, which will put £200 back into the pockets of hard-working people in this country. That

is the action this Government are taking to help people through these difficult times.

Budget Deficit

10. Stephen Phillips (Sleaford and North Hykeham) (Con): By what date he expects

revenue to the Exchequer to match levels of public expenditure. [47927]

The Financial Secretary to the Treasury (Mr Mark Hoban): Excluding capital

expenditure, the Office for Budget Responsibility forecasts revenue to exceed current

expenditure by 2015-16. This is further evidence that this Government believe that thecountry should live within its means.

22 Mar 2011 : Column 843

Stephen Phillips: I am grateful to my hon. Friend for that answer. The shadow Chancellor

was reported as saying in Saturday's The Daily Telegraph:

"The idea that Labour profligacy caused the crisis is utter tosh."



Does my hon. Friend agree that the only tosh to be seen in that statement is the suggestion

that Labour had not created the mess we are in? Is it not the case, as the CBI has said, that the

previous Government's target of balancing the budget by 2018 was set too far off to-

Mr Speaker: Order. We are asking about current policy, and some of these questions are

simply -[Interruption.] Order. We have got the gist.

Mr Hoban: My hon. and learned Friend is absolutely right, and a number of organisations,

both at home and abroad, have criticised the lack of ambition of the previous Chancellor's

plans. That is why the Obama Administration, the International Monetary Fund, the OECD,

the Institute for Fiscal Studies, the CBI, the Governor of the Bank of England, 35 leaders of

British businesses, the European Commission, the World Bank, three major credit rating

agencies and the world's biggest bond trader have been backing our plans-the only person the

shadow Chancellor can find to back his is The Guardian.

Tony Lloyd (Manchester Central) (Lab): Public expenditure is to be matched by revenue

in 2015, but has the Treasury made any estimate of the amount of growth and employmentthat will have been forgone by these policies of making too-deep cuts too quickly?

Mr Hoban: The hon. Gentleman should pay attention to the forecast produced last year by

the OBR indicating that the economy would continue to grow in each year of this Parliament.

Stephen Hammond (Wimbledon) (Con): Does my hon. Friend agree that real progress on

growth has to be made through not only matching expenditure, but cutting the deficit, and

that the OECD says that the only way we will get future growth is by ensuring that the deficit

plans are continued and this Government pursue their policy?

Mr Hoban: My hon. Friend is absolutely right. The OECD is one of a number of

organisations that have supported our plans. The IMF has said:

"The government's strong and credible multi-year fiscal deficit reduction plan is

essential to ensure debt sustainability."

That theme continues to come across from international organisations, which demonstrates

that we are on the right track to get this economy growing again and ensure that Britain

continues to live within its means after a decade of a Labour Government who maxed out on

the nation's credit cards.

Budget (Impact Assessments)

11. Helen Goodman (Bishop Auckland) (Lab): If he will (a) prepare and (b) publish an

assessment of the relative effect of his forthcoming budget on women, families and ethnic

minorities. [47928]

22 Mar 2011 : Column 844

The Exchequer Secretary to the Treasury (Mr David Gauke): Consistent with the

approach taken at the June Budget, the Government will publish analysis on the Budget'soverall impact on households across the income and expenditure distributions in the Red



Book. The Budget is an overall statement of economic policy containing a wide range of

measures, and it is not possible to make a robust assessment of its overall impact on specific

groups.

Helen Goodman: I am surprised by that answer. Since the general election, the Government

have made 17 distinct cuts to tax credits and child benefit, which are paid to women.Tomorrow, the Chancellor will announce increases in personal allowances, which will benefit

millions more men than women. Does the Minister think it is fair that money should be taken

from women to give it to men?

Mr Gauke: All I can say is that I am surprised that the hon. Lady is opposed to increases in

personal allowances and I suspect that she might be somewhat lonely in the Lobby opposing

it.

Claire Perry (Devizes) (Con): Is the Minister aware of my freedom of information request

from last September which found that the previous Government never carried out an

equalities impact assessment-not in the March Budget, the December pre-Budget report or the March 2010 Budget? They never did it either.

Mr Speaker: Order. I am sorry but I must repeat, and I hope that the message will be heeded,

that questions must be about the policy of the current Government.

Mary Macleod (Brentford and Isleworth) (Con): Does my hon. Friend agree that raising

the income tax threshold, protecting spending on the NHS and increasing spending on social

care will definitely benefit women?

Mr Gauke: My hon. Friend is absolutely right to highlight this point. Some of us recall thedifficulty in getting distributional analyses out of the previous Government and it has to be

said that this Government are taking great steps forward.

Kerry McCarthy (Bristol East) (Lab): The Chancellor chose to hit women three times as

hard as men in his Budget last year and now, as living costs rise and the public sector is

slashed, he wants to hit them yet again by changing the rules around maternity and paternity

leave and flexible working in small companies. Is it really women whom the Prime Minister

has in mind when he talks about taking on the enemies of enterprise, and can the Minister

reassure the House that it will not be women who bear the brunt of tomorrow's Budget?

Mr Gauke: This is pretty desperate stuff. It is in the interests of the entire country that wesort out the public finances, even if the Labour party will not accept that.

Amber Rudd (Hastings and Rye) (Con): Does the Minister agree that the fact that we are

not cutting the NHS will really support women because they are so often carers in their

family and it is so important that we support them in that important role?

22 Mar 2011 : Column 845

Mr Gauke: My hon. Friend is absolutely right and it is striking that the previous shadow

Chancellor and the previous shadow Health Secretary said that it was madness to ring-fencethe NHS. That is not the view of this Government.



VAT (Road Fuel)

13. Anas Sarwar (Glasgow Central) (Lab): What assessment he has made of the effect on

road fuel prices of the increase in the standard rate of value added tax. [47930]

The Exchequer Secretary to the Treasury (Mr David Gauke): How much of the rise inthe standard rate of VAT is passed on to consumers is a commercial decision for retailers.

Anas Sarwar: I thank the Minister for that answer. Treasury Ministers are very wrong to

suggest that the calls to scrap the VAT increase on fuel is illegal and unworkable. There is

precedent for it: the French President recently got a derogation from EU laws for French

restaurants. Will this Government stand up for UK families who have been hard hit by the

rise in fuel costs and look for derogation powers on fuel duty?

Mr Gauke: A week ago, the shadow Chancellor was saying that we needed an immediate cut

in the tax on fuel and now the Labour party is saying that we should start a process that will

take about seven years. That does not strike me as being terribly helpful.

Richard Graham (Gloucester) (Con): In terms of the value for money of decisions taken by

the Treasury, whether on road fuel tax or other things, does the Minister agree that one of the

best value creations of this Government has been the increase in apprenticeships, which is

widely appreciated around the country? Does he agree that apprenticeships are critical both to

our growth strategy and to the reduction of youth-

Mr Speaker: Order. I am sorry, but that question suffers from the disadvantage that it bears

absolutely no relation whatever to the question on the Order Paper.

Mr Peter Bone (Wellingborough) (Con): May I suggest a much quicker way of changing

the VAT rate without that being illegal-by pulling out of the European Union?

Mr Speaker: I have to say that that was not much better, but the Minister may have a go.

