Westminster Hall
(13 years, 11 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Independent Parliamentary Standards Authority
(13 years, 11 months ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr David Winnick (Walsall North) (Lab)
It is pleasant to serve under your chairmanship, Dr McCrea. Let me say straight away that it is unfortunate that this debate is necessary. All of us in the last Parliament hoped that when we were re-elected, the issue described as “MPs’ expenses” would have been dealt with once and for all. Enough controversy occurred in the last Parliament. Let me make it clear to the chair of the Independent Parliamentary Standards Authority, and the interim chief executive, that I have no wish to conceal from the public in any way the amount of money that we claim. I am sure that that applies to other colleagues, whichever party they belong to. Indeed, I was one of those who strenuously opposed the attempt to exempt Parliament from freedom of information legislation. If we claim public money—and it is public money—the public are entitled to know what we claim. That is not at issue, and it is important that that is understood.
It is perfectly understandable that in the closing stages of the last Parliament, as you know, Dr McCrea, IPSA was unanimously agreed to without any vote. My right hon. Friend the Member for Blackburn (Mr Straw), who is present in the Chamber, put the reasons why a new body should be set up, which we all understood. However, what has occurred since we returned after the election has put these issues back on the agenda. The reason for that is simple: the system that IPSA introduced, without any consultation with Members, is complex and difficult. When it comes to legitimate claims—obviously, all our claims should be legitimate—for constituency offices and related bills such as council tax, rent, telephone, electricity and so on, it is difficult to get any sense out of IPSA.
The person whose title is “independent expenses compliance officer” was quoted yesterday in the press as dismissing the complaints as coming only from older MPs. I am not here to apologise for my age. I am no more responsible for that than I am for the colour of my skin, my racial origin or my gender. However, over a third—35%—of the Members are new to the House of Commons and they cannot be dismissed as “older MPs”. Presumably, those MPs coming to the House for the first time are somewhat younger than me—I would be surprised if that was not the case—but it is not a matter of saying that they should “get used to it”, because that is nonsense. Criticism coming from new Members is no less than that coming from those of us who have been re-elected.
Mr Kevan Jones (North Durham) (Lab)
I think that I am correct in saying that my hon. Friend was elected to this House for the first time in the 1960s. In The Guardian yesterday, Mr Alan Lockwood commented that most MPs were happy with the system and he made some pejorative statements. If he were to hear a complaint against my hon. Friend, or if my hon. Friend made a complaint about IPSA, does he think that he would get a fair hearing?
Mr Winnick
I am not going to take up what the independent expenses compliance officer said. I do not think that his comments deserve any response from me; they speak for themselves. However, if the situation has been difficult for returning Members—as many of us are—how much more difficult has it been for new Members? It must be an outright nightmare for them, and that is set against a background in which they would find it far more difficult to criticise the system because their local paper might say, “Look what they complain about the moment they are elected.” At least returning Members have constituency offices, however difficult it is to get IPSA to agree on rent and related matters. New Members have to start from scratch, without being able to go to IPSA and say, “This is what we want to do. Is it legitimate? Is it within the rules?” Those are elementary questions, but they will not get any answers because, at the moment, the system does not provide for anything of that kind.
Mr Tom Harris (Glasgow South) (Lab)
Does my hon. Friend find it perturbing that although it is virtually impossible for Members of Parliament to get a face-to-face interview with a senior IPSA official, it is extremely easy for almost any member of the press to do so?
Mr Winnick
I take that point entirely. If IPSA spent as much time trying to resolve the genuine difficulties of new and returning MPs as it gives to the press, that would be an advancement. The national press will say, as in one recent article, that MPs are too obsessed with their own position. However, what we want to do is on behalf of our constituents; it is not about our salary. Perhaps our salary has not been paid in full due to a technical fault, but that is not the subject of today’s debate. We are not going to town about that, far from it. If we want to have constituency offices and to get matters resolved, it is so that our constituents can come to our constituency offices and we can pursue their complaints. IPSA gives the impression that our concerns are all about ourselves, and that is what it tries to get over to the media.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
I congratulate my hon. Friend on securing this debate; it is a subject that I feel passionate about. Is it not wrong that long-standing, loyal staff find themselves in the predicament that, as a consequence of the ceiling that has been set, they might be made redundant?
Mr Winnick
I would like to make some progress as I know that a number of colleagues wish to speak. IPSA’s justification is that the system works. I do not claim to be an expert in computer technology. My secretary makes the claims. I am not sure that when she was appointed, many years ago, that was one of her jobs. Be that as it may, it could be argued that whether or not we are acknowledged computer experts, that is the system.
Let me, however, give some illustrations in order to challenge what IPSA has said. One new MP—not of my party—told me that since he was elected, 80% of his time has been spent being an administrator. He did not consider that to be the reason he stood for election. If my party had won that constituency, it is likely that the Labour Member would be in precisely the same position.
Another colleague—not a new Member—said that he had spent four hours trying to submit a claim for the cost of petrol to and from his constituency. Four hours, and then the system crashed. On “Newsnight”, which some colleagues will have watched, a newly elected Conservative MP was shown using a computer. She said that trying to deal with the computer system set up by IPSA was far more complex than working as a GP in the national health service. Why should that be the case? Why should MPs, be they Conservative, Labour or Liberal Democrat, have to do that? We should not be spending hours and hours on such matters; we should be getting involved in the things that we were elected to deal with in the first place. It is indefensible that IPSA should have set up a system that is so difficult and complex, and which, particularly for new Members, has made life a nightmare.
Emily Thornberry (Islington South and Finsbury) (Lab)
Is my hon. Friend aware that 20 central London MPs have, on a cross-party basis, signed a letter to Sir Ian and held meetings with IPSA to highlight the historical problems that we have had in balancing our budgets—a difficulty greatly exacerbated by the changes in the rules? The penultimate sentence of our letter states that
“no thought has been given to the needs of central London MPs when designing this scheme of allowances.”
Mr Winnick
I am sure that that is an important and interesting intervention.
Phil Wilson (Sedgefield) (Lab)
On computers, I managed to get access to the expenses system using my own password—
Phil Wilson
However, the expenses that appeared on the screen were those of another MP. A member of my staff managed to get through to IPSA to point that out and was told that it was a computer glitch that would be sorted. In my view, that is not a computer glitch but a gross intrusion into another Member’s privacy, and it needs to be looked into before we go any further.
Mr Winnick
My hon. Friend’s point is valid, and I hope that it will be noted by IPSA. I am not sure whether IPSA is represented here today—I shall talk about its senior personnel in a moment.
Another of my hon. Friends said that trying to deal with IPSA was like dealing with a brick wall. That sums up the experience very well. IPSA has provided a helpline, but if there ever was an anti-helpline, that is it. In many instances it is impossible to get through, and if one does, one gets no information but is told to send an e-mail. One would have thought that if a helpline is provided, it should be a genuine one. Time and again, colleagues have complained that they send e-mails to IPSA and spend a great deal of time doing so—as Members of Parliament, we should not be spending anywhere near as much time on that as we do—but they receive no response at all. One would hope that one could phone somebody, apart from the helpline, and get information, but that is out of the question. IPSA will not give out another phone number.
Allegations have been made about rudeness to staff. I do not blame the staff employed by IPSA for the problems. They are not responsible. If any colleague, from whichever party, has been rude, that is wrong and I would be the last person to defend them. Responsibility lies with the chair and the chief executive of IPSA and not the staff, many of whom, apparently, are interns who were employed only because of their technical knowledge of how to work the computer system. They are not in a position—they admit as much—to give advice to any Member.
Mr Russell Brown (Dumfries and Galloway) (Lab)
My hon. Friend, like those others of us who were here before the last election, will easily recognise the difficulties that everyone encountered last year, when the whole expenses and allowances fiasco was dragged through the press. I have every reason to believe that those involved in setting up the IPSA system visited the Scottish Parliament and spoke to the staff in the allowances office there, who are held in high esteem. The point was raised: why do we not have such a system? It now appears that IPSA visited and paid no attention whatsoever to the advice and help that was given.
Mr Winnick
I would like to have the response of the chair of IPSA to my hon. Friend’s very important point about the Scottish Parliament.
Regarding submissions, if IPSA says that it is absolutely vital that the system is online, so be it, but I do not see any reason why that is necessary. Why can we not make submissions in writing, with all the documentation? Of course the documentation should be checked thoroughly—there should be no repeat of the embarrassment and shame that was brought on Parliament as a result of the abuses, although we should bear in mind that most of those involved in the abuses are no longer in the House of Commons—but no reason has been given why submissions cannot be made in writing. If approved, they could immediately be put on the IPSA website. In that way, those who cannot sleep at night unless they know what their MP is claiming can be satisfied. All the information will be on the website, so everyone will know the details immediately a claim has been submitted and approved.
Mr Winnick
I will give way to my hon. Friend, who does not usually like to get involved in controversy.
Mr Skinner
I think my hon. Friend is now at the kernel of the subject: the online system. We have heard from my hon. Friend the Member for Sedgefield (Phil Wilson) that he reported a breach of security—that is what it was—when an e-mail was sent to him in error. Does my hon. Friend the Member for Walsall North (Mr Winnick) agree that that is not an isolated case? I have a letter here that was sent to me on 2 June. It belongs to another Member of Parliament. I have sent it to IPSA and told it about the mistake, and I have heard that several other Members have had similar e-mails, not destined for them. That is a serious breach of security. We all know that three Ministers in the previous Government lost their jobs because of dodgy e-mails, and the IPSA system will end in tears if we are not careful. This debate is not about IPSA itself, as my hon. Friend said at the very beginning, or about its being an independent body. We all welcome that, and voted for it. It is about the fact that the system is not secure. Already, in just a few weeks, we have seen many breaches of security. IPSA must look for a different system to get the show on the road, and then everybody will be satisfied.
Dr William McCrea (in the Chair)
Order. Interventions will have to be interventions, not speeches.
Mr Winnick
My hon. Friend has touched on an important question, which I mentioned earlier: why are we having this debate at all? Why was the issue not resolved in the previous Parliament? Why are we back to the point where the media can say that MPs are discussing what they call their expenses again? My hon. Friend has mentioned other matters on the Floor of the House, and IPSA should take them up immediately.
I take the view that the most senior people in IPSA—the chair and the interim chief executive—should understand the widespread concern that is reflected in the attendance at this debate. This is not an attempt to undermine IPSA or to undermine the concept of what we claim becoming public knowledge as quickly as possible. It is an attempt to get those responsible to recognise that there are genuine difficulties, which it is up to them to resolve.
The chair of IPSA receives £700 per day, plus what are called “reasonable expenses”. Whether or not those expenses have to be claimed online, I do not know. That is the equivalent of more than £100,000 a year for a three-day week. The chair is a distinguished public servant—I do not question that for a moment—but he has a responsibility to get a grip on the situation. The interim chief executive is paid somewhere between £105,000 and £115,000 per annum. That is quite a sum, and one would hope that someone in such a senior position and with such a substantial salary would recognise the considerable disquiet, to say the least, among Members of Parliament and staff. The Unite parliamentary branch has expressed much concern that some of its members could be made redundant as a result of the changes.
Angela Smith (Penistone and Stocksbridge) (Lab)
I put on record that I am here today only because of the inordinate amount of time that I spend on IPSA matters when I should be seeing to the interests of my constituents. Is it not the case that the system has been badly thought through and hastily and sloppily introduced, and that the impact is not just on MPs but on staff, not just in terms of redundancy but in the fact that IPSA has completely overlooked the payment of maternity and sickness leave?
Mr Winnick
I totally agree.
I mentioned IPSA’s chair and interim chief executive. A communications director is also being advertised for, with a salary of up to £85,000. Apparently, one is not enough, and the intention is to appoint two others. Inevitably, one asks oneself why on earth IPSA requires three, or indeed any, spin doctors. My debate is about Government policy on IPSA, and I know that the Minister will do his duty by explaining what that policy is. However, it would be interesting to know why it is necessary to have three spin doctors, with the salary of the most senior being advertised as £85,000.
Helen Goodman (Bishop Auckland) (Lab)
Does my hon. Friend agree that there is a serious impact on Members’ families as well as an effect on staff? One of the most serious issues, in addition to all the points about administration, is that once children reach the age of six the entitlement to accommodation is cut off and spouses are given no travel allowance. Does my hon. Friend agree that IPSA is behaving not only independently but above the law? Is it not clear that that discriminatory rule will impact on not only the way we do our jobs but who can be elected and who can do the job?
Mr Winnick
My hon. Friend could not have set out better the effect on family life. We could go back to the situation that we had many years ago when only those with independent means could become Members of Parliament. That would be a very undesirable state of affairs to say the least, and I am sure that that view is not confined to Labour Members. I see no reason why family life should be undermined in that way.
Joan Walley (Stoke-on-Trent North) (Lab)
May I just go back to my hon. Friend’s point about communication officers? Does he agree that the real issue with IPSA is that there are no channels of communication? There is no way of having contact to resolve issues about parts of the policy that it is has imposed without consultation and that are not fit for purpose.