Mr Gauke: To be fair, if we wanted to reduce tax on fuel through the VAT rate that is

exactly what we would have to do, so perhaps that is not the best way of doing it.

Budget Deficit

14. Mark Lancaster (Milton Keynes North) (Con): What recent representations he hasreceived on measures to reduce the budget deficit. [47931]

22 Mar 2011 : Column 846

The Financial Secretary to the Treasury (Mr Mark Hoban): The Government have

received a number of representations for the Budget referring to the need to reduce the budget

deficit. In addition, the Government's strategy has been endorsed by a number of

organisations, including the OECD, which said in January that the Government should

"stay the course...The fiscal situation in the UK absolutely requires this approach".



Mark Lancaster: The Government's plan to eliminate the deficit by 2015 is in stark contrast

to the Darling plan, which was simply to reduce it by half. What assessment has the Minister

made of the likely impact of the Darling plan on the level of debt and the cost of servicing it?

Mr Hoban: If we had continued with the previous Government's deficit reduction plan, debt

would still be rising in 2015, not falling, meaning that we would have to spend an extra £3billion in one year on debt interest while still having to make spending cuts. The lack of

ambition in the previous Government's plan put our credit rating at risk, thus threatening the

prospect of higher interest rates and putting a brake on the recovery.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): When such representations were being

made, was the Minister conscious of the effect that these cuts might have on young people in

our country? Did he look at last week's level of unemployment among young people? When

will his Government do something for young people in this country?

Mr Hoban: The legacy left by the previous Government was that youth unemployment was

continuing to rise. The other problem with which the Opposition left us was that our childrenand grandchildren would have to pick up the tab for Labour's mismanagement of our

economy. We need to get the deficit down to create the foundations for economic growth to

ensure that more young people are back in work.

Duncan Hames (Chippenham) (LD): The Chief Secretary to the Treasury has certainly

received representations from me on such measures, including about the estimated loss to the

Exchequer of more than £100 million due to tax avoidance through low value consignment

relief on VAT. Will the Minister at least confirm that the Government's conclusions on that

will be shared with us in tomorrow's Budget?

Mr Hoban: I encourage my hon. Friend to be patient.

Economic Growth

15. Mr Kevan Jones (North Durham) (Lab): What recent assessment he has made of the

effect on economic growth of the spending reductions set out in the June 2010 Budget.

[47932]

16. Mr Geoffrey Robinson (Coventry North West) (Lab): What recent assessment he has

made of the effect on economic growth of the spending reductions set out in the June 2010

Budget. [47933]

22 Mar 2011 : Column 847

The Economic Secretary to the Treasury (Justine Greening): The independent Office for

Budget Responsibility's November economic and fiscal outlook takes into account the

spending plans set out in the 2010 spending review. The hon. Gentlemen ask about a recent

assessment, and I can tell them that the OBR will publish an updated forecast alongside

tomorrow's Budget.

Mr Kevan Jones: Durham university's economic model shows that between 45,000 and50,000 individuals will lose their jobs in the north-east of England as a direct result of public



Mr Osborne: What I can confirm is that Labour left us with six duty rises. Now they are

wriggling desperately to find some excuse to get off the hook they put themselves on.

T3. [47945] John Pugh (Southport) (LD): Can the Chancellor tell me when the Treasury's

detailed investigation of the feasibility of incorporating a general anti-avoidance rule in

British tax law will conclude?

The Exchequer Secretary to the Treasury (Mr David Gauke): My hon. Friend is right to

highlight the matter. We have asked Graham Aaronson QC to undertake a study on the matter

and he will report in the autumn.

T6. [47948] Mrs Linda Riordan (Halifax) (Lab/Co-op): Following the announcement last

week by Lloyds of more job cuts, many of them in my constituency, to a work force that has

showed total loyalty to the company, and as the Government own a large percentage of the

company-a company that made more than £2 billion profit last year-will the Chancellor

intervene to protect people's jobs and livelihoods, and stop the constant drip-feed of job

losses by Lloyds?

Mr Osborne: Of course we are concerned when people lose their jobs, including in the

banking sector, but what Lloyds is undergoing is the process of merging HBOS with Lloyds

bank, which was waved through by the previous Government.

T7. [47949] Dr Julian Huppert (Cambridge) (LD): I have had the privilege of talking to

the Chancellor about a charter for entrepreneurs that I drew up, based on discussions with

entrepreneurs in and around Cambridge. I am sure he will not want to pre-empt what he will

say tomorrow, but can he say that he has looked carefully at some of those issues, in

particular reforming the enterprise investment scheme and enterprise management incentives,

and making research and development tax credits easier for small companies?

Mr Osborne: I have a copy of the hon. Gentleman's document here. He has some excellent

ideas on promoting enterprise and entrepreneurs. He will have to wait until tomorrow to see

how we respond to them.

T8. [47950] Mr Geoffrey Robinson (Coventry North West) (Lab): Can the Chancellor not

see that the figures -current and forecast-for inflation, unemployment, growth, borrowing and

even the deficit are all way off his target? Can he not see that the plan is not working, or is it

a sad case of him not wanting to see?

Mr Osborne: What I would say to the hon. Gentleman is this: we inherited a record budget

deficit and there was no credible plan to deal with it. We put a plan in

22 Mar 2011 : Column 850place and it is supported by the international community. The result of all this is that we have

interest rates that are closer to Germany's, despite having been left a deficit that is bigger than

Portugal's or Greece's.

Mr Andrew Tyrie (Chichester) (Con): Will the Chancellor make every effort to keep the

House informed about the cost of our operations in Libya by providing an estimate at the

earliest opportunity? Will he also tell us whether those costs will be funded from the Ministry

of Defence budget or drawn from the Treasury reserve?



Mr Osborne: My hon. Friend alerted me to the fact that he might ask this question. The

House will understand that it is too early to give a robust estimate of the costs of the

operations in Libya, but I can say that they should be modest compared with some other

operations, such as Afghanistan. The MOD's initial view is that they will be in the order of

tens of millions of pounds, not hundreds of millions. I can tell the House today that whatever

they turn out to be, the additional costs of operations in Libya will be fully met from thereserve.

T9. [47951] Mr Kevan Jones (North Durham) (Lab): The Chancellor said on Sunday that

the present financial difficulties were the result of "a decade of overspending", so can he tell

the House why in July 2008, 11 years into a Labour Government, the then Leader of the

Opposition, now the Prime Minister, told the CBI conference

"we are sticking to Labour's spending totals"?

Mr Osborne: What we did on coming into office was set out a credible plan to reduce the

budget deficit that has moved this country out of the financial danger zone. One month ago,the shadow Chancellor told his entire Front Bench not to make any spending commitments,

and after that they committed to more than £10 billion of spending commitments. They have

opposed £50 billion of the cuts. It is completely incredible, and that is why they cannot find

any reputable organisation in the world to agree with them.

Mr Douglas Carswell (Clacton) (Con): How high would inflation need to be before we

halted further quantitative easing, stopped printing money and raised interest rates?

Mr Osborne: The Bank of England's Monetary Policy Committee is of course independent.

It is set a target by the Chancellor, and I expect the Bank to pursue that target.

T10. [47952] Graeme Morrice (Livingston) (Lab): Contact a Family and the Children's

Trust have been campaigning for a change to the current rule that suspends disability living

allowance payments for children under 16 once they have spent 84 days in hospital. The cost

of this is around £3 million, compared with the overall deficit reduction measures of £80

billion. As this is a financially driven measure, will the Chancellor undertake to discuss the

funding issue with colleagues in the Department for Work and Pensions so that some of the

most severely disabled and sick children and their families continue to receive the financial

support required when they need it most?

22 Mar 2011 : Column 851

The Chief Secretary to the Treasury (Danny Alexander): The Secretary of State for Work

and Pensions is bringing forward proposals to reform the disability living allowance system

and replace it with a new personal independence payment. I am sure that he will have heard

what the hon. Gentleman said and will be very happy to discuss the matter with him.

Greg Mulholland (Leeds North West) (LD): The previous Government's beer duty

escalator was damaging to pubs, ill-considered and did not raise the revenue that it should

have done. Considering that the Prime Minister has said that he wants this to be a pro-pub

Government, will we get some good news for pubs tomorrow?



The Economic Secretary to the Treasury (Justine Greening): The hon. Gentleman will

have to wait until tomorrow's Budget, but he will recognise that in the emergency Budget last

year we left beer duty frozen.

Stewart Hosie (Dundee East) (SNP): The Chancellor knows that the long-term solution to

the spikes in fuel prices is a stabiliser or a regulator, and hopefully we will hear about thattomorrow. However, is he aware that the price rises in fuel over the past four of five weeks

equate to an additional £1,000 a year for running every truck in the country? Does he not

agree that that is hugely inflationary and utterly unsustainable?

Mr Osborne: Of course, the very sharp rise in the world oil price has posed a challenge to

lots of economies-all but the oil-exporting economies. That is one of the headwinds currently

facing the global economy. Specifically on fuel duty and other issues, the hon. Gentleman

will have to wait for the Budget.

Andrea Leadsom (South Northamptonshire) (Con): Will my right hon. Friend undertake

very carefully to consider improving the diversification of financial services provision in theway that United Kingdom Financial Investments Ltd divests itself of taxpayers' shareholdings

in the banks?

Mr Osborne: I am very happy to consider a number of ideas that have been put forward, but

we have not yet reached that stage. If we sold the bank shares today, we would still be

making a loss as a nation. That is an indication of the scale of the banking crisis. When we

come to put those banks back in the private sector, I am sure that there will be a healthy

debate in this Parliament and elsewhere about how we treat the proceeds.

Andrew Gwynne (Denton and Reddish) (Lab): Ministers will be aware that there is a

sunset clause in the Debt Relief (Developing Countries) Act 2010, which comes into effect in

June. Does the Treasury have a view about renewing this important landmark legislation,

which tackles the worst abuses of vulture funds?

Mr Gauke: I am grateful to the hon. Gentleman for asking that question. That legislation will

remain on the books and-I do not think we have announced this formally before-we will put it

on a permanent footing.

Jesse Norman (Hereford and South Herefordshire) (Con): Is my right hon. Friend aware

that the Governor of the Bank of England confirmed to me recently in the

22 Mar 2011 : Column 852Treasury Committee that without the current austerity measures, our international borrowing

rates would be some 3% higher?

Mr Osborne: Of course, the Governor of the Bank of England is one of many people who

have pointed out that there was no credible plan when we came into office and that we have

put a credible plan into place.

Mr Chuka Umunna (Streatham) (Lab): The Chancellor and other Ministers have cited

investor confidence as the reason why they cannot revise their original plan for fiscal

consolidation, but Jonathan Portes, the immediate former chief economist at the Cabinet

Office, said:



"This is not a justification, economic or otherwise, for"

not changing policy. He said that

"it relies on an odd view of market psychology, one that says markets have more

confidence in governments that never adjust policy, even when it is sensible, from aneconomic perspective, to change course."

Why is he wrong?

Mr Osborne: Our country's credit rating was on negative watch when we came to office and

as a country we did not have a credible plan to reduce the budget deficit. Since that plan has

been put in place we have been able to see the effects because our market interest rates and

our spreads over bunds have come down. We have interest rates that are closer to Germany's

despite, as I have said, having a budget deficit left to us that was higher than either Greece's

or Portugal's.

Richard Harrington (Watford) (Con): Would my right hon. Friend the Chancellor like to

inform the House which organisations have made representations to him that the deficit

should be halved over the course of this Parliament?

Mr Osborne: The Guardian newspaper.

Ian Paisley (North Antrim) (DUP): The Chancellor might know that my constituent, Jenifer

Herald, employs 40 people in Northern Ireland in a number of Subway cafés. The chief

executive officer of that company has written to the Chancellor to say that inconsistent VAT

policies on toasted sandwiches are damaging the growth of that industry. Does the Minister intend to review how VAT applies to toasted sandwiches and does he, like me, want to get

his toasted sandwiches at a reasonable price?

Mr Gauke: I am grateful to the hon. Gentleman for his question. I, too, have received many

representations on this point. Of course, we keep VAT under review within the restrictions

that exist.

Mr Aidan Burley (Cannock Chase) (Con): Is the Minister aware that according to the

Institute for Fiscal Studies, if we only halve the deficit rather than close it completely over

the lifetime of this Parliament, we will spend an extra £10 billion on interest? Does he think

that that is money that would be better spent on schools and hospitals in this country rather than foreign investment bankers?

22 Mar 2011 : Column 853

Mr Osborne: I certainly do. This country is spending £120 million a day on debt interest,

which is now one of the largest items of Government spending. These are taxes we raise from

people and money we borrow to pay debt interest. The truth about Labour's plan is that it

would mean billions of pounds more in debt interest-something that will become clear later in

the Parliament.



Several hon. Members rose -

Mr Speaker: Order. As usual, demand has exceeded supply, but I am afraid we must move

on.

22 Mar 2011 : Column 855

Student Visas

3.32 pm

The Secretary of State for the Home Department (Mrs Theresa May): The UK has a

worldwide reputation for providing quality education to overseas students, and Britain is

rightly the destination of choice for many people wishing to study abroad, but under the

previous Government the student visa system became the symbol of a broken and abused

immigration system. Labour claimed that it had capped unskilled immigration at zero, but itwas happy just to sit back and watch as unskilled migrants abused the student route to come

here. We had too many people coming here to work and not to study, we had too many

foreign graduates staying on in the UK to work in unskilled jobs, and we had too many

institutions selling immigration, not education.

We want to attract only the best and the brightest to Britain. We want high-quality

international students to come here, we want them to study at genuine institutions whose

primary purpose is providing a first-class education, and we want the best of them-and only

the best of them-to stay on and work here after their studies are complete. That is exactly

what we are doing across all the immigration routes: tightening up the system, tackling the

abuse and supporting only the most economically beneficial migrants.

I have already announced and begun to implement our plans to limit economic migration-

cutting the numbers by more than one fifth compared with last year. I will return to the House

later this year with a consultation that will set out proposals to break the link between

temporary migration and permanent settlement. I also intend to consult on changes to the

family migration route. I will be bringing forward proposals to tackle sham marriages and

other abuse, promote integration and reduce the burdens on the British taxpayer. We aim to

reduce net migration from the hundreds of thousands back down to the tens of thousands.