Mr Winnick
I mentioned how difficult it is to get in touch with IPSA, apart from with its interns, whom I would be the last person to criticise. I have not seen the chair or the chief executive. Where are they? Do they come to the House of Commons? They apparently have very luxurious accommodation in central London, but why do they not come here? Why can we not meet them? Have they imposed some sort of rule that means that they cannot meet Members of Parliament? Parliament has been back for two or three weeks, but anyone who has seen the chair or the interim chief executive is fortunate. I would not recognise them—I might try to remember them from their photographs, but that is about all.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Last week, I received a letter telling me that I had not submitted my bank details to IPSA so that I could be paid. That struck me as a little odd as I was actually paid, and the money was put in my bank. Today’s edition of The Times contains the statement that many MPs have not submitted their bank details to IPSA. First, I would dispute a communications policy that allows such information to be divulged. Secondly, I deeply resent the implication that MPs are somehow engaged in a conspiracy to avoid giving IPSA their bank details and getting their pay. Lastly, I would ask that we apply what pressure we can, perhaps collectively, to get the National Audit Office to look at these procedures to see whether they give the public value for money.
Mr Winnick
That is a good point. I spoke about the compliance expenses officer, who is supposed to be an independent watchdog, but that person is appointed by IPSA and occupies its offices, so I do not know how much of a watchdog he is.
I have yet to find a single Member of Parliament of any party who is in favour of what IPSA has done—if there is one, they should quickly put their hand up—and I am not likely to find one among the 47 colleagues who have come along today, presumably to support the criticism of IPSA.
To a large extent, IPSA is working with the mindset that we got into such a position in the previous Parliament—that we were so embarrassed and shamed—that the public will not be on our side. That is a possibility. If that is IPSA’s mindset, it is unfortunate. However, I hope that I have made it clear today that we are not complaining for ourselves, but because what has happened since we returned after the election is undermining the work that we do as Members of Parliament on behalf of our constituents. That is our concern: our constituency offices and the bills to be paid. The system that is in operation should not be so complex or difficult that, as I mentioned, a colleague has to spend, unbelievably, four hours trying to process a petrol claim.
The public should understand that this is not a matter of a few pounds. Normally, when people talk about expenses, it might be a matter of a cab fare—not for us, of course—a meal and the rest of it. However, when our expenses—the constituency rent, the bills, our rented accommodation and the rest—are totalled up, they come to quite a substantial sum. That sum is perfectly legitimate and above board, and I am not aware that anyone has suggested otherwise. We hope that it will be processed properly and without taking too much time.
I hope that IPSA’s chair and interim chief executive understand that our criticism is justified and that we have merit on our side. I also hope that they will come to grips with the situation as quickly as possible and end this rather embarrassing position, which has seen us having to come here to discuss the issue again. Following what happened in the previous Parliament and the setting up of IPSA, we had all hoped, as I have said, that this issue had gone for ever.
Dr William McCrea (in the Chair)
Order. I draw Members’ attention to the fact that I will start the winding-up speeches at 10.40 am. I want to get as many of the Members who requested to speak into the debate as possible.
Sir John Stanley (Tonbridge and Malling) (Con)
I wish to declare an interest as one of the many Members of Parliament who have been deemed to be a London-area MP with a constituency outside London. I also wish to state that I am among the many MPs of all political parties who were not asked to pay one penny back by Sir Thomas Legg.
I warmly congratulate the hon. Member for Walsall North (Mr Winnick) on initiating the debate; he has done a great service to parties in all parts of the House. New Members, in particular, might well ask how it is that they arrived in the House on 6 May to find the expenses scheme creating such enormous difficulty for them and, indeed, for returned Members. It is therefore worth stating that that occurred because the final IPSA scheme was published only on 29 March. On the very same day, it was brought into being, when the Speaker laid it before the House without debate, consideration, the opportunity for amendment or a vote. I hasten to say that that comment represents no criticism whatever of the Speaker; that was the procedure laid down by the House in the Parliamentary Standards Act 2009. That is why we are in this situation, debating a scheme that has hitherto been wholly undebated and that is incapable of amendment or vote by Members of the House.
I want to focus on one fundamental issue, which has thus far, I believe, received no consideration inside or outside the House, although I drew it to the attention of IPSA’s chair, Sir Ian Kennedy, in my letter to him of 21 December last year. That issue is the interface between parliamentary privilege and IPSA’s decisions. I should make it absolutely clear that the aspect of parliamentary privilege to which I am referring has nothing whatever to do with the application of the criminal law to MPs’ expenses. I am referring to a quite different aspect of parliamentary privilege—the privilege of freedom from obstruction in the performance of parliamentary duties.
I have taken advice from the Clerk of the House as to the ambit of that privilege. He has drawn my attention to page 75 of “Erskine May”, under the heading “What constitutes privilege”. He has also drawn my attention to page 143, under the heading “Obstructing Members of either House in the discharge of their duty”, the first paragraph of which reads:
“The House will proceed against those who obstruct Members in the discharge of their responsibilities to the House or in their participation in its proceedings.”
He has also drawn my attention to the report of the Joint Committee on Parliamentary Privilege, at paragraph 264, where, among the contempts of Parliament that are listed, are
“assaulting, threatening, obstructing or intimidating a member or officer of the House in the discharge of the member’s or officer’s duty”.
I do not, of course, suggest that IPSA is in the country of assault, but there are serious issues to be raised about obstruction.
The Clerk of the House has made it clear to me that the privilege of freedom from obstruction applies only to work in connection with parliamentary proceedings. It does not apply to constituency work. However, he has also confirmed to me, in writing, that the protection of MPs from obstruction in connection with parliamentary proceedings applies whether the House is sitting or not. So, just as the IPSA scheme and any obstruction occurring under it applies throughout the year, the protection from obstruction for MPs applies equally throughout the year.
The issue before the House is whether IPSA is obstructing Members of Parliament in the discharge of their parliamentary duties, other than their constituency duties, by, for example, forcing them to spend many hours a week travelling, when they could be working in connection with their parliamentary duties; or whether in countless other ways, as we heard from the hon. Gentleman and in interventions, it is obstructing Members in the efficient and effective discharge of their parliamentary duties.
Helen Goodman
The right hon. Gentleman makes a fascinating and pertinent point. Is he aware that some of our colleagues have been told that they cannot recoup the cost of going to conferences on subjects that are of relevance to their work in the House and their constituencies? Is not that precisely the sort of issue that would be covered by the points he has made?
Sir John Stanley
I am grateful to the hon. Lady for making that important point.
No one can say with certainty at the moment whether IPSA is violating the privilege of freedom from obstruction; that is a matter for the House of Commons only. Equally, no one can reasonably deny that the issue must be addressed by the House, as early as possible in the life of this Parliament. We are in an unprecedented situation. Never before in the history of Parliament has a statutory body outside Parliament been created with the ability to introduce rules that directly impact on the ability of Members of Parliament to perform their parliamentary duties. It is clear that the boundary between the authority of IPSA and the ambit of the parliamentary privilege of freedom from obstruction needs to be defined. It is at the moment wholly undefined. For that reason, the issue must be placed at an early date before the Select Committee on Standards and Privileges. I intend to achieve that, with, I hope, the support of other Members. I hope the Minister will agree that the issue of the boundary between the authority of IPSA and the privilege of freedom from obstruction needs early consideration by the Committee.
Ann Clwyd (Cynon Valley) (Lab)
I congratulate my hon. Friend the Member for Walsall North (Mr Winnick) on bravely initiating the debate on behalf of other Members. Many of us have felt totally frustrated in the past months, particularly during the expenses scandals, and I blame all the party leaders for failing to protect Members of Parliament. They vied with one another to wear the most painful hair shirt. They have thrown us to the dogs.
This is my 26th year in Parliament and I have never felt as humiliated as I was during the expenses scandal and during the general election. I had nothing to apologise for, but in our constituencies people shouted “You’re all the same; you’re all crooks.” I object very strongly to that. I am not a crook. The majority of my colleagues are not either.
Because of IPSA I have spent many hours on accountancy, clerical work, and repeating that clerical work because forms have not been received or have been lost, and I should not have had to do that. Also, when one is doing that work from constituency offices, the online system often breaks down and cannot be accessed. Members spend a lot of time hanging around waiting for it to come back. I agree that it would be much better if the work could be done in writing. We all know that we are asked to repeat things; we are asked to send original receipts, which then get lost. We must keep photocopies of the originals and produce those again.
Mr David Hanson (Delyn) (Lab)
We have an online computer system, but I also submit every receipt in writing and must establish my own internal office system to track the fact that I have sent the receipts. I submit the information in writing and online, and therefore duplicate the process. I am not against computer systems, but I want to find a way in which my right hon. Friend and I can do things once, not twice.
Ann Clwyd
I agree; and, by the way, I want to say to the press that we are not whingeing MPs. I object to that title. We are raising matters that it is legitimate to raise because they affect our performance as Members of Parliament. If anyone describes me as a whingeing MP again—and I do not know if any members of the press are responsible for such expressions—I ask them please to come and see me.
Andrew McDonald said in a letter to me dated 9 June that IPSA had met almost 600 MPs face to face at the induction sessions. I must have been at a different induction session, because the person dealing with my induction was a civil servant from the Department for Work and Pensions who is not even a member of IPSA. Where were the people who should have met me face to face? Were they the people who smiled and nodded at me on the way into the induction session? Will they please introduce themselves next time as members of IPSA, so that I can acknowledge them? It has been impossible, as we have already heard, to talk to somebody responsible at IPSA. Instead, we are asked to submit things in writing, which is time-consuming.
IPSA is hosting training sessions around the country for MPs’ staff. Again, I object that there is not one training session in Wales, so my member of staff is expected to travel to Bristol for it. That cannot be right.
Mr Kevan Jones
Does my right hon. Friend agree that the problem with the so-called induction system or briefing session was the fact that it was designed only to show us how to use an incompetent computer system? First, if we raised any questions, staff could not answer; secondly, the default position with IPSA seems to be, “Put it in an e-mail.” My right hon. Friend may have experienced the fact that even if we send e-mails, we get no replies.
Ann Clwyd
My hon. Friend is absolutely right. The comments made by other Members show that we have all shared these experiences. Indeed, I can hardly sit down now in the Tea Room without somebody talking to me about IPSA. Of course they do, because it takes up such a great amount of our time, but it should not be taking up our time in that way. The organisation cannot even get our salaries right; it says that that is an administrative error, but with all the staff or accountants that it has working for it, how on earth can it make an administrative error? I suggest that it is totally incompetent if it cannot get the simple matter of our salaries right.
Mr Richard Bacon (South Norfolk) (Con)
As with the hon. Member for North Durham (Mr Jones), the young man who came to explain the system to me could not answer any of my questions. Does the right hon. Lady agree that it was not his fault? He had been an administrative back-office person in the private office of the former Lord Chancellor, the right hon. Member for Blackburn (Mr Straw). Those who are responsible are those who put him into that job without giving him the answers.
Ann Clwyd
That is disgraceful. It puts unfair pressure on those people. We expect answers and if we do not get answers we obviously feel frustrated. I have not yet screamed or shouted at anyone, or banged the table, but I am getting to the point of saying that I would not have come back to Parliament if I had realised what a hassle the system would be for me and my staff. I would not have returned. That is a shocking thing to have to say, because throughout my time here I have enjoyed being a Member of Parliament; to spend my time now having to do this kind of thing irritates me beyond explanation.
I note that the Leader of the House is here. He will know that a few weeks ago in business questions I raised this matter in response to a question asked by my hon. Friend the Member for Walsall North. My hon. Friend did not receive an answer to his questions; he was told that no one was responsible for answering on behalf of IPSA. I then discovered that the Deputy Prime Minister would have policy responsibility for IPSA; the Leader of the House told me that in reply to my question. If the Deputy Prime Minister is responsible for IPSA policy, he should be here listening to this debate. I am sorry he had to send his right hon. Friend to take the flak on his behalf. I would like to know what “policy” means. If answering questions on IPSA is not part of policy, what is?
Mr Winnick
The reply to the questions I tabled to the Leader of the House was that no responsibility falls on the Government for what are basically day-to-day matters. Downing street then said that it was the responsibility of the Deputy Prime Minister. I put the same questions to him, but got the same response. It is not its fault, but the Table Office now blocks all questions on the workings of IPSA. The organisation is a law unto itself; it is impossible, except at business questions, to raise issues by way of parliamentary questions. That in itself is pretty disgraceful.
Ann Clwyd
I totally agree with my hon. Friend. I hope that we allow enough time for the poor man who has to answer the debate to give a comprehensive reply.
I read again in the paper this morning that MPs will be given face-to-face advice surgeries with officials, starting in September. At the moment, advice is given largely via telephone helpline and e-mail. None the less, despite the complaints of MPs, Sir Ian said that it is not a complicated expenses system. Who is he kidding? It is complicated, and I object very strongly on behalf of my fellow Members that the system has been imposed upon us and that nobody seems to be accountable.