The most significant migrant route to Britain is the student route, and we must take actionthere, too. Immigration by students has more than trebled in the past 10 years, and it is now

far larger than immigration through the work or family routes. It is unsurprising that more

and more overseas students are attracted by our world-renowned higher education

institutions, but there has also been an increase in abuse in the private further education

sector.

Students now make up the majority of non-EU migrants: including their dependants, they

accounted for about two thirds of the visas issued last year under the points-based system.

When Labour introduced the current system in 2009, almost a third more student visas were

issued that year than the year before-an increase from 230,000 to 300,000. Numbers were so

high that the UK Border Agency had to suspend student applications in some parts of theworld because it could not cope with the demand, and much of that demand was simply not



genuine. We have so-called students turning up at Heathrow airport who cannot answer basic

questions in English or even describe what their course is about. One institution has an intake

of 90% international students and asks only for GCSE-level qualifications to do a supposedly

degree level course. Another college's own sales agent actually helped a student to cheat in

their entry exam.

22 Mar 2011 : Column 856Legitimate colleges should still be able to recruit legitimate overseas students, but we need to

stop the abuse and return some common sense to our student visa system.

The current system is based on a sponsorship regime that trusts educational institutions to

assess the quality and ability of students, and puts the responsibility on the institution to

ensure that the student is in fact studying and obeying the immigration rules. That trust has

been well placed in some sectors: universities, independent schools and publicly funded

further education colleges mostly take their sponsorship duties seriously and act responsibly.

But some, particularly in the private FE sector and parts of the English language college

sector, are not exercising the due diligence we expect. Those institutions make up the largest

single group on the sponsor register. The sector is essentially unregulated; those institutionsare not subject to a statutory system of education inspection and can offer any type of course

they like. Although some of them are legitimate, for many their product is not an education,

but immigration, together with the ability to work here.

It is absolutely clear that the current regime has failed to control immigration and failed to

protect real students from poor-quality colleges. That is why the proposals I am announcing

today are unashamedly targeted at the least trustworthy institutions. Our proposals protect the

interests of our world-class universities, protect our leading independent schools and public

FE colleges and, ultimately, are in the best interests of legitimate students.

In future, all sponsors will need to have been vetted by one of the approved inspectorates-

Ofsted and its devolved equivalents, the Quality Assurance Agency or the relevant

independent schools inspectorate-and all must become highly trusted sponsors. Once they

achieve that status, private colleges offering quality, bona fide training programmes of

genuine educational value will be able to continue to recruit legitimate international students.

All current sponsors who do not meet the requirements will be allowed to stay on the register

for a short period from April 2011. During that time they will be limited in the number of

students they may sponsor. They will first have to apply for highly trusted sponsor status and

accreditation. They will then be required to achieve highly trusted sponsor status no later than

April 2012, and accreditation by the relevant agency by the end of 2012.

As well as cracking down on bogus colleges, we will crack down on bogus students. Students

who want to come here should be able to speak English, to support themselves financially

without taking paid employment, and to show that they are coming for study, not for work.

So we will toughen up the entry requirements. First, we will strengthen the evidence that

students need to demonstrate that they have the financial means to fend for themselves.

Secondly, we will streamline the requirements for students from low-risk countries and

prioritise resources on high-risk students. Thirdly, we will toughen up the rules on English

language competence. Those coming to study at degree level will have to speak English at

upper intermediate level; others will have to speak English at intermediate level. UKBA

officers will be given the discretion to refuse entry to students who cannot speak English

without an interpreter and who do not meet the required minimum standards. Let me22 Mar 2011 : Column 857



be clear: you need to speak English to learn at our education establishments; if you can't, we

won't give you a visa.

If someone is coming to the UK as a student, study should be their main purpose, not work.

So we will end permission to work during term time for all students other than those at

university and publicly funded FE colleges. Students at public sector FE colleges will beallowed to work for 10 hours per week in term time, and students at university for 20 hours

per week. We will reduce the amount of work that can be done on work placement courses

for non-university students from 50:50, as now, to two thirds study, one third work. At

present, students on courses of six months or more can bring their dependants with them. In

2010, over 31,000 student dependants came here. We will remove this right for all but

postgraduate students at universities and Government-sponsored students.

Coming to the UK to study for a course should, by definition, be a temporary step, so we will

limit the amount of time that students can spend in the UK. Too many students who

originally came here for short courses have been staying for years and years by changing

courses, often without showing any tangible academic progress. We will limit the overalltime that can be spent on a student visa to three years at lower levels, as now, and five years

at higher levels. There will be exceptions for longer courses such as medicine and veterinary

science, and for PhD study, but no longer will students be able to stay here and switch from

course to course to course.

We want the best international graduates to stay and contribute to the UK economy.

However, the arrangements that we have been left with for students who graduate in the UK

are far too generous. They are able to stay for two years, whether or not they find a job and

regardless of the skill level of that job. In 2010, when one in 10 UK graduates was

unemployed, 39,000 non-EU students with 8,000 dependants took advantage of that

generosity.

We will therefore close the current post-study work route from April next year. In future,

only graduates who have an offer of a skilled graduate-level job from an employer licensed

by the UK Border Agency will be allowed to stay. Post-study migrants must be paid at least

£20,000 or the appropriate rate for the occupation, as set out in the relevant code of practice,

whichever is higher. That will prevent employers from recruiting migrants into skilled

occupations but paying them less than the going rate. We estimate that had this measure been

applied last year, it would have halved the numbers staying in the UK through this route. We

will not impose a limit on that group next year, but we will keep the position under review. If

the number of foreign students entering the labour market as post-study workers increasessignificantly and unexpectedly, we will ask the Migration Advisory Committee to look at

how abuses can best be addressed. That would potentially include the introduction of a

separate temporary limit on post-study workers.

As we restrict the post-study work route, we will ensure that innovative student entrepreneurs

who are creating wealth can stay in the UK to pursue their ideas. The message to the brightest

and the best students around the globe is clear: Britain's world-class universities remain open

for business.

22 Mar 2011 : Column 858



We recognise the need to implement these changes in a staged manner that minimises

disruption to education providers and students. We will therefore implement the measures in

three stages, starting with new rules, which will be laid by the end of this month. I will

publish the full details shortly.

The package of measures that I have outlined today is expected to reduce the number of student visas by between 70,000 and 80,000-a reduction of more than 25%-and it will

increase the outflow of foreign students after they have concluded their studies. There will be

a proper system of accreditation to root out bogus colleges; tough new rules on English

language skills, financial guarantees, working rights and dependants, to root out bogus

students; and new restrictions on post-study work to make sure that all but the very best

return home after study. This package will stop bogus students studying meaningless courses

at fake colleges, protect our world-class institutions, stop the abuse that became all too

common under Labour, and restore some sanity to our student visa system. I commend this

statement to the House.

Yvette Cooper (Normanton, Pontefract and Castleford) (Lab): I thank the HomeSecretary for the half-hour's advance sight of her statement, as has become the form for the

Home Office. Helpfully, however, we were, of course, able to read about the main changes in

the newspapers this morning. As has become the form for this Government, we were also

able to read opposing stories in opposing newspapers. The Business Secretary briefed the

Financial Times that the policy had been completely changed so that he could support

universities in expanding the number of their foreign students; the Home Secretary promised

The Sun that the policy meant slashing foreign student numbers. Different policies for

different papers, policies changing all over the place, and an unseemly row at the heart of the

Government-such is the chaos at the centre of the Government's immigration policy for

students.