Mr Donohoe
Is my right hon. Friend aware that we cannot talk to IPSA but have to speak to an agency in Manchester called Calyx? When we ask a question, all the staff there can do is to say, “We’ll call you back; we have to get in touch with IPSA.” Surely that is ridiculous.
Ann Clwyd
It is all ridiculous. We must have answers today, because we are not going to put up with it. Of course it is right that the expenses system should be transparent. We all agree with that—nobody disagrees—but we disagree with the way that IPSA is operating and the extra stress that it causes Members of Parliament.
David Simpson (Upper Bann) (DUP)
Further to what the right hon. Lady said about information being given in different regions, an information day was held in Northern Ireland on Monday. I believe that four MPs were notified about it—a total disgrace, given the other difficulties that we are expected to deal with—and as a result, hardly anyone turned up.
Bob Russell (Colchester) (LD)
I congratulate the right hon. Member for Tonbridge and Malling (Sir John Stanley) on raising the real threat to the operation of this Parliament and to the ability of democratically elected Members to do the job for which they were elected. I sincerely hope that the Minister was listening and will give feedback and take action. I hope that the leader of the council—[Laughter.] It could almost be a council, could it not? I hope that the Leader of the House hears what has been said and takes immediate action. Our work is being seriously interfered with and Parliamentary privilege is therefore being compromised.
I have not yet found a Member of Parliament who thinks that IPSA is doing a good job, but we should acknowledge and appreciate that its staff—those who are trying to do the job—are wading through treacle, just as we are. It is down to the Government—my Government—to put it right.
I am not technically proficient, so it goes way over my head, but those MPs who do know how to operate the computer system are spending many hours on it—or their staff are doing so. We had a simple system before and a few Members made it go wrong, but that was to do with second homes. I am not aware of anything seriously affecting the way that our staff operated. Why should they be penalised? Why should they suffer because of the sins of MPs? Why should new MPs have to tolerate a system that would not be tolerated in any other walk of life?
I have been to IPSA—I doorstepped it. If I can do that, I am amazed that no investigative journalist has done so. I can tell colleagues that the accommodation is luxurious—the best that I have ever seen and better than anything in a Cabinet Minister’s office. The work done there could easily be done from an industrial estate in Romford. IPSA does not have to occupy very expensive offices in central London.
I repeat: we should not criticise IPSA staff. It is their bosses who created this monster. It is not fit for purpose. This is not a question of MPs wanting to line their pockets; it is a question of MPs being able to pay the bills, so that they can operate their constituency offices and their staff can get on with their jobs. I honestly believe that if the job had been handed over to Tesco, it would have been done more efficiently, because Tesco knows everyone who goes in its shops and what they purchase. If every MP were issued with a House of Commons credit card, at the end of the month the printout would say what had been purchased and it would be deducted automatically. No money would go out of or into an MP’s personal account.
It is an affront that I have found it necessary to open a separate bank account. I do not see why the private bank account of my wife and I should be called upon to pay the office costs of an MP and that money then paid back into our private account. It is a real affront. Please, let us take up the excellent research undertaken by my right hon. Friend the Member for Tonbridge and Malling (Sir John Stanley). We have the Leader of the House and the Minister here, and I can guarantee that the Deputy Prime Minister will hear about this at 5 o’clock tonight.
Barbara Keeley (Worsley and Eccles South) (Lab)
It is a pleasure to serve under your chairmanship, Dr McCrea. I congratulate my hon. Friend the Member for Walsall North (Mr Winnick) on securing the debate.
It is almost a year since the Parliamentary Standards Act 2009 went through its Commons stages. I remember it well. The Act created the Independent Parliamentary Standards Authority and gave it a number of administrative and regulatory functions, including payment of MPs’ allowances, dealing with allowance claims and revising the allowance scheme for MPs. The key aspect of the Act is that it gave IPSA those functions in relation to Members’ allowances, yet when IPSA published the first scheme for consultation, it changed the word “allowances” to “expenses”.
Most right hon. and hon. Members understand the anger and annoyance generated in the public by the term “MPs’ expenses” following the scandal of last year. It therefore seems to me to be incorrect and somewhat provocative of IPSA to describe allowances designed to support MPs in carrying out their parliamentary functions as expenses. We could debate the different definitions, but the definition of “allowance” is money defined or set aside for a purpose—in the case of MPs, to pay essential costs such as staff salaries and national insurance, rent, business rates and utility costs. It includes the sense that the sum specified in the allowance may or may not be used, but IPSA seemed to react to the term “allowances” by suggesting that if it made an “allowance scheme”, MPs would use all of the allowance allocated. That has not been the case in the past.
There is a wide variety of definitions of expenses, but a common one is that of costs incurred by an employee that are payable by an employer. As other Members have said, that does not fit the situation of MPs as we are not employees of the House. I strongly feel that “expenses” has overtones that work to hamper Parliament’s recovery from the scandal generated by the discredited system used in the previous Parliament. As my hon. Friend the Member for Walsall North has said, we all want to get over it. In my view, IPSA would be well advised to describe the scheme as an allowance scheme, as the 2009 Act laid down.
Interestingly, IPSA uses a different definition of expenses when it comes to its own reporting. It states on its website that it will publish all expenses and hospitality incurred by the IPSA board and senior staff. If it used the same definition of “expenses” for its own staff, it would report its office costs and the salaries and other support costs of its staff, as well as personal expenses. What it actually publishes is travel and accommodation costs.
What was called the office costs allowance is now split by IPSA into two allowances: constituency office rental and general administrative expenditure. The previous allowance was more than £22,000 and could be supplemented by transfer from other allowances if office running costs were higher than the allowance. The IPSA scheme split the allowance into two parts and reduced it by £1,300. One part of the allowance has to be used to pay office rent, business rates, utility bills and office insurance, and the other for office furniture, computers and printers, phone systems and bills, stationery and postage. Why does IPSA feel that it is right to reduce the total amount of allowances for running an MP’s constituency office?
The Committee on Standards in Public Life looked at the previous allowance and, in its report, recommended no change. Not only has IPSA reduced the allowance, but it has arbitrarily split it and insisted that office rental and associated costs must somehow fit into the reduced half, with the other part of the allowance not able be used for rent, rates or utility bills. Apparently, the level of rental used by IPSA to set the constituency office rental cap is about £5,000 a year, which is meant to pay the annual rent of offices for the MP and up to three and a half staff, plus filing space, printers and space to meet constituents. It is not adequate. The cap is said to be the average office rent paid in the previous Parliament. The concept of an average rent is strange—rents vary up and down the country and probably half of the MPs in that Parliament had a higher cost than the £5,000 average. Many MPs are able to rent office space at low cost from constituency associations or have subsidised offices from their local authority, but for other MPs such subsidised and low-cost offices are not available. There is a danger that IPSA’s splitting the allowance and setting such a low cap on the office rental element could drive MPs out of their current constituency offices and into unsuitable premises.
Helen Goodman
My hon. Friend is absolutely right. It is even more absurd to put things over which no one has any flexibility into one budget. We sign up to all the things included in the rent five years beforehand—they are not under our control—and all the flexible things are in another budget. Putting those two budgets together would make management of the money far easier.
Barbara Keeley
My hon. Friend makes a very good point. My hon. Friend the Member for Walsall North referred to new MPs setting up their offices from scratch. Some new colleagues have told me that they cannot afford the offices used by their predecessors. The rent will last for a number of weeks and then they will be pushed out of those offices.
On the same day that my right hon. Friend the Member for East Ham (Mr Timms) was stabbed at a constituency surgery, I challenged a person whom I thought was breaking into a property neighbouring my constituency office. The police advised me that challenging would-be burglars is not a good idea and that I should desist from doing so in future. My current constituency office is a place in which I feel that my staff and I are safe—it is not a shop, it is not on the ground floor and we have good security protection in the building—but I am very aware of the possibility of crime in the area and the other security threats posed to MPs and their staff.
Ian Mearns (Gateshead) (Lab)
I am an MP for a new constituency following a boundary change. It would plainly have been the wrong decision for me to try to inherit the premises occupied by my former colleague, David Clelland, which are on the outskirts of the new constituency. In Gateshead town centre, there is a significant transport hub that feeds virtually every part of my constituency, so it would be right for me to establish a new constituency office there. However, the IPSA recommendations on rents do not take account of town centre locations, where rents are necessarily higher because of market conditions. That precludes my establishing a constituency office that is handy for my constituents to access, unless I subsidise it out of my own salary.
Barbara Keeley
That is a well made point.
I am short of time, so I want to end my remarks on that aspect by saying that I cannot get another office that I believe would be safe for my staff at the rent that IPSA has used to calculate office costs. IPSA is considering my case, and presumably that of other Members in my situation. I hope that it will be true to its word and not force me and other MPs out of our constituency offices. If it forces us into cheap premises in unsuitable areas, what does that say about security and safety considerations? Following on from my hon. Friend’s intervention, I am now thinking about finding ways to subsidise my office costs. That is the position we have been pushed into.
In summary, why has IPSA changed the terms laid down in the Parliamentary Standards Act 2009? Why does it describe our offices and staffing costs and other essential elements of MPs’ costs as “expenses”, given that the word has such a particular resonance with the public? Why has it caused a great deal of doubt, uncertainty and problems to MPs by reducing the office costs budget and splitting an allowance that worked well into elements with caps that are too low to work properly for a number of MPs and that, by forcing MPs into cheaper office premises, could have very serious implications for the safety and security of MPs and their staff?
Dr William McCrea (in the Chair)
We have 10 minutes left, and three Members are trying to catch my eye. I leave it for Members to decide whether they wish to allow others to get in.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
I congratulate my hon. Friend the Member for Walsall North (Mr Winnick) on securing this debate. In anticipation of press reporting of this debate, may I say that we get it—but we have had it? Also on press reporting, I would really welcome Mr Kennedy’s coming out of his luxurious bunker to tell us whether a member of staff said to an MP, “Don’t shout at me because it wasn’t me who fiddled my expenses.” I very much doubt whether that was said by a member of IPSA, because the staff are extremely helpful if they can be. I raise the matter because it relates to the whole question of staff budgets. IPSA has effectively cut £5,000 from staff budget levels. That means that 175 MPs will have to reduce their staff, which is unacceptable.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
As a new Member, I inherited the staffing structure of my predecessor. He and I and our constituents have been served by those staff with both dignity and diligence. If there is no change in the staffing levels, I will have to sack someone. Does the hon. Gentleman not agree that that is unfair?
Jim Sheridan
That is grossly unfair. The worrying aspect is that the hon. Gentleman may even be taken to an industrial tribunal, and who will pay the cost of that? IPSA has also denied our staff the opportunity to be awarded performance-related bonuses. What we want to know—we have been trying to find this out and it has been very difficult—is whether IPSA staff receive performance-related bonuses. If they do, what is the criteria for them and how much do they get? As for redundancy, we cannot pay staff a basic redundancy, and we have little opportunity to enhance that, which is causing us concern.
There is also the question of gender in this place. Maternity pay for our staff now comes from a contingency fund, and it is approved or rejected at the sole discretion of IPSA. There is no possibility of an appeal or anything else. Again, that is extremely worrying.
I am conscious of the time, but let me finish by referring to the question of the stand-in Deputy Prime Minister, the hon. Member for Colchester (Bob Russell), who asked why we could not have a credit card. I asked IPSA that question myself, and it came back and said:
“Your email asks whether IPSA can consider an alternative system for processing expenses, based on a credit card similar to the travel card. The system used by IPSA has been assessed to be efficient and cost effective for the purposes required. A significant advantage of the system is that it has been specifically designed to help MPs by preventing them from making mistakes at the initial stage of inputting an expense claim - this automatically reduces the level of incorrect claims and therefore reduces associated administration costs.”
If we had a simple credit card system that is transparent and accountable—that is what the general public wants and what we want to give them—we would not need all these compliance officers, communications officers and press officers. We have created an administrative monster. If we had a simple credit card system that is, as I said, transparent and accountable, we would not need all of that.
Mr Richard Bacon (South Norfolk) (Con)
I strongly endorse the point made by the hon. Member for Paisley and Renfrewshire North (Jim Sheridan). If we can have a House of Commons travel card for our train or plane tickets, why can we not have it for anything else? The hon. Gentleman made a very good point.
People will not be able to take up the excellent suggestion of my right hon. Friend the Member for Tonbridge and Malling (Sir John Stanley) about privileges until the Standards and Privileges Committee is established. There is one other thing that Members can do now. Many people have said that IPSA is not accountable, but that is wrong. It spends public money, which, therefore, makes it accountable. The IPSA chief executive is an accounting officer. The Comptroller and Auditor General is an officer of the House of Commons; he is the head of the National Audit Office. His address is 157 Buckingham Palace road, London SW1 W9SP. I encourage all Members of Parliament to write to him with their own experiences, because he is responsible. He is charged by Parliament, under the National Audit Act 1983, with ensuring the effective, efficient and economic use of public funds. In due course, he will need to take an interest in this question. It is a simple suggestion, but people should encourage the Comptroller and Auditor General to look at IPSA, because eventually, if there is enough pressure, he will have to look at it, and IPSA will then have to account for how it is spending public funds. It is that simple.
Emily Thornberry (Islington South and Finsbury) (Lab)
I promise to be extremely brief. I appreciate that many Members do not have a great deal of sympathy for us London MPs because we have the huge advantage of being able to go home every night and see our families, but we do have particular difficulties. Historically, we have had problems balancing our budgets. The current rules mean that the office limit of £12,761 is simply far too low for London MPs. The amount of money allowed for staff is too low for central London. IPSA suggests that we spend 20% more on our staff, but not a penny more is given to us to be able to employ them. The requirement for staff pensions creates new pressures on that tight budget, and the money allowed for staff bears no relation to the needs of the constituency.
It is the opinion of central London MPs that there should be an objective test, perhaps based on the index of multiple deprivation, on the basis of which we should be allowed additional case work. We have confessed to each other that, over the years, we have been putting large amounts of our own salaries into our staffing budgets. Frankly, this is the last straw. We are quite sure that IPSA intends to support Members of Parliament in their work, but it has got a number of the issues completely wrong, and that needs to change. We are pleased that IPSA has agreed to an early review, but we ask it to
“develop an objective method of assessing constituency need. Assess how many staff would be needed to meet that need. Fund that number of staff. Commit to funding increments for staff with long service. Commit to funding London weighting for London-based staff. Develop an objective method of assessing local rent levels. Fund a constituency office large enough to hold the assessed number of staff plus volunteers.”
We are asking for that not for ourselves but for our constituents. Our constituents would not believe it if we told them that MPs’ expenses meant that we could not do a proper job for them.
Mr Jack Straw (Blackburn) (Lab)
I express my gratitude to my hon. Friend the Member for Walsall North (Mr Winnick) for raising this very important issue. It is important not only to every colleague in the House, but, indirectly, to every constituent. It will become very apparent from this debate that concern about the structure and administration of the new allowance system goes right across the House. It is a matter of concern regardless of party or of previous experience. In his important remarks, the right hon. Member for Tonbridge and Malling (Sir John Stanley) said that IPSA was the first body ever to be created with power effectively to adjudicate over the conduct of Members of Parliament, and that is true. However, it is worth reflecting on why this time last year, the whole of the House of Commons, all three party leaders, and some of us caught up in a vice by those party leaders, were under such pressure to establish a separate and independent allowance system.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I want to raise one issue that probably has not been mentioned yet. We are talking about value for money for the public purse and the taxpayer. As a matter of public record, at the moment the cost of my accommodation in London is £252.54 a month. Under the IPSA system and the proposed changes, that figure will rise to about £1,200 or £1,400 a month, so the cost to the taxpayer will be four or five times greater. Does the right hon. Gentleman think that that represents value for money?
Mr Straw
From what I have seen, IPSA itself recognises that there are a number of anomalies in the system—although I do not remotely speak for IPSA. Those include the anomaly that if a colleague lives in a second home that they now own they cannot make a claim in respect of that second home. They could, however, rent the home out to a third party and then use an IPSA allowance to rent further accommodation. That is plainly irrational and I gather that it is going to be changed.
Bob Russell
Will the right hon. Gentleman please confirm that the public anger during the last year was directed at MPs’ second home allowances and not at our staff, our constituency offices and the office costs? IPSA has created problems that were not there before.
Mr Straw
I was going to come on to that very important point.
Just to go back slightly, it is true that this is the first time that there has been a body adjudicating on the conduct of Members of Parliament. However, the reason for that is not an invention of the board of IPSA; it was because of the egregious and outrageous conduct of some Members of the previous Parliament. We know what happened. We also know that the Commons, during a period of years, although it was never presented with the full facts, failed to take—
Jim McGovern
I am grateful to my right hon. Friend for giving way. When he mentions the “outrageous conduct” of Members of the previous Parliament, does he not agree that it is a fundamental principle of British justice that someone is innocent until they are proved guilty?
Mr Straw
Of course I accept that point. The truth of the matter was—we know this—that quite a number of our former colleagues, although they were of course a minority, were being unjustifiably imaginative, to say the least of it, in their expenses claims, especially for second homes and associated expenses. Because of variable decision making by the Fees Office, bluntly the system came crashing down and confidence in the body politic was brought to the lowest ebb that I have ever seen in my political lifetime.
It was because of that situation that the party leaders agreed in May 2009 that we should set up a separate authority, and the House endorsed that decision. It then fell to me as the Justice Secretary at the time and to a team of very good officials to try to hold discussions with the other parties and to bring forward what became the—
Mr Straw
If my hon. Friend will allow me, no, I will not give way. We brought forward what became the Parliamentary Standards Act 2009, which gained Royal Assent at the end of June last year.
As my hon. Friend the Member for Walsall North and, I think, my hon. Friend the Member for Bolsover (Mr Skinner) and others have said, there was and is, I believe, widespread agreement that we could no longer continue with a system—
Mr Straw
No. We could no longer continue with a system of allowances whereby we set the allowances ourselves. And yes, my right hon. Friend the Member for Cynon Valley (Ann Clwyd) is absolutely right to say that all of us felt humiliated by that situation, and still do. It was and is a collective humiliation, but we cannot place responsibility for that on the board or the staff of IPSA. I am afraid that we have to look to ourselves.
There is now, however, this other factor, which hon. Friends and other colleagues have referred to this morning, that almost every one of those who transgressed the rules is now outside this House, so the 400 returning Members and certainly the 260 new Members are now paying the price and the penalty not for their own offences, because they have not committed those offences, but for the offences of predecessors who have now left the House. That is a point that I continually make to members of the IPSA staff and board. They have got to recognise that, collectively, the Members of the new Parliament are not the culprits; those culprits, with perhaps one or two minor exceptions, have left Parliament.
Mr Straw
I am just putting on the record what Parliament itself agreed. We then had to get an interim chief executive of IPSA appointed in September and a board appointed in November. In addition, the Committee on Standards in Public Life itself decided that it wanted to second-guess what the new IPSA board was doing. That led to further pressure on the establishment of that board. All the time there was that imperative, and I do not remember any colleague from any part of the House saying that we should not have pushed forward with that timetable to try to get the new system established, at least in embryo, by the beginning of this calendar year, with a view to it coming into force at the general election.
Jim Sheridan
If my right hon. Friend had known then what he knows now, would he have done anything different?
Mr Straw
No. If we are going to have an independent authority, we have got to give it some independence.
There are two fundamental problems. One is the structure of the allowance system that the authority has decided on; that is something that it decided on. Having done that, the second problem is the system of administration.
Mr Straw
I have only two minutes left.
So far as the structure of the allowance system is concerned, my view is that the authority has failed to take account of the reality of Members’ work and it needs to change that. It has failed to take account of the fact that we are in a wholly different position from most people, because we do not have an office provided for us; we are expected to provide that office ourselves, and we have to do so. That is why I believe the authority has made an error in assuming that a system for incidental expenses, which could operate for staff in a normal organisation, can be brought in to operate for the complete administration of an office. None of the people who are running that system has ever been in the position of having to run a complete office system altogether.
Secondly, there are major problems about the treatment of families. I have no interest in that issue; my family is grown up. But the fact that travel for spouses and children over the age of six is not properly supported is unacceptable.
I make two final points. First, on the administration of the system, I strongly believe in and support what the hon. Member for Colchester (Bob Russell) said about the importance of direct payments. There was no scandal that I can remember about the system of office administration—none whatever. It would have been sensible for IPSA simply to have taken over the direct payment system, which is transparent anyway. By the way, it is not the IT system that will stop abuse of the system in future; total transparency alone will do it. The elaborate system set up to stop abuse is not needed. Unless people are suicidal, there will be no more abuse.
As I perceive it, IPSA staff and Members of Parliament have been talking past one another. IPSA made an error in not ensuring that high-grade staff were available at an early stage to talk people through the system.
Mr Straw
No, I have no time.
I hope that all members of the board of IPSA have sought to register themselves and make claims in order to see how the system operates, rather than looking over somebody else’s shoulder. I think that that would be instructive for them. Ensuring personal contact and a phone system that is not Kafkaesque in its operation is critical, as is, above all, responding to the entirely legitimate concerns and complaints raised by hon. Members from all parties.
Colleagues may recall that an amendment to the Parliamentary Standards Act 2009 was made in the Constitutional Reform and Governance Act 2010, which was passed just before Parliament dissolved. The amendment established a general duty on IPSA to
“have regard to the principle that members of the House of Commons should be supported in efficiently, cost-effectively and transparently carrying out their Parliamentary functions.”
I hope that the board of IPSA is applying itself not only to its duties to administer the allowance system but to its clear statutory duty to support the conduct and work of Members of Parliament.
The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)
I do not have a great deal of time. I will try to address as many of the issues raised by right hon. and hon. Members as possible as I go along, but I may not be able to take many interventions if I am to make progress. For those Members who have mentioned it, I will also try to set out exactly what the Government’s role is in policy on the Independent Parliamentary Standards Authority, IPSA’s own responsibility and, to respond to the point made by my hon. Friend the Member for South Norfolk (Mr Bacon), what other avenues of accountability exist to ensure that the system is run in a sensible and cost-effective manner.
I congratulate the hon. Member for Walsall North (Mr Winnick) on securing this debate and on how he has conducted it. He reminded us why we are here and emphasised the importance of transparency and accountability for the costs that we incur while doing our jobs, including for the IPSA staff trying to administer the system. He described that well, setting a tone for the debate that I hope will be reflected in the coverage of it. He cannot be accused—to use the words of another hon. Member—of not getting it. He absolutely does get it, and his interest seems to lie in ensuring that a workable, sensible system is in place to enable Members to do their jobs.
Mr Harper
Let me make some progress. The fact that there are some 47 Members in Westminster Hall today—the largest number I have ever seen—indicates the concern that exists on both sides of the House. I am sure the IPSA board will pay attention to that, listen to this debate and take note.
To start off on a good foot—before I go on, probably, to disappoint everybody—it is worth saying for the benefit of those who did not see the coverage this morning that at its board meeting yesterday, IPSA made a number of changes that I think Members will welcome. IPSA has agreed to make one-to-one, hands-on help with the expenses system available to MPs who need it. IPSA has recognised the system’s complexity and will deal with it. As the right hon. Member for Cynon Valley (Ann Clwyd) mentioned, IPSA has also said that it will offer MPs one-on-one advice surgeries with IPSA officials who understand the scheme.
Mr Bacon
If it is a bad system, it will be like the Rural Payments Agency, which finally sent people to meet farmers face to face. What we want is a system that works. As a colleague said, a credit card system, which would be totally transparent, would be much simpler, cheaper, more efficient, more effective and more economical.
Mr Harper
If my hon. Friend will let me get to the end of my list, he may hear some positive news. To pick up that point, IPSA has also said that in its review of the scheme, it will consider a direct payment system. It is therefore incumbent on Members—[Interruption.] I am sure that IPSA will have listened to the advice from my hon. Friend and the hon. Member for Colchester (Bob Russell) about a credit card system. There are alternatives, but I think IPSA recognises that a direct payment system for office costs is a sensible venture, and it will consider that system during its review in the autumn.
Mrs McGuire
Does the Minister have any idea how much it has cost to reinvent the wheel on direct payment of office costs? Many of us already had such a system in place under the previous Administration and did not handle any cash in our offices.
Mr Harper
The right hon. Lady makes a good point. Under the old system, with which Members of the old Parliament will be familiar, no money passed through our hands. That system was completely transparent. I think IPSA will want to bear that in mind as it conducts its review. Members ought to tell IPSA what they think was powerful about the old system—[Hon. Members: “How?”] I am sure that they will, and I am sure IPSA will listen.
In the four minutes remaining to me, I will explain clearly to Members the methods for accountability and what the Government are and are not responsible for.
Mr Harper
I will not take any more interventions. I have only four minutes.
The shadow Secretary of State, who was responsible for taking some of the measures through the House, explained clearly the history behind them, the reason why they were introduced and the consequences of moving to an independent system. He also explained why it was necessary. The details of IPSA’s internal workings are for the chairman of its board and its senior management to explain, not the Government. I will not discuss individual details of how the expenses scheme works.
However, the Speaker’s Committee for the Independent Parliamentary Standards Authority has an oversight role. It must agree IPSA’s budget and lay it before the House. Members will be aware that the Speaker’s Committee on the Electoral Commission, an analogous body, answers both written and oral questions in the House from Members. I understand that at its first meeting on 30 June, the Speaker’s Committee for IPSA will consider whether that is a suitable model for enabling IPSA to answer Members’ questions about its internal workings.