The Home Secretary is right to say that migration makes an important contribution to our

economy, the strength of our business and our vibrant society. She is also right to say that

migration needs to be properly controlled to sustain social cohesion and an effective labour

market. She will recognise the importance of the higher and further education sector to the

British economy. Non-EU students contribute an estimated £5 billion to the UK economy,

support thousands of jobs in teaching and related areas, and make education an extremely

important export industry. It is important that we recognise that economic value in providing

workable migration policies. She will know that the Home Affairs Committee stated in its

important report that it

"would caution against measures which could be detrimental to a thriving, successful

industry."

Does she recognise, too, that CentreForum has said that moves to tighten the restrictions on

overseas students will risk nearly 12,000 jobs in education and another 12,000 in the wider

economy?

Some of the damage has already been done. Anecdotally, some universities are already

noticing a significant drop in applications from foreign students as a result of the signals

being sent out by the Home Secretary's consultation. Does she believe that the 80,000 drop in

student visas to which she has referred will consist entirely of visas for 22 Mar 2011 : Column 859



bogus students on bogus courses, or does she believe that some legitimate students, too, will

be put off as a result of the measures that she has announced?

We agree that we should not tolerate bogus colleges and fake students. People who want to

come to this country need to play by the rules. That is why the Labour Government

introduced a system of highly trusted sponsors through our respected universities, and wesupport measures that will build on that, so long as they are introduced in a workable way. It

is also why we closed 140 bogus colleges.

Can the Home Secretary tell the House how the UKBA is going to increase its checks on

colleges and students when it is facing staff cuts of 9,000?

What is the Home Secretary's position now on free degree courses? In the consultation she

said that she would introduce substantial restrictions on pre-degree level courses being

covered by tier 4 visas, but there was silence from her on that issue in her statement today.

Can she confirm that she has now ditched that proposal to remove pre-degree level courses?

We also agree that there should be appropriate restrictions on students' employment. It is

welcome that the Home Secretary has taken into account some of the evidence about the

international competitiveness of UK higher education, but she put that into the context of

trying to help youth unemployment. Is not the truth that her figures will mean restricting post-

study work permits for non-EU students by about 19,000 at a time when youth

unemployment is nearer 1 million? If she were serious about tackling youth unemployment

she might be talking to the Chancellor about reversing some of his cuts, and reinstating the

future jobs fund. Is not the truth that this policy is not about youth unemployment or bogus

courses, but about hitting higher education because she cannot meet her promise to cut net

migration to tens of thousands over the course of this Parliament?

What is now the Government's policy towards foreign students studying bona fide courses at

legitimate institutions? Does the Home Secretary want their number to increase or fall? The

Business Secretary has said of the higher education sector:

"It's an export industry; we want to grow it."

But the Home Secretary has said that she wants the numbers cut. The Business Secretary

wants more foreign students, and she wants less. If Britain's major universities and colleges,

faced with nearly £3 billion of cuts, decide to expand their courses and double the number of

legitimate foreign students paying full fees in order to subsidise British students, will shesupport them or not? If they increase their legitimate students by 80,000, will she support

them or not?

Finally, will the Home Secretary tell the House what the position is on student visitor visas,

which she did not mention? Will she confirm that although she is restricting tier 4 student

visas, in December she increased the number of students and courses eligible for student

visitor visas? Will she confirm that under that visa, people can still apply for non-degree

courses that are not run by highly trusted sponsors and do not have any minimum language

requirement? Will she confirm that she has done nothing to prevent an increase of perhaps

80,000 in student visitor visas, and will she admit that

22 Mar 2011 : Column 860the people on those visas will not be included in the net migration figures? Does that not



figure is around 5,000. She said that the Government were not going to do anything about

courses below degree level. The whole point of the private FE college sector is that it offers

courses below degree level. We intend to remove the bogus courses, colleges and students so

that we can do what her Government failed to do: deal with and control immigration.

The right hon. Lady made a lot of statements about the importance of universities to the UK.Yes, universities are an important part of the UK economy. That is precisely why the

measures that I have introduced take great pains to ensure that we protect universities. We are

protecting universities, our independent school sector and public sector FE colleges, and we

are ensuring that those who want to come here as legitimate students on legitimate courses of

study at legitimate institutions can do so. We are doing what she failed to do: we are cracking

down on the abuse.

Several hon. Members rose -

Mr Speaker: Order. A great many hon. and right hon. Members are seeking to catch my eye.

I should like to accommodate everyone who has an interest, but brevity is vital if I am to haveany realistic chance of doing so.

Mr Graham Brady (Altrincham and Sale West) (Con): Thank you, Mr Speaker. I have an

unremunerated interest as a governor of Manchester Metropolitan university.

Will my right hon. Friend clarify two points? First, what is her view of students progressing

from courses on English for academic purposes to degree courses. Secondly, what about

those progressing from proper undergraduate degree qualifications to postgraduate courses

within the same or other British universities?

Mrs May: I thank my hon. Friend for his question, because it enables me to clarify a point

about students who currently do so-called pathway courses for English language. One of the

points made clear to us by the university sector was that it often has arrangements with

colleges to allow students without the required level of English to come and learn it at a

pathway college and then progress to university. They will be able to continue to do so, but

the students entering the college must be sponsored by the university. The university's highly

trusted sponsor status will cover those students, and undergraduates who wish to progress to

postgraduate studies will be able to do so. Our requirement for progression is that it is clear

that academic progression is taking place, and obviously moving on to postgraduate study is

exactly that.

Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab): As a lifelong expert

in hyperbole, I advise the Home Secretary to ease off on it in the message to undergraduate

and postgraduate students across the world. Some £25 million will be lost to the university of

Sheffield and Sheffield Hallam university

22 Mar 2011 : Column 862from legitimate overseas students in the coming year. Will she promise the House that in

taking the necessary tough measures in one area she will change the hyperbole and send the

message to legitimate students across the world that they are welcome in the United

Kingdom?

Mrs May: As I said in my statement, the message to the brightest and best students aroundthe globe is clear: Britain's world-class universities remain open for business. However, as I



have said to the university sector, we need to work together to ensure that that positive

message is the one given, not the negative one given by the shadow Home Secretary.

Nicola Blackwood (Oxford West and Abingdon) (Con): I welcome the Home Secretary's

statement, particularly on the retention of a reformed post-study work route, on which I was

especially keen. Given her estimate that the reforms will lead to about 80,000 fewer studentmigrants, does she believe that our world-class universities, such as the two excellent

universities in my constituency, will still be able to recruit the brightest and the best, which is

what our economy so urgently needs?

Mrs May: I thank my hon. Friend for her question, and for the considerable interest that she

takes in the university sector. I can assure her that the proposals we have introduced today

will ensure that universities are protected and will continue to be able to attract the brightest

and best students from across the world.

Mr Frank Field (Birkenhead) (Lab): I welcome the Home Secretary's statement,

particularly on behalf of my unemployed constituents who are desperate to find work. Giventhat the numbers coming in and leaving the country are crucial to the whole debate, when will

she be able to come to the House and announce a system for border controls that counts

people in and counts them out again?