My hon. Friend the hon. Member for South Norfolk, an experienced and well-respected member of the Select Committee on Public Accounts during the last Parliament, made the point that IPSA is subject to audit by the National Audit Office and therefore also by the Public Accounts Committee. I would expect the new Select Committee on Political and Constitutional Reform to take an interest in the matter as well. Those bodies will deal with the scrutiny oversight arrangements and ensure that IPSA is discharging its duties in a sensible way.
Sir John Stanley
Before my hon. Friend sits down, will he answer the fundamental question that I put to him? Does he agree that it is necessary and desirable that the Standards and Privileges Committee should consider the interface and boundary between the authority of IPSA and Members’ parliamentary privilege of freedom from obstruction?
Mr Harper
It is not for a member of the Government to tell the Standards and Privileges Committee—when it is set up—what it should consider. The Chairman and members of that Committee are perfectly able to decide that. However, it is worth remembering and reiterating the point made by the right hon. Member for Blackburn (Mr Straw) that under the Parliamentary Standards Act 2009, IPSA has a statutory duty to ensure that it supports Members in carrying out their parliamentary functions efficiently, cost-effectively and transparently. IPSA is legally obliged when running the scheme to ensure that it is helping us do our jobs as Members of Parliament. That was put into the Act from the beginning.
As I am about to run out of time, I will just make the point that the Government support the independent system of regulating our parliamentary expenses that has been in place since the election. We want to enable IPSA to get on with doing the job it is legally obliged to do in order to help us do our job of serving the public, but we will keep its role and functions under review. I am grateful to the hon. Member for Walsall North for securing this debate. It has been helpful, and I am sure that members of the IPSA board will take note of all the concerns raised. My right hon. Friend the Leader of the House, who was here earlier, has been speaking with IPSA regularly about any concerns raised by Members regarding their ability to do their job, and I know that he will continue to do so.
Alleged War Crimes (Sri Lanka)
(13 years, 11 months ago)
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Siobhain McDonagh (Mitcham and Morden) (Lab)
I am grateful for the chance to highlight again the appalling treatment of Tamil civilians by the Sri Lankan Government. Many hon. Members share my interest in the subject, and although the debate is short, I will take as many interventions as I can. I pay tribute to the former hon. Member for Enfield North, my great friend Joan Ryan, who has always been one of the most powerful and passionate supporters of human rights and who continues to care deeply about what has happened to the Tamil community.
Before I begin my speech properly, I want to go over some old ground, as there have been several very good debates about the Sri Lankan Government’s treatment of Tamils in the past 18 months or so. In that time, hon. Members persuaded the previous Government to support a number of measures, including an end to GSP plus—the generalised system of preferences, which is a preferential trading agreement between the European Union and Sri Lanka. GSP plus was stopped because the European Commission conducted a major study of human rights in Sri Lanka and found a variety of abuses, including the lack of a free press, unlawful killings, torture, disappearances and so on. For similar reasons, the Commonwealth decided not to make Sri Lanka the host of the next Commonwealth conference, largely as a result of the British Government’s leadership. I would welcome the opportunity to hear confirmation from the new Government that they support the decisions on GSP plus and the Commonwealth conference. Those decisions have been debated several times in the House of Commons, and many hon. Members have spoken in favour. Can the Minister confirm that the present Government will support them?
The reason why I called for the debate is that since Britain acted against Sri Lanka’s human rights record, even more disturbing questions have emerged about Sri Lanka’s activities. I am referring to evidence of war crimes. I shall quote from the International Crisis Group report of 17 May, which is called, very starkly, “War Crimes in Sri Lanka”, but first I shall mention a report by Desmond Tutu and Lakhdar Brahimi, who are members of The Elders, a group of eminent global leaders brought together in 2007 by former South African President Nelson Mandela, who is a hero to many of us here. Their report states:
“There is a growing body of evidence that there were repeated and intentional violations of international humanitarian law...in the last months of the war.”
They note that President Mahinda Rajapaksa has decided to appoint
“a commission on lessons learnt and reconciliation”
and call that
“a step in the right direction”.
However, they say that it is “not nearly enough.” They go on to say:
“There is no indication, as yet, that the commission intends to hold anyone to account for any violations of domestic or international law.
Without a clear mandate for legal accountability, the commission has little chance of producing either truth or reconciliation. Nor will victims and witnesses feel safe in giving evidence.”
Keith Vaz (Leicester East) (Lab)
I congratulate my hon. Friend on all the excellent work that she has done on this issue. In the last Parliament, the then Government appointed a special envoy to try to cut through the difficulties of talking to the Sri Lankan Government. Does my hon. Friend agree that that is perhaps one appointment that the present Government can make to show their determination to try to deal with the horrific consequences of the war?
Siobhain McDonagh
I agree. I thank my right hon. Friend for all his work on behalf of the Tamils and I ask the Minister to address the point that he raises.
Mike Gapes (Ilford South) (Lab/Co-op)
Does my hon. Friend share my concern that the United Nations Human Rights Council failed to carry out its duty to investigate war crimes and abuses on both sides in the conflict in Sri Lanka, and that that is an indictment of those members of the UN system that blocked it—specifically, China, India and Russia?
Siobhain McDonagh
I agree. As I have often admitted, I am a novice in international issues. When dealing with these matters, I have been shocked by the behaviour and procedures of the UN.
Desmond Tutu and Lakhdar Brahimi believe that an independent international inquiry is needed. They say:
“In our experience in South Africa and other countries, these kinds of inquiries work best alongside a full and open reconciliation process. This would allow the suffering—and mistakes—of all communities during decades of war to be acknowledged.”
What happened to Tamil civilians in Sri Lanka was disgraceful, but equally disgraceful is the fact that what took place there was so hard to document because of the restrictions on monitoring and reporting and the lack of a free and open press.
Mr Lee Scott (Ilford North) (Con)
I congratulate the hon. Lady on securing the debate. Does she agree that however an international investigation is conducted, one of the most major things that needs to be dealt with now—indeed, it should have been dealt with a long time ago—is that not one displaced person should still be in a camp, not one person should still be suffering and everyone should be returned to their homes in safety? That should happen immediately.
Siobhain McDonagh
I agree.
Independent analysis was extremely difficult, but the ICG report is the most comprehensive investigation so far into what happened. It concludes:
“The Sri Lankan security forces and the Liberation Tigers of Tamil Eelam…repeatedly violated international humanitarian law during the last five months of their 30-year civil war ...Evidence...suggests that these months saw tens of thousands of Tamil civilian men, women, children and the elderly killed, countless more wounded, and hundreds of thousands deprived of adequate food and medical care, resulting in more deaths.”
Mr Andrew Love (Edmonton) (Lab/Co-op)
I associate myself with my hon. Friend’s words about the former hon. Member for Enfield North, who was indeed a true champion of the Sri Lankan Tamil issue. The evidence that my hon. Friend has presented is overwhelming. In the light of the failure of the United Nations to do anything in relation to human rights in Sri Lanka, is it not now incumbent on the west and particularly the United Kingdom to take a lead in having an independent investigation into these war crimes?
Siobhain McDonagh
I agree, and I hope to deal with that point in my speech.
To be fair, we already knew that these things were happening. However, the ICG goes further than previous studies and convincingly argues that there are
“reasonable grounds to believe the Sri Lankan security forces committed war crimes with top government and military leaders potentially responsible.”
Of course, the report also accuses the LTTE and its leaders of war crimes, but it says that
“most of them were killed and will never face justice.”
It adds:
“While some of the LTTE may go on trial in Sri Lanka, it is virtually impossible that any domestic investigation...would be impartial given the entrenched culture of impunity.”
Robert Halfon (Harlow) (Con)
Does the hon. Lady agree that it is an absolute priority now for the Government of Sri Lanka to release the people who are still in the camps, who have been there for so long; to ensure the freedom of journalists; and to begin constitutional change in earnest to bring about a political settlement?
Siobhain McDonagh
I agree, but we know from experience that expressing pious desires does not work with the Sri Lankan Government; we have to be tough and do something about it.
As a result of the evidence that the ICG has found, it argues:
“An international inquiry into alleged crimes is essential given the absence of political will or capacity for genuine domestic investigations, the need for an accounting to address the grievances that drive conflict in Sri Lanka, and the potential of other governments adopting the Sri Lankan model of counter-insurgency in their own internal conflicts.”
That is serious stuff. The report goes on to say that there is
“credible evidence that is sufficient to warrant an independent…investigation”.
That includes the intentional shelling of civilians, the intentional shelling of hospitals, such as those at Ponnambalam and Putumattalan, and the intentional shelling of humanitarian operations, notably operations from the UN’s PTK—Puthukkudiyiruppu—hub.
The report adds:
“The consequences of the security forces’ shelling were made substantially worse by the government’s obstruction of food and medical treatment for the civilian population, including by knowingly claiming the civilian population was less than one third its actual size and denying adequate supplies.”
The evidence cited by the group is substantial, including
“numerous eyewitness statements...hundreds of photographs, video, satellite images, electronic communications and documents from multiple credible sources.”
The ICG complains that the Sri Lankan Government
“declined to respond to Crisis Group’s request for comment on these allegations.”
The House has already looked into many other allegations. A variety of news outlets and broadcasters have described terrible actions in the last days of the civil war. Few could not have been moved by the terrible pictures on Channel 4 of imprisoned Tamil soldiers being shot in cold blood. The ICG admits that it has looked at only a small number of the alleged violations. It has not looked into, for example,
“the recruitment of children by the LTTE and the execution by the security forces of those who had laid down their arms and were trying to surrender.”
Despite that, the ICG states:
“The gravity of alleged crimes and evidence gathered...is not a case of marginal violations of international humanitarian law...There is evidence...both sides condoned gross and repeated violations that strike at the heart of the laws of war.”
It is therefore hard not to agree that the allegations should be looked at independently by an international inquiry.
I praised the previous British Government for taking action against human rights abuses in Sri Lanka, but the ICG is much more critical of the wider international community. It concludes:
“Much of the international community turned a blind eye to the violations when they were happening. Some issued statements calling for restraint but took no action as the government continually denied any wrongdoing. Many countries had declared the LTTE terrorists and welcomed their defeat. They encouraged the government’s tough response while failing to press for political reforms to address Tamil grievances or for any improvement in human rights.”
The report therefore places the onus on the international community to make up for its past and to conduct a full investigation into the last year of hostilities.
Many of my constituents had family members who were caught up in the hostilities. Some of their friends and families are dead, or spent many months in temporary camps for internally displaced people that were little more than concentration camps. Many Members still get Tamils coming to their surgeries with their stories. I do not believe that any of us can have been unmoved by the testimony of our constituents.
Barry Gardiner (Brent North) (Lab)
I agree with the powerful case that my hon. Friend is making. One of my constituents who returned to Sri Lanka was detained on arrival in Colombo, and I have written to the Foreign Secretary this week to ask for the Government’s intervention in the matter. Does my hon. Friend agree that that case illustrates how the Government in Sri Lanka are continuing to persecute Tamils in every way that they can, and that there is no possibility of the diaspora being able to return while such detentions and interrogations continue?
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
I associate myself with my hon. Friend’s comments. Will she also ask the Minister to explain the Government’s policy on its relationship with India and China in respect of an independent investigation into the alleged war crimes? If there is to be sufficient international pressure to get such an investigation, they clearly have a key role to play. What will the Minister do to raise the issue with those key neighbours of Sri Lanka?
Siobhain McDonagh
I thank my hon. Friend for all the work that he did while in government, particularly his work with the EU to get suspension of GSP plus. I hope that the Minister will take his questions on board.
Stella Creasy (Walthamstow) (Lab/Co-op)
I give testament to the substantial amount of work that my hon. Friend has done, not only in securing this debate but in her work with the Tamil community in London. I certainly have benefited from it working with the Tamil community in Walthamstow.
Does my hon. Friend agree with the comments made by my hon. Friend the Member for Brent North (Barry Gardiner) about the continuing persecution of the Tamil community in Sri Lanka and use of camps for displaced persons, and that it is vital that we keep up the pressure on the Sri Lankan Government over how they are acting now, as well as seeking an international inquiry, if we are to gain any kind of redress for the Tamil community and ensure that their human rights are protected? Does she also agree that it is vital that the Government commit to continuing not only the suspension of GSP plus but the aid that was being given to help those who were displaced and put into the camps? The previous Government committed to such aid to help people not only to go home but to build lives full of prosperity and peace, which we want for everyone in Sri Lanka.
Dr William McCrea (in the Chair)
I draw to Members’ attention that interventions are to be short.
Siobhain McDonagh
Thank you, Dr McCrea, but may I say how absolutely right my hon. Friend’s comments are? I may not get through all my speech, because we do want the Minister to be able to address all of our concerns. There are so many Members here because they are concerned about their Tamil communities and their extended families in Sri Lanka.
Children are being separated from their parents, people in hospitals are being bombed and soldiers are shooting indiscriminately. On previous occasions, Conservative Members argued that it would not be constructive for Britain to threaten to take action against Sri Lanka. They said that economic action would not help. However, in the past few weeks, the Sri Lankan Government have been acting in ever more paranoid ways.
Gotabaya Rajapaksa, the Defence Secretary, recently appeared on the BBC threatening to execute Sarath Fonseka, the army commander who delivered victory over the Tamil Tigers, because he had suggested that top Government officials may have ordered war crimes during the final hours of the Tamil war. That is not the approach of a reasonable Government whose priority is peace and reconciliation. That was not the first time that we have seen compelling evidence of atrocious behaviour by the Sri Lankan Government.
In October, the European Commission published a report on human rights in Sri Lanka since the war. It stated:
“During the period covered by the investigation, there has been a high rate of unlawful killings in Sri Lanka, including killings carried out by the security forces, persons for whom the State is responsible and the police...extra-judicial killings were widespread and included political killings designed to suppress and deter the exercise of civil and political rights...Unlawful killings perpetrated by soldiers, police and paramilitary groups with ties to the Government, have been a persistent problem.”
In other words, there is enough evidence to conclude that war crimes could have taken place in Sri Lanka, and therefore they should be investigated.
Last year, when the Conservative party was in opposition, its spokesman, the hon. Member for The Cotswolds (Geoffrey Clifton-Brown), criticised Britain for seeking action against Sri Lanka for abuses. He complained that Britain
“voted against the $2.5 billion International Monetary Fund package in July and are now considering ending the EU’s special trade privileges”.
He asked:
“Is that really the most constructive way to persuade the Sri Lankan Government to promote a long-term reconciliation?”—[Official Report, 21 October 2009; Vol. 497, c. 895.]
I am sorry that the Conservative position at that time was that reconciliation required inaction. I hope that that is not the case now.
I believe that a boycott of Sri Lankan goods by British citizens will help Sri Lanka to resolve its past, in the same way that the boycott of South Africa helped that country to bring about peace and reconciliation. In my view, doing nothing will only make matters worse. As the ICG said,
“Now a number of other countries are considering ‘the Sri Lankan option’—unrestrained military action, refusal to negotiate, disregard for humanitarian issues—as a way to deal with insurgencies and other violent groups.”
It argues:
“To recover from this damage, there must be a concerted effort to investigate alleged war crimes by both sides and prosecute those responsible.”
Although Sri Lanka is not a member state of the International Criminal Court and it is therefore unlikely that the UN Security Council would refer the matter to it in the short term, the ICG’s conclusion is that:
“A UN-mandated international inquiry should be the priority, and those countries that have jurisdiction over alleged crimes…should vigorously pursue investigations.”
If countries such as ours do not take that action, disreputable Governments around the world may look at the Sri Lankan option and ask, “What’s to lose?” We must not let that happen.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)
It is a great pleasure to serve under your chairmanship, Dr McCrea. I congratulate the hon. Member for Mitcham and Morden (Siobhain McDonagh) on securing this debate and on the number of colleagues who have attended it. I appreciate that the issue raises a great deal of concern among Members and our constituents.
I appreciated the brevity of colleagues’ interventions and would be grateful if those who are already on the record listened to the bulk of my remarks before intervening. I am not sure whether I can compete with the hon. Lady’s speed and clarity, but I will do my best. This is the first occasion on which I have spoken on Sri Lanka as Minister, and I know how much interest the debate will generate in the community.
The United Kingdom has long-standing historical connections with Sri Lanka. Our two peoples are united by many ties of family and culture, as well as business, tourism and education. Our primary objective, therefore, is to support the development of a peaceful and prosperous Sri Lanka.
Let me turn immediately to the first of the concerns raised by the hon. Lady: the war crimes. Sri Lanka is now emerging from a prolonged and painful period of bloody internal conflict. We have seen immense suffering across all the communities in Sri Lanka, and the country’s development has been blighted by terrorism. Sri Lanka can now blossom and grow, and we want to work with the Sri Lankan Government and all their people to achieve that.
For any country emerging from conflict, there must be a balance between looking forward to new opportunities and development, and dealing with the past with honesty and compassion. The decades-long conflict in Sri Lanka has seen the country’s Sinhalese, Tamil and Muslim communities riven by mistrust and suspicion. There are serious allegations of the most atrocious violence and abuses having been committed by all sides over the past 30 years. Most recently, serious allegations have been made of war crimes by both Government forces and the Liberation Tigers of Tamil Eelam in the final stages of the conflict in early 2009. Our view is that the allegations will haunt the country for many years to come and will hinder much-needed reconciliation between the communities unless there is an honest process of accountability for the past.
President Rajapaksa made a commitment to the UN Secretary-General last year that he would take measures to address possible violations of international humanitarian and human rights law. He has now announced the establishment of a lessons learned and reconciliation commission. My right hon. Friend the Prime Minister has written to the President to encourage him to ensure that the commission produces recommendations that address the past allegations and allow all communities in Sri Lanka to live and work together in peace and security. I have today spoken to Foreign Minister Peiris to emphasise the need for a credible and independent process of accountability.
Siobhain McDonagh
We wish the Minister well and want him to make progress with his speech but, for us, the position seems incredible. Do the British Government actually believe that the current Sri Lankan Government have the wherewithal to carry out such a reconciliation inquiry, given that Sri Lanka is the most dangerous country in the world for journalists?
Alistair Burt
We take the view that the Government of Sri Lanka are committed to a process, understanding the extraordinary degree of international concern and recognising the need for credibility in what happens. The responsibility of an inquiry and an investigation is primarily with the Sri Lanka Government—something that we understand, as did the previous Government, and we are proceeding accordingly.
Barry Gardiner
In taking the matter forward, I ask the Minister to pay heed to the establishment in the diaspora of the transnational Government elections that took place recently? Will he give a commitment that the British Government will work with those who were elected from the diaspora in the United Kingdom to ensure precisely that all the views of the wider Tamil community are taken into account in the Government’s thinking?
Alistair Burt
We shall continue to listen to everyone in such circumstances. It is not for us to dictate how an inquiry should work or what voices it should listen to, but this Government will continue the policy followed by the previous Government and be open to the views of all those in the community.
Keith Vaz
I congratulate the Minister on his appointment; I am sure that his work will be a very valued addition to the Foreign Office. When he next speaks to the Sri Lankan Foreign Minister, will he raise with him the newspaper reports that a Chinese firm has been contracted to go into Sri Lanka to remove the evidence of those who have been buried there? It is a very serious matter, and it will obviously affect any investigation that takes place. Will he ask the Foreign Minister whether such reports are true? Has a Chinese firm been instructed to remove the evidence?
Alistair Burt
I shall make sure that an inquiry looks into the issue the right hon. Gentleman has raised.
The establishment of a lessons learned and reconciliation commission is a step in the right direction, but to be credible it needs to show itself to be a strong, independent voice. We urge the Sri Lankan Government to draw on the experience of other countries that have set up successful post-conflict commissions. I said very clearly to the Foreign Minister today that, no matter how painful they are, experiences in South Africa, Rwanda and, indeed, in our country have shown that the only way to deal properly with reconciliation is to be honest and open and to get absolutely to the heart of the matter. There must be proper public consultation, sufficient time to examine evidence and a clear and realistic mandate.
In particular, we hope that the commission can investigate fully the recent allegations of war crimes. We also encourage the Government to address urgently the issue of witness protection in Sri Lanka, mentioned by the hon. Lady. That will be essential if the commission is to get to the truth in its investigations. We recognise that it is for the Government of Sri Lanka to take the lead in addressing allegations of war crimes, but we also support the UN Secretary-General’s proposal for a panel of experts to advise on accountability issues. We trust that the Government of Sri Lanka will co-operate fully with the Secretary-General’s panel to help their own domestic process.
We believe that lasting peace will come about only when Sri Lanka addresses the underlying causes of the conflict and ensures that all communities are treated with fairness and respect. Following elections earlier this year, the President and Government of Sri Lanka have a renewed political mandate. We urge them to use the mandate to take meaningful steps towards long-term, inclusive political action. We welcome the commitment of the President in his joint declaration with the Indian Prime Minister on 9 June to develop a political settlement that is acceptable to all communities, in which the people of Sri Lanka can
“lead their lives in an atmosphere of peace, justice and dignity, consistent with democracy, pluralism, equal opportunity and respect for human rights.”
The United Kingdom stands ready to support Sri Lanka to make good on those commitments, and to take decisive steps to establish a long-term political solution to the island’s divisions.
I hope that the Sri Lankan diaspora in the UK can also play a role. The diaspora’s support following the humanitarian crisis undoubtedly helped to alleviate the hardship of many individuals and their families, and we thank them for their contribution. I hope the diaspora will find meaningful ways to engage with communities across Sri Lanka in pursuit of a lasting and agreed political solution.
Mr Love
I thank the Minister for his contribution, which is coming across very well. However, all the evidence emerging from Sri Lanka is that those wise words are unlikely to persuade the Government. That therefore leads me to GSP plus. Can he give us an assurance today that the British Government will continue to look critically at GSP plus in the light of what is happening in Sri Lanka?
Alistair Burt
The hon. Gentleman anticipates my next but one paragraph. Let me deal first with the humanitarian situation touched on by my hon. Friends the Members for Ilford North (Mr Scott) and for Harlow (Robert Halfon). A focus of much international attention in the past year has rightly been the humanitarian needs of nearly one third of a million Sri Lankan citizens who are displaced due to the conflict. We continue to support the humanitarian response in Sri Lanka as people strive to re-establish their lives. We have been concerned at the long delay in returning internally displaced persons from the camps to their homes, and the restrictions placed on their freedom of movement. We note the progress the Government of Sri Lanka have made in releasing IDPs from their camps to the home areas, but urge that this progress continue.
United Nations figures from 3 June show that some 60,000 displaced persons remain in the camps, compared with an immediate post-conflict figure of 280,000. However, many humanitarian agencies do not enjoy full humanitarian access to them once they return to their home areas. This limits the effectiveness of the assistance we and other donors are able to provide. Concerns remain about the situation of some 8,000 ex-combatants of the LTTE held in detention. Despite repeated calls by the international community, the International Committee of the Red Cross has not been allowed access to this population. We therefore urge the Government of Sri Lanka to establish clearly the legal status of these people and to allow the ICRC access in line with international norms.
As for the GSP scheme, in a meeting with the Sri Lankan Foreign Minister recently, my right hon. Friend the Secretary of State for Defence called upon the Government of Sri Lanka to make progress on human rights and reconciliation. We remain concerned about the human rights situation in Sri Lanka. There have been widespread and persistent allegations of human rights abuses by both state and non-state actors. There have been attacks on the media, including the murder and disappearance of prominent journalists. We support the EU statement made at the UN Human Rights Council last week, expressing concern about the situation of journalists and human rights defenders and the lack of adequate investigations of alleged violations of human rights. We urge the Government of Sri Lanka to ensure that human rights for all communities receive full protection.
Strengthening the mechanisms for the protection of human rights in Sri Lanka will be an essential part of building strong and durable peace and stability. We hope to see these translate into evidence on the ground that the Government are following through with those commitments, and building confidence in the rule of law and good governance. The UK supports the EU’s decision of 15 February to remove GSP plus trade preferences from Sri Lanka from August 2010. The European Commission report of 19 October 2009 on Sri Lanka’s failure to implement core human rights conventions, which are a requirement of the scheme, made this a clear decision.
We also support the moving of the Commonwealth conference, which the hon. Lady mentioned. We know that the Government of Sri Lanka are taking steps to address the Commission’s concerns. We encourage constructive engagement between the Government of Sri Lanka and the Commission, so that the concerns in the Commission report can be properly addressed. The GSP scheme brings significant benefits to all in Sri Lanka; we recognise that it plays a role in the ongoing development of Sri Lanka’s economy and that economic development has a role in the reconstruction process. We sincerely hope that Sri Lanka will therefore take all the necessary steps to ensure GSP plus is retained.
On the point made by the hon. Member for Edmonton (Mr Love), Des Browne did a very good job for us. We have not come to any decision on special envoys yet, but I know him very well and will certainly talk to him. It was disappointing that he was not well received by the Government of Sri Lanka, which might limit his effectiveness. We believe that this is an historic moment for Sri Lanka, but it will only get somewhere if it moves forward. Listening to the concerns expressed by Members and by the international community will be a welcome sign for the reconstruction and reconciliation that we all wish to see among all communities led by the Government in Sri Lanka.
Tax Avoidance
(13 years, 11 months ago)
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Dr John Pugh (Southport) (LD)
It is a pleasure to serve under your chairmanship, Dr McCrea, and I welcome the Front-Bench speakers to the debate. I have a high degree of respect for them both and I hope that between us, in this relatively informal environment, we can start the ball rolling on what is a serious topic for this Parliament: tax avoidance.