Mrs May: I thank the right hon. Gentleman for his question. This is an issue in which he has

taken a long-standing interest. I will give two answers to his question. The e-Borders system,

which is being put in place, is partly working at the moment; complete application will come

in 2015. In the next couple of months we will also make proposals on settlement, in which I

know he has taken a particular interest.

Tom Brake (Carshalton and Wallington) (LD): Does the Home Secretary agree that higher

education in the UK is world class, and that our top institutions should remain open for

business to genuine students, but that bogus colleges, which provide nothing more than an

excuse for entry into the UK, should be forced to close their doors promptly?

Mrs May: My hon. Friend is absolutely right. The package that we have introduced today

will protect our universities, which provide a world-class education. Students should want to

come here for that quality of education, and we need to crack down on bogus colleges. It

gives the UK a bad name when people see that they can come here supposedly as students but

not get a proper education.

22 Mar 2011 : Column 863

Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): It is estimated that the loss of

income to higher education resulting from the Government's current policies on the issuance-

or non-issuance-of tier 4 permits for pre-university pathway courses is costing higher

education an enormous amount of money. I waited in vain during the Home Secretary's

statement for clarification on the position pending the announcements. Will she make it clear

whether tier 4 applicants can now come here to do pre-university pathway courses?

Mrs May: The hon. Gentleman is correct: I did not mention that in my statement; I referredto it in response to my hon. Friend the Member for Altrincham and Sale West (Mr Brady).



Pathway courses for students without the correct level of English to enable them to study at

university will continue, but the student will need to be sponsored by the university

concerned-the highly trusted sponsor.

Mr Mark Field (Cities of London and Westminster) (Con): In recent years I have been on

the advisory board of the London School of Commerce.

I want to ask the Home Secretary about post-study work, as did my hon. Friend the Member

for Oxford West and Abingdon (Nicola Blackwood). I have slight reservations. Given the

excellence of our offering and the idea that we will get some phenomenally innovative

students from across the globe who will go back as ambassadors for this country, has any

research been done in the Home Office showing that we might lose some of those students to

places such as the United States or Australia, or are we confident that the changes will have

no such adverse impact?

Mrs May: I am happy to tell my hon. Friend that there is no evidence that that will be the

upshot. Our system is similar to those in operation elsewhere. It is wrong to say that theUnited States has a formal post-study work route; it does not. There are some abilities for

people to stay and do some work in the United States, but they are different. Indeed, in some

ways our requirements will continue to be less tough than those in countries such as

Australia.

Keith Vaz (Leicester East) (Lab): I thank the Home Secretary for keeping to her promise to

publish her proposals after the Select Committee on Home Affairs had published its report

last week. I hope that she found the report helpful. There is much to welcome in her

statement-we recommended action on bogus colleges, reform of the post-study route and

better accreditation-but will she look at the two most important recommendations, on whether

students are migrants if they come here genuinely to study and then to leave, and on the issue

of data. Unless we have proper data, we can make only flawed policy.

Mrs May: Obviously one is always looking to improve the quality of the evidence on which

policy can be based. As for whether students are migrants, we use the internationally

accepted United Nations definition of "migrant", which is somebody coming to stay for over

12 months.

Mr James Clappison (Hertsmere) (Con): I warmly welcome the package that the Home

Secretary has announced today and her determination to tackle the

22 Mar 2011 : Column 864problem of bogus colleges and bogus students, which the Home Affairs Committee has been

warning about for a long time, but on which no action had been taken. She has announced

that she will return a measure of independence to entry clearance officers, which is welcome.

Will she consider returning to them-as recommended by the Home Affairs Committee and

Migrationwatch-the wider discretion that was removed under the points-based system, which

would be in the interests of both facilitating genuine students and keeping out bogus

students?

Mrs May: Having spoken to UK Border Agency officers at points of entry, I am conscious

of the frustration that they have felt at not having the discretion to deal with people whom

they have plainly seen were not coming here as bona fide students, so I am pleased to restorea degree of discretion to them. My hon. Friend tempts me to go further than that, but that is



not a path down which I intend to go at the moment. There were some issues raised about the

greater degree of discretion available previously, but we are constantly looking at our

immigration system and the way in which UKBA officers operate.

Andrew Miller (Ellesmere Port and Neston) (Lab): I welcome the continuation of the

notion of trusted status among the universities. When the Home Secretary finesses the rules,will she ensure sufficient scope for universities to take into account the realities of the

circumstances that face them? In some areas of science and engineering, students come here

with weak English but amazing skills and the ability to learn very quickly. Equally, some

post-doctoral or post-graduate students come here with spouses who do not speak English.

Will she ensure that universities have the capacity to deal with all those complex cases?

Mrs May: We have already introduced some English language requirements for people

coming here to marry somebody in the UK, but the English language requirement relates to

the post-graduate student who will be at university, not to a spouse entering as the dependant.

It has been put to me that there are potentially a small number of cases of people who are

extremely bright, but who do not have the correct level of English. My answer to that istwofold. First, it will be open to those people to go through a pathway course to the

university. However, secondly, we will retain a small margin of flexibility where academic

registrars have an individual student who is particularly brilliant but whose English they do

not think will improve to the necessary level within the time scale required.

Nicholas Soames (Mid Sussex) (Con): May I congratulate the Home Secretary and her

Minister of State on this important and long overdue measure to put right years of neglect in

the system? After the system has had time to settle down, will she consult the Migration

Advisory Committee and ask for any recommendations it might have on how to tighten up on

bogus students?

Mrs May: I thank my hon. Friend for his welcome for the statement. We are asking the

Migration Advisory Committee generally to look annually at the immigration arrangements

that we are putting in place, but it will be consulted, as I made clear in my statement, if we

find that the number of students staying on for post-study

22 Mar 2011 : Column 865work rises unexpectedly and significantly. We would ask the MAC to look into such a

situation and to determine whether any abuse was taking place, and that could include the

possibility of a limit.

Pete Wishart (Perth and North Perthshire) (SNP): Will the Home Secretary tell us whatthe tone has been of the representations that she has received on this issue from the Scottish

universities and the Scottish Government? What have they said about the funding issues and

about the competitive situation? The Home Secretary knows that we do not have a fixation

with immigration in Scotland; in fact, we are experiencing a structural fall in population

numbers. We also have no evidence of bogus colleges. Will she consider an exemption for

Scotland, so that any unforeseen consequences of her announcement today do not impact on

our universities north of the border?

Mrs May: During the consultation, we had discussions with the Scottish Government and the

Secretary of State for Scotland. He and I spoke about the concerns that Scottish universities

had raised with him, one of which related to students who had an entrepreneurial idea and



wished to stay on to launch a business. That is why we are ensuring that, within the post-

study work rules, there will be a possibility to protect student entrepreneurs.

Lorraine Fullbrook (South Ribble) (Con): The shadow Home Secretary claimed last month

that, under the points system, "a lot of progress" was being made. Will my right hon. Friend

assess the progress that Labour made in controlling migration?

Mrs May: I thank my hon. Friend for her question. The answer is a very short one, because

Labour did not make any progress in controlling migration, as we saw from the fact that it

closed tier 3 of the points-based system, as though that would have some magic result for

immigration, and all that happened was that the number of student visas went up instead.