Let me put the Minister at ease by saying that I am not going to discuss the capital gains tax proposal or any of the media coverage of it. It is a key aspect of the coalition agreement. All I will say is that the thrust for change comes from the desire to close a loophole that allows for tax avoidance, where people receive economic rewards as capital rather than income so as to avoid higher rates of taxation. Obviously, that is a move for the privileged few that potentially costs the Exchequer millions. Recently, there have been both decent and some dodgy arguments in the media about the mooted capital gains tax proposals. I am prepared to acknowledge that a number of sensible points have been made apropos the need to encourage long-term investment rather than short-term gain, and the need to privilege savers above speculators. There has been much learned discussion about tapers, capital relief and so on. I remain fairly sanguine about the matter and will leave the Minister to his pre-Budget deliberations—provided that, within the coalition, we do not lose the essential goal of successfully attacking tax-avoiding abuse.
Tackling tax avoidance is important to the coalition, particularly in the present circumstances. If the central problem of this Parliament is reducing the structural deficit, there are essentially not two but three ways to help to do that: we can cut spending, which none of us wants to do unless necessary; we can increase taxation, which none of us wants to do unless necessary; or we can ensure that tax revenues are more often and more efficiently collected and not avoided, which all of us would be perfectly happy to do were it the panacea for all our ills. Unfortunately, in the present circumstances, it is not.
If the coalition is not ruthless in its pursuit of avoidance and evasion, now more than ever, we will stand accused of harming or at least being indifferent to the industrious and needy, to the advantage of the devious and the privileged few. That is scarcely fair or in line with the themes announced by the coalition of fair taxation and fair reward. So far in the history of this Parliament, little has been said by the Government about tax avoidance. I understand that the Minister has answered a few questions, both oral and written, but by and large he has given answers that I would describe as holding answers that refresh the position that we understand to be in place—that Her Majesty’s Revenue and Customs does not take lightly the matter of tax avoidance and there is a big gap to be plugged. There is a big gap, because potentially large sums are to be obtained by a clampdown. The Treasury estimates the tax gap of tax avoided or evaded to be about £40 billion. The Tax Justice Network—not uninformed people—gives a figure of £120 billion. The truth is probably that we do not know the precise figure, and perhaps we should split the difference.
The reality is that we have made some progress in getting large sums back to the Exchequer as a result of a serious attack on tax avoidance. That is to the credit of Ministers in the previous Government, who recognised that a serious attack was necessary. The figures for 2008-09 provided by the Treasury suggest that about £12 billion of extra revenue was collected because of the forthright approach taken to tax avoidance. The figure expected for 2010-11—the Minister will be able to tell us whether we get anywhere near it—is a whopping £16 billion. Those are significant sums.
A distinction is often drawn between avoidance and evasion. I do not want to trespass into the area of evasion, as that is a different issue, although at times it is quite difficult to define the difference. Somebody said that the only real difference or line between evasion and avoidance is the thickness of a prison wall.
Dr Pugh
It is a different sort of accounting, let us put it like that. Evasion characteristically involves not only non-compliance, but a breach of tax law and often an element of downright and explicit dishonesty. However, in truth, some forms of avoidance are almost equally morally reprehensible if looked at from an ethical point of view rather than a technical or legal one. We think of past abuses of charity law, which people have explicitly used to make a fast buck with no real benefit to charity, thereby bringing the whole business of charity law into disrepute. We think of a genuine unwillingness on the part of some members of society to pay towards the maintenance of the society that enables them to thrive—the free-rider mentality that is found in certain sections of society and business.
On the other side, we must recognise that we are talking about an industry that does not hang its head in shame. It is staffed by clever and well rewarded people who are dedicated to not what they would call tax avoidance—although it is that in a sense—but, to give it another name, tax planning. As tax law becomes more sophisticated, the economic instruments with which tax planning is arranged become ever more complex and, because of the global reach of the economy these days, ever more global.
The demands for such services are huge and appreciable. There are some well rewarded people in the City whose life is almost entirely dedicated to some form of tax avoidance or tax planning—whatever they want to call it—which they regard as an entirely legitimate enterprise. One should not be too pompous about this. Few people volunteer to pay more tax than is due, or avoid opportunities that come their way to defray their own tax burden. Some people are capable of availing themselves of clever, post hoc rationalisations that run along the lines of: if they spend the money rather than paying it in tax, it will be spent to greater social benefit. That is not a plausible argument, but it is a comforting moral argument if one’s conscience bends in that direction. Such people argue that they can spend their money better than the state can for the social benefit of people in their community. That is a bit of sophistry with which we need not detain ourselves.
Who has not had a discussion with a tradesman about paying in cash, while remaining completely oblivious to the consequences that might befall the Inland Revenue? Are we not sometimes encouraged by the state to modify our economic behaviour by being offered tax breaks and incentives?
Mr Gregory Campbell
I congratulate the hon. Gentleman on securing this debate. He touches on a matter that I have raised for many years. In areas of high unemployment, there is a tendency for the black economy to thrive. There is a tendency for small to medium-sized employers to employ people on the basis that he has just outlined, giving a cash payment of £100 or £150 per week for several hours per day or whatever. The raising of the income-tax level to £10,000, which the Liberal Democrats and my party have been advocating for some time, will help but not completely eradicate the desire of some to employ people on the side, in the black economy, for a few pounds per week, rather than doing it legitimately, which would raise more income for the state and bring people from the black economy into proper, better paid jobs.
Dr Pugh
The hon. Gentleman is right to suggest that the black economy needs a whole toolkit of approaches. I happen to have with me the report from the Public Accounts Committee entitled “Tackling the hidden economy”, which contains a number of rational, sensible and workable proposals, which will enable people to earn a living and at the same time pay taxation legitimately and fairly. Obviously the fairer the system is, the more prone people are to do that.
Tax avoidance properly, though, is the apparent attempt to frustrate the intent of tax law. That is fundamentally what it is. It is normally done by organising economic transactions in a way that ensures that whatever wealth, investment, profits, income or rewards people have or aim for, they escape the charge that the state would ordinarily impose on them. The state does not do that for idle purposes, but for the common good. Tax avoidance is therefore morally reprehensible. MPs flipped their homes and were rightly criticised in the media, but it was not the intention of the expenses scheme—or the capital gains tax regime, for that matter—to ensure that that would happen. People in this place availed themselves of a loophole. That is an almost classic case of tax avoidance, but one could give sundry examples, in various exotic formats.
The previous Government did an appreciable amount of work, endeavouring to ensure that tax avoidance, when spotted, gets dealt with. They fought what I would describe as a long guerrilla war against exactly what we are talking about: loopholes. I pay tribute to the right hon. Member for East Ham (Mr Timms), who was a kind of platoon commander, for prosecuting that guerrilla war with some success. He tried to track down the loopholes and closed them where possible. I think that most hon. Members here, while reading through very dull tracts of successive Finance Acts, will have recognised that those provisions are there simply as part of the ongoing skirmishing between the tax planners—tax avoiders—and the Inland Revenue. By and large, however, what we have seen so far have been post hoc reactions to abuses that have been identified in charity law, with repo arrangements, or with controlled foreign companies—we had an awful lot of debate about controlled foreign companies in the last year of the previous Parliament, as well as stamp duty and other matters.
The Inland Revenue has been involved in constructing complex defences against complex devices and schemes. Quite frankly, even though we pretend to understand them properly as we sail through the Finance Act, many of the schemes are not adequately grasped by many Members. It used to amaze me how the right hon. Gentleman had command—or seemed to, at any rate—of some very complex schemes and some very complex remedies for them. The basic strategy, however, is one of shutting the door after the horse has bolted, which normally leads to those people who wish to persist with mechanisms for avoidance simply adjusting the scheme in some marginal way, modifying it and presenting a new scheme that leads to a new ad hoc adjustment, when it is spotted—it is, of course, not immediately spotted and cannot be dealt with retrospectively. Again, I am reminded of guerrilla war. It is rather like the US forces trying to deal with an ever-elusive Viet Cong that springs up around them in the jungle. My analogy slightly breaks down, however, when one recognises that the resources available to the people fighting that guerrilla war far exceeded those of the Government in this case.
The problem is therefore difficult to deal with, and is made immeasurably more complicated by the global reach of modern international capitalism, with the plethora of tax havens and the associated absence of transparency. Again, I pay tribute to the right hon. Gentleman for having done a great deal of work on that. In the last few months of the previous Parliament, there was a slew of double taxation treaties that attempted to deal with precisely that problem, devised meticulously and with extraordinary detail by very clever people in the Treasury. Generally speaking, what we were hoping for—and sometimes got—was greater transparency and sharing of information, but again we were involved in the post hoc job of trying to close down complex tax arrangements that seemed to evade many jurisdictions when it came to the pursuit of tax liabilities. Interestingly, PricewaterhouseCoopers recently suggested that it would make it a heck of a lot easier if big international companies were to list in full their assets right across the piece on a global basis, and suggested that as a new standard for accountancy. I agree, but I think it fairly unlikely that many such companies will follow suit. Big organisations that keep their property arm in Liechtenstein or wherever will not be the first candidates for laying all their cards on the table.
It is worth making the point, in passing, that the British Exchequer is not the only loser here. A substantial amount of tax leakage is caused by people not paying tax in developing countries, and it is distressing to see organisations such as the Commonwealth Development Corporation, which was set up for laudable ends and with massive national and public support, putting an awful lot of money into development projects in the developing world, but having the money sourced or put through private equity companies, many of which are in offshore tax havens.
Ms Angela Eagle (Wallasey) (Lab)
Does the hon. Member, like me, support the moves towards country-by-country reporting, which were pushed by the previous Government but developed by the OECD? International corporations are encouraged to report both their profits and their assets on a country basis so that there is that level of transparency. Christian Aid, ActionAid, Oxfam and other development organisations support that, precisely to prevent the tax loss, about which the hon. Gentleman is talking, for countries that are developing.
Dr Pugh
I entirely support that, but I consider it a distant ambition that will take an awful lot of putting together over time, and will involve a large number of international bodies. It is, however, entirely the right direction in which to go, and is the direction in which we will all have to go eventually, if we are going to deal with the problem remotely adequately, even on a national basis. What I hope to do as I conclude is to suggest an improvement to what we are doing nationally. The former Minister in the room might correct me, but we have the anomalous situation in which the Exchequer building itself is owned by a sort of semi-bankrupt offshore company. We can see how the need for getting things right on an international basis is just as important as getting things right nationally.
I hope that I have done enough to demonstrate that there is a sort of futility to what we are doing at the moment, which I think is recognised to some extent within the Treasury. I genuinely do not believe that I am pushing at a closed door—it is at least half open—and in discussions with the right hon. Gentleman prior to this Parliament I sensed that. There is a sense in which continually trying to mop up after the errors have been spotted is perhaps not enough, and there have been two significant moves, which are worth remarking on and praising. The previous Government insisted on pre-disclosure of new tax instruments—a vetting system—which is a commendable step forward.
In recent finance legislation, however—I forget which clause of which Bill—I saw for the first time not just simply, “This scheme is wrong, this is how it runs and this is what we’re going to do about it,” but “Any scheme of this nature needs to fit in with certain principles and basic parameters.” I came across a quote from the right hon. Gentleman. He said that
“we need not just new powers but clearer norms for behaviour too.”
We are moving, therefore, to a system in which instead of a case-by-case examination of each scheme, we are laying down principles by which people can judge whether schemes will be acceptable.
I therefore urge upon the coalition Government a final, third step in addition to pre-disclosure and having principles: the introduction into tax law of a general anti-avoidance rule. Some think that that is a distinct probability; I think that it is a possibility. It would parallel moves made in many other countries. Most Commonwealth common-law systems, from Hong Kong to Australia, have something like this. I have argued for it in the past, and I have not been given a dismissive response by the Treasury. Basically, it says, “We have this under consideration, and we may well take it further.”
The advantage of a general anti-avoidance rule being embodied in law is that it would throw the burden of demonstrating the legality of new tax planning schemes on those promoting it by obliging them to show that the schemes will ensure a worthy economic benefit other than tax avoidance—the avoidance of tax law. It would have the added spin-off and economic benefit of ensuring that financial ingenuity would always be employed to the general economic benefit and not simply to dodge tax.
I am aware that, in principle, there are all sorts of downsides to having such a general rule written into law. I have no view of how it should be framed, but we can consider the dispensations of other Governments for advice on that aspect. The legislation certainly needs to be purposeful and clear. There need to be good pre-clearance and adjudication arrangements within HMRC should there be any doubts or disputes that seem incapable of immediate reconciliation. Also, just as in other Government arrangements, there needs to be a sensible and clear list of exceptions.
Given all that, we could certainly run with such a basic rule; indeed, it is recommended by charities and organisations such as Tax Justice Network. Not only can it be done, it is done. It does not encourage wholesale capital flight, as some suggest it might. For example, it has not done so in Hong Kong, which has somewhat of a reputation for financial dealings, and where British judges are involved in a relatively rare dispute resolution procedure based on such a principle.
The strong upside for the Exchequer is that, even on City estimates, it will raise significant revenue. It could be introduced here, and I hope that it will be. I would like to see it introduced as early as possible. It would simplify existing tax law. We are all in favour of that—it needs a certain amount of clarification and consultation. If we follow the road taken by Australia, Hong Kong and many other nations, our tax system will be less prone to the byzantine schemes dreamed up at Canary Wharf and less time will be consumed at the Treasury devising equally elaborate defences. However, we need to get on with it.