Sir Gerald Kaufman (Manchester, Gorton) (Lab): Given that a substantial segment of the

economy of the city of Manchester depends on the success of its world-class universities, one

of which occupies the biggest campus in western Europe, and that those universities have

already begun to cut courses as a result of other Government policies, can the right hon. Lady

assure Manchester that her policies will not irrevocably damage the city's economy, which isalready suffering dreadfully under this Government?

Mrs May: Yes, I can confirm that. The message that the right hon. Gentleman can take back

to his constituents is that the universities in Manchester are open for business to first-class

international students, as they always have been.

Simon Hughes (Bermondsey and Old Southwark) (LD): I thank the Home Secretary and

her Cabinet colleagues for listening to the representations of the university communities. As

the questions of exit visas and bogus colleges and the success of our students and universities

are a continuing matter of concern for the growth of the British economy, will my right hon.

22 Mar 2011 : Column 866Friend and the Business Secretary undertake to report back annually to Parliament on this

matter, to ensure that the successful import of academics into this country can continue?

Mrs May: I can assure my right hon. Friend that we will be giving regular reports to

Parliament on what we are doing on the immigration system. People will also be able to see

what is happening with other aspects of the system, as I have said; I shall be coming back to

Parliament to discuss those as well. I am absolutely clear that what the coalition Government

have announced today will ensure that our universities can continue to attract students from

across the world and to provide world-class education.

Joan Ruddock (Lewisham, Deptford) (Lab): Some of the brightest and best international

students attend Trinity Laban, the dance and music conservatoire in my constituency. Will

students who wish to progress from undergraduate to postgraduate studies have to return

home to obtain visas, and will students be able to work in this country if they are offered a

job paying less than £20,000 a year, which is possible? Many have international careers

ahead of them.

Mrs May: Let me deal with the right hon. Lady's second question first. A code of conduct

will be agreed between the UKBA and the Department for Business, Innovation and Skills-

obviously the Home Office will look at it as well-and will set out the requirements for the

post-study work route. I outlined those requirements briefly in my statement, but it will benecessary to consider particular sorts of occupation and the appropriate rates applying to



them. As for the right hon. Lady's first point, no, those students will not be required to return

home.

Mr David Evennett (Bexleyheath and Crayford) (Con): I warmly welcome my right hon.

Friend's statement, and congratulate her on her approach. Can she assure me that she will be

tough and allow only legitimate institutions on to the highly trusted sponsor list? That wouldof course benefit us in the United Kingdom, but we must also be fair to students who come to

the UK to study.

Mrs May: My hon. Friend has made an extremely important point. It will not benefit the UK

if people throughout the world who have received the message that they can come here and

be given an education end up in a bogus college. We will certainly be tough on highly trusted

sponsor status. We will ensure that there is proper accreditation in terms of the educational

qualifications and educational standard that colleges must offer, while the UKBA will look

into whether they are observing immigration rules.

Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): What level of Englishlanguage qualification will be required for students attending English language schools? I

understand from the proposals that even students taking short courses will require an

intermediate-level qualification. If that is the case, will it not prove damaging to many

genuine colleges that make an important contribution to the economy in our constituencies?

22 Mar 2011 : Column 867

Mrs May: The requirements will be B2 for university-level study and B1 for below degree-

level study, so there will be a B1 requirement for the pathway courses. As the hon.

Gentleman will know-this enables me to answer a question asked earlier by the right hon.

Member for Normanton, Pontefract and Castleford (Yvette Cooper) -we are piloting a system

enabling student visitor visas to remain valid for 11 months. The right hon. Lady appeared to

suggest that they were included in the migration figures, but they are not.

Yvette Cooper: That is the point.

Mrs May: They are not included in the migration figures, and they are therefore not covered

by my statement. However, as the hon. Gentleman will probably know from discussions in

which he has engaged in the past with, among others, the Minister for Immigration, my hon.

Friend the. Member for Ashford (Damian Green), the requirements of the English languagecolleges were of particular concern to us, and we have dealt with that by piloting the

extension of the visitor visas.

Dr Julian Huppert (Cambridge) (LD): I declare an interest as a member of the university

of Cambridge, one of the three excellent universities in my constituency.

I welcome the changes that the Home Secretary has announced, because the original

proposals in the consultation would have caused a great deal of harm to much of our

education industry. I was interested to hear what she said about student entrepreneurs. How

will that system operate? Will it form part of the post-study work system, and will it apply

only to new applicants? Will we be telling students who came here expecting a particular set



of post-study work rules that they will be changed while they are in the middle of their

studies?

Mrs May: We will make absolutely clear when the new post-study work route proposals will

be implemented. Students will have reached various stages in their courses, but there will be

a specific point at which the post-study work route requirement is introduced. Those who arealready studying in the UK and may have expected to stay will still be able to stay, provided

that they obtain graduate-level jobs. It is the qualification level for the jobs that will change.

As for the arrangements for student entrepreneurs, we are considering how best to position

them in the immigration system. I hinted earlier that they might form part of the post-study

work route, but we might consider other routes. The intention is to enable a student who is

graduating from university and who has a first-class idea to set up a business and put that idea

into practice, and I think it right for us to do so.

Roberta Blackman-Woods (City of Durham) (Lab): I understand the right hon. Lady's

concern to reduce abuse in the visa system, but what is she doing to ensure that the measuresannounced today do not simply send a message to bona fide students applying to legitimate

institutions that they are not welcome, especially as that would create huge problems for our

excellent universities and colleges?

Mrs May: What I am doing at every possible opportunity is saying that our universities are

still open for business to overseas students. I have said at every stage, both

22 Mar 2011 : Column 868throughout the statement and in response to a number of questions, that the whole point of

what we are proposing is to protect the universities while dealing with the bogus colleges. I

think that is the right approach, and I hope it meets with agreement across the entire House.

Mr Brian Binley (Northampton South) (Con): I welcome the general thrust of the

statement, and my constituents will be delighted to hear about it. I particularly welcome the

statement that Britain's universities are open for business to the brightest and best, but I must

tell the Home Secretary that that perception does not hold good in China. In fact, the Chinese

think we are closed for business. What specific measures will the Home Secretary take to

improve that situation?

Mrs May: I thank my hon. Friend for his opening comment, but I do not think that there is

any reduction in the number of applications from Chinese students wanting to come to the

UK. However, as I have said in answer to a number of other questions, we are absolutelyclear about the purpose of what we are announcing today, and I have talked with the

university sector about the responsibility that it also has for ensuring that the message is

given that UK universities are open for business.

Pamela Nash (Airdrie and Shotts) (Lab): Which criteria will the Home Office use to

differentiate low-risk and high-risk origin countries, and will they change as a result of

today's announcements?

Mrs May: We already have a list of low-risk countries- I think about 15 countries are on it.

The quality of documentation that can be provided to back up students' applications is an

example of the sort of criteria we will consider for determining that.



Mr Rob Wilson (Reading East) (Con): I also welcome the Home Secretary's statement, as

will my constituents. She will be aware of the recent Home Affairs Committee report, which

noted from the evidence taken that the student visa system was likely to remain leaky until an

effective method of counting students in and out of the country was established. She has

already said something about that to the right hon. Member for Birkenhead (Mr Field), but

can she say a little more?