If our public finances are in the critical situation that we all think they are, and if, as we appear to be able to do, we can argue for immediate cuts, we must also be able to argue for an immediate and effective attack on tax avoidance if we think it is possible. We are probably talking not about the next Budget, but of the autumn when there will another opportunity. However, certain requirements need to be put in place before we can run an effective regime built around the principles-base that I suggest.
In the first place, HMRC needs the right skills base. I am not yet convinced that it has an adequate degree of specialism. In the past, I have tried to interrogate the Treasury, asking the previous Government how many people were employed on the rather more specialised forms of tax avoidance that we are talking about today than on ensuring general tax compliance. The general answer will be somewhere on the record. It was, “In a sense, that is what we all do all the time.” However, a definite cadre of specialists deals with the high-business end, where some of the bigger centres of tax avoidance are found. We need them still to be in employment at HMRC rather than being affected by staff cuts and other reductions. Indeed, their number needs to be supplemented, so that we have the right sort of tax officers, and tax offices.
It is suggested that cutting the number of local tax offices is not helping in that respect. The tax office in my town has disappeared; I am told that the net effect is that all sorts of local knowledge has gone, and that as a result there will be more tax avoidance. I do not know for sure whether that is true; high-ranking people at HMRC tell me a different story. They say that they now have clever software that does the job infinitely better than local knowledge. It enables them to pick out trends in accountancy and such matters, and it is far more sophisticated and far less consuming of manpower and far more effective in bringing in the shekels.
HMRC has nailed its colours to the mast, putting its faith in software rather than in manpower. I hope that it is right. However, we need some of the right people, and I am not convinced that we have enough of them. I would like more of them to help solve the enigma of why some extraordinarily profitable companies pay surprisingly little tax.
All in all, we need to aim for simplicity. We need a general provision of the kind that I have tried to outline, however inadequately, so that we can stop fighting what I believe is a losing battle. We can do better. We can fight the battle differently. We need to move rapidly towards a general anti-avoidance rule. Ultimately, as the hon. Member for Wallasey (Ms Eagle) said, we need global agreement built upon such pillars. The purpose of the debate is to ask the Government to take up this suggestion—or give reasons why they should not—and if they wish to do so, to get a move on, because clamping down on tax avoidance must be as important as anything else.
Nigel Mills (Amber Valley) (Con)
It is a pleasure to speak under your chairmanship, Dr McCrea.
Until the election, I was employed by one of the large firms of accountants, although I assure the hon. Member for Southport (Dr Pugh) that I was not involved in tax avoidance. My role was to seek up-front agreements with Her Majesty’s Revenue and Customs, which was generally more than happy to enter into such agreements with my clients. I am not guilty of the things of which he accuses accountants. I have practised as a tax adviser since 1996, so I remember the previous Government’s attempt to introduce a general anti-avoidance rule in 1997-98, and I can just about recall why that attempt failed.
I agree with much of what the hon. Gentleman said. It is clearly right to tackle tax avoidance and it is important that the new Government continue to do that job. I accept that the previous Government took many effective measures on that front—the move towards targeted anti-avoidance rules and the principles-based approach was the most effective way forward. However, if we are to get the deficit down, we need to increase tax revenue, so we need to attract taxpayers to the UK and encourage them to remain here. A general anti-avoidance rule in principle may not be a brilliant way of doing that.
Dr Pugh
I wonder whether the hon. Gentleman has any evidence of that. We have enough examples worldwide of such rules being implemented. We ought to be beyond the stage of simply suggesting that it can happen. We should be able to point to empirical data showing that that is exactly what has happened in places such as Hong Kong.
Nigel Mills
I am afraid that I do not have those data in front of me. Having worked with many businesses on where they want to locate head offices or functions, I know that one of the key determinants of their choice is the tax regime—its simplicity, the ease of compliance and the overall rate. The combination of difficulty of compliance, the rate and ease of getting certainty on tax treatment is what makes people choose where to go. The risk of a general anti-avoidance rule in that situation is that it makes certainty hard to get, and it would be bad to combine that with the UK’s very complex tax regime and some tax rates that are currently not over-competitive, although I hope that that will change. The combination of those three factors might make the UK an unattractive location for people to come to or stay. I am sure that many bodies can provide those data.
The key to tackling tax avoidance is to make tax law simple and understandable to taxpayers. The hon. Gentleman talked about tax avoidance being a way of frustrating the intent of tax law, but at times, it is important that the intent of the tax law is clear in the drafting and that the drafting achieves that intent. Often, commercial situations grow up that tax law does not specifically address, so the intent of Parliament is not easy to establish. If we get the drafting right, it might take away some of those problems. The hon. Gentleman alluded to the finance and Treasury rules, which are incredibly complex and have produced various loopholes that have been exploited in various ways. That is a case of very complex legislation that no taxpayers I can think of could understand, and that the vast majority of tax advisers—myself included—did not really understand. I suspect that a lot of staff at HMRC could not possibly understand it either. If we get that right, some avoidance opportunities will not come up in the first place.
The hon. Gentleman said that he was not the person to draft a general anti-avoidance rule. Where the previous legislation floundered was in the attempt to find words that achieved what was wanted without unnecessarily stopping or discouraging many things that we want people to do. The examples cited at the time were the various tax-advantaged savings schemes, such as individual savings accounts, which in theory would fall within a general anti-avoidance rule unless a lot of care was taken over the exemptions included. Getting the drafting right is extremely difficult, and a lot of detailed consultation will be needed if the Government want to proceed.
I have experience of dealing with some of the existing anti-avoidance legislation, which generally looks at a transaction’s main purpose or one of its main purposes, or at the main benefit or one of its main benefits—one has a choice of which way to go. The difficulty comes in defining “transaction”. What is a scheme of transactions? How many are related? Are we tackling individual components? Should the purpose of the individual components or of the scheme as a whole be looked at? Understanding what is being done becomes very complicated. For example, somebody could decide to buy a UK-headquartered multinational business. We would all say that that is a good commercial purpose, but it commonly needs to be done differently in various territories, depending on the tax needs of those territories. As a result, individual elements of the transaction might be created that look as though they are motivated by a tax benefit, whereas, overall, they are part of a main commercial transaction. We could create great uncertainty about those transactions, which might then fail because the businesses or individuals involved could not be confident that they would get the commercial benefits they were trying to achieve without being drawn into some huge, long tax dispute.
Ms Angela Eagle
The hon. Gentleman is making a fascinating speech illustrating precisely the problem that everybody has to grapple with, as the Minister will have to in due course. If one goes for a simple, declaratory and principles-based approach, one has to think about what is motivating people, which is difficult. The only other way of approaching it is the extremely complex and byzantine method of looking at what to do in each circumstance, which the hon. Member for Southport (Dr Pugh) was worrying about. The hon. Member for Amber Valley (Nigel Mills) is illustrating the fact that we get into difficulties whichever route is taken.
Nigel Mills
The hon. Lady is correct. The previous Government happened on what is probably the right balance, which is to have principles-based rules targeted at commonly exploited rules, so that taxpayers know when they are wandering on to dangerous ground and therefore need to deal with those rules, rather than having a general principle that might apply to every tax in every situation. The hon. Gentleman mentioned that it puts the burden on taxpayers to declare that what they are doing has a mainly economic benefit rather than being an attempt at tax avoidance. That is a huge burden to put on taxpayers. I am not sure that we should put the burden of knowing how to comply with a general rule in complicated and innocent situations on to every payer of every tax in the country. I am not sure if that is what he intends.
Dr Pugh
Some of us laboured long and hard over controlled foreign companies. I remember one difficulty was deciding how different transactions should be linked and/or broken up. Anyone reading the legislation, highly specific as it is, will have to do an enormous amount of work—no less than if they had to apply a general principle to their circumstances.
Nigel Mills
I have some familiarity with the controlled foreign company rules, or at least the previous version—I never had to get too close to the attempt to reformulate them. Yes, they are incredibly complicated and they were complicated before, although there was a purpose exemption in the previous rules that was in some cases helpful. I would not necessarily suggest that the new Government should exactly follow the approach that was taken to reforming those rules, because it was a long drawn out process which is, I think, still incomplete.
If we are to tackle avoidance without going down the general anti-avoidance rule route—if the Minister is minded to go down that way, I suspect that by the time he has gone through the full gamut of consultation, he will be backing off quickly—perhaps we should look at overall solutions for tackling the problem rather than proceeding on that basis alone. Targeted purpose rules in areas of tax that are commonly exploited are the better way to go. As a way forward in tackling tax avoidance, we want simple, clear legislation so that the intention of Parliament is clear and both tax authorities and taxpayers can understand the aim of the law and what the rules are. That will help to support the moral argument: if we all understand the right amount of tax to pay in a situation, everyone should be paying it. The present complexity gives people the veneer of an excuse when they structure transactions in an artificial way.
The hon. Gentleman mentioned tax havens. There is a lot of scope for tax planning using other EU nations that have very different tax regimes or much lower tax rates in some situations. I am sure that the Minister has found in his in-tray a load of pending or ongoing cases at the European Court of taxpayers claiming that they have suffered tax that does not comply with various EU treaties. Roughly how much tax is the Exchequer in danger of losing or having to pay back as a result of those cases? It is important when looking at tax law to make it compliant with systems outside the UK, but it is difficult to do.
My area of expertise was transfer pricing. We were forced to apply transfer pricing rules on transactions within the UK, rather than just cross-border ones, which added a huge compliance burden that, frankly, taxpayers were not desperately excited by and the tax authorities did not have anything at stake on. I hope that we can find better ways of writing tax law that do not add to that burden. Perhaps some tweaks to European treaties would have been a better way of sorting this and creating OECD-compliant tax law, rather than using a sledgehammer to crack a nut.
If we want to tackle tax-avoidance effectively, let us have simple, clear legislation, and where there is abuse, let us have targeted, principles-based anti-avoidance rules that state clearly that the intent of Parliament is to stop one-sided complex financing transactions that have no commercial benefit and get a big tax advantage. In that way, we will make the progress that the hon. Gentleman wants.
Ms Angela Eagle (Wallasey) (Lab)
It is a pleasure to take part in my first debate in Westminster Hall in the new Parliament and to serve under your chairmanship, Dr McCrea.
This has been a fascinating debate. It is entirely in keeping with the work that the hon. Member for Southport (Dr Pugh) has done on this issue and with the fact that he has sat on many a Finance Bill Committee that he has brought this extremely important issue to the attention of the House, and I congratulate him on initiating the debate. He put his case very well and demonstrated that he has spent many years considering these issues. He could see both sides of the argument and he managed to put both of them in much of his contribution. He also identified the free-rider mentality, which is the key thing we all want to crack down on and minimise.
The hon. Gentleman was generous enough to praise the previous Government’s record, and I thank him very much for that; that has not been noticeably present in our debates on the Floor of the House so far in this Parliament, which has diminished our debates in this difficult time for the country. I deplore the rewriting of history and the abuse that the previous Government’s record has received, particularly in the economic context, and it is nice that the hon. Gentleman did not sink to that low level.
I particularly thank the hon. Gentleman for praising the record of my right hon. Friend the Member for East Ham (Mr Timms), who would have been winding up the debate under more normal circumstances. I hope that Members will realise that my right hon. Friend is still recovering from the attack on him at his constituency surgery, and I am sure we all join together in wishing him a speedy recovery. He has been seen back around the House and he is well on the mend, but he is still a bit fragile.
I welcome the new Minister to his position. Those who slog away in opposition do not always end up inheriting the positions that they shadowed when their party is lucky enough to be magically translated into government, but the hon. Gentleman has managed to make that transition. Having experienced the Department he now represents, I know he is a very lucky man, and he certainly deserves luck. I therefore welcome him to the debate.
I want to spend a little time putting the previous Government’s approach on the record. I then want to ask the new Minister a few questions about his Government’s actions and their future intentions on this extremely important issue. I note the self-restraint that the hon. Member for Southport showed in not trespassing on the area of capital gains tax, but I wonder how long the restraint shown by the partners in this Conservative-led Government will last as we get further into this Parliament—I will certainly watch developments with interest. The hon. Gentleman has set a sterling example, although I notice that it was not particularly followed by the right wing of the Conservative party at Prime Minister’s questions earlier today—“interesting noises off” is all I will say about that.
We can all agree that the financial crisis of 2008 led to a radical shift, domestically and internationally, in the approach to tax evasion and tax avoidance. Following the crisis, the previous Labour Government made certain that the UK was at the forefront of the drive for radical change. Internationally, there was a rapid realisation that the lack of transparency in the international financial system presented previously unrecognised but severe systemic threats to the entire global financial architecture, that those threats had to be dealt with and that good progress had to be made quite rapidly. In the forum of the G20 and in the aftermath of the credit crunch in 2008-09, good progress was made, but that momentum needs