Mrs May: There are various aspects of that particular issue, of course. In addition to the

response I gave to the right hon. Gentleman on the e-Borders system, I might add that the UK

Border Agency will, as part of its assessment of whether institutions can become highly

trusted sponsors, examine whether they ensure that their students go home after their period

of study. That is another way in which we will try to ensure that the issue is addressed.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): I serve on the external board of

Birmingham university's business school and I must tell the Home Secretary that both

Birmingham university and Aston university are experiencing a reduction in the number of

applications, so her message is not being heard. May I challenge her a little further on post-study work? Is she working with

22 Mar 2011 : Column 869business schools on that, because they have very specific requirements, and if we lose sight

of them we will harm ourselves greatly?

Mrs May: We have been discussing with business and the university sector what might be

the appropriate criteria for the post-study work route, and the message both those sectors

have given me loud and clear is that if international students graduating from UK universities

are to go into a job, that should be a graduate-level job.

Mark Reckless (Rochester and Strood) (Con): Three months ago, the Home Secretary

proposed closing the post-study work route, expressing concerns that it was adding to

graduate unemployment. Will she explain to unemployed graduates in my constituency why

she now says that foreign students can stay on, so long as they take a graduate job earning at

least £20,000 a year?

Mrs May: We have looked at the balance of interests among universities, the UK economy,

businesses and, of course, those currently resident in the UK who are graduating from UK

universities and looking for jobs. That is why we have not said that graduates can stay on

under the terms of the current post-study work route, which allows them to stay on and go

into unskilled jobs or stay on and not be in employment. We think it is right that the brightestand best should have an opportunity to stay here for a limited period of time, but they must be

in a skilled graduate-level job. We have been absolutely clear, however, that if the numbers

unexpectedly or significantly increase, we will ask the Migration Advisory Committee to

look at how we can ensure that abuses do not continue-if that is happening-and that could

include limiting the numbers.

Tony Lloyd (Manchester Central) (Lab): The Home Secretary will get support-not least

from me-for her previous answer, because it is important to get that balance right. Will she

clarify something for me? One of the things involved in the post-study work route that she

has described is a system of UK Border Agency licensing. If that is to exist, will those who

operate it be properly trained and will they operate with proper flexibility? That has notalways been the case in the past. Does she recognise the point made by my right hon. Friend



be absolutely clear in saying to people that our universities remain open for business and

provide a first-class education.

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): Liverpool's three universities attract

approximately £66.6 million in gross income from international students. That income is a

significant driver for Liverpool's economy and is absolutely vital at a time when universityfunding is being so drastically cut. Will the Home Secretary please expand on what the

tougher entry requirements for demonstrating international students' financial means will be

and can she guarantee that the proposals will not prevent genuine students from coming to

study in Liverpool?

22 Mar 2011 : Column 871

Mrs May: The proposals will not prevent genuine students from coming to study, but we do

need to look at things such as documents provided by banks to ensure that they are genuine

institutions that are genuinely backing up the financial claims being made by individuals whocome here to study. It is in nobody's interests to allow people to use documents that are not

legitimate when they apply for a student visa to come to the UK. As regards the three

universities in Liverpool, as I have made absolutely clear, they will continue to be able to

attract international students.

Mr Stewart Jackson (Peterborough) (Con): I congratulate the Home Secretary on facing

down some of the hysterical hyperbole from the Opposition, parts of the media and parts of

the further and higher education sector. On English proficiency and integration, will she

please work with our colleagues across government to address the very specific issue of the

hundreds of millions of pounds spent by British taxpayers on translation and interpretation

services-a non-statutory duty-and to reduce such expenditure in these financially straitened

times?

Mrs May: My hon. Friend is taking me down a road that goes beyond the Home Office's

area of responsibility, large though that is. I fully accept the thrust of his comment about the

importance of people being able to speak English, which is precisely why we introduced a

requirement last year that those who come here to marry or join a partner should be able to

speak English to a particular standard.

Ian Paisley (North Antrim) (DUP): I welcome much of the sentiment in the Minister's

statement. Will she facilitate a meeting with representatives of Queen's university Belfast andthe Royal Victoria hospital? They provide many opportunities for students to come and learn

about medicine and then to go into those teaching institutions and provide services to many

of our patients in Northern Ireland.

Mrs May: I note the hon. Gentleman's comment and request; my hon. Friend the Minister for

Immigration will be happy to meet him.

Stephen Mosley (City of Chester) (Con): One popular scam involves students deliberately

failing their examinations repeatedly in order to retake them and hence prolong their stay in

the UK. What action is my right hon. Friend proposing to tackle such scams?



Mrs May: I referred in my statement to students who stay on and move from course to

course but I had not got as far as those who deliberately, as my hon. Friend suggests, fail their

exams. There will be a time limit on how long someone can stay in the UK-three years for a

below degree-level course. The limit will be extended for postgraduate studies and to

accommodate those who are doing medicine and longer courses, but there will be a limit on

the number of times that someone can try that ruse.

Mr David Nuttall (Bury North) (Con): One in five of the students granted a student visa in

2004 was still here in 2009. Will my right hon. Friend please confirm

22 Mar 2011 : Column 872whether the measures in her statement will end that type of abuse of the system?

Mrs May: My hon. Friend makes an extremely valid point. I am happy to tell him that the

time limit on how long a student can stay in the UK will address precisely the point he raises.

Roger Williams (Brecon and Radnorshire) (LD): Universities across Wales will welcome

today's statement, particularly as the right hon. Lady has been able to address so many of their concerns. Will she commit to maintaining the dialogue with the vice-chancellors that

has proved so productive over the past couple of months so that we can ensure that the

proposals deliver in the way that they are intended?

Mrs May: I am happy to confirm to my hon. Friend that we will be happy to continue

speaking with the vice-chancellors.

Mr Marcus Jones (Nuneaton) (Con): I strongly welcome the Secretary of State's statement,

particularly as I have learned that in one private college there was no classroom tuition

whatever and there were so-called work placements up to 280 miles from the college. Does

she agree that it is important that student visa holders should be studying and not working?

Mrs May: I could not agree more. If someone comes to the UK to study and do a course of

education, that is precisely what they should be doing. They should not use the student visa

route as a back-door entry into migration for work.

Stephen Hammond (Wimbledon) (Con): I congratulate my right hon. Friend on her

statement, which will be warmly welcomed by the legitimate private language college sector

throughout the country. There are a number of such legitimate colleges in Wimbledon, so will

she outline the changes that she expects that they will need to make to comply with her

statement?

Mrs May: A process will be set out for those legitimate colleges by the UK Border Agency.

It will be necessary that they apply for highly trusted sponsor status and for accreditation, and

we will set out the time limit for that application process soon. They will need to receive

highly trusted sponsor status by April 2012 and educational accreditation by the end of 2012.

Mr Aidan Burley (Cannock Chase) (Con): Last and hopefully not least, I am sure that I am

not the only Member of the House who is astonished by how widespread the abuse of the

student visa system has become. May I ask the Home Secretary whether our policy to reduce

net migration from hundreds of thousands to tens of thousands is supported by the shadow

Home Secretary?



Mrs May: That is a very good question, and perhaps the shadow Home Secretary would like

to answer it at some stage.

new immigration statement from house of commons

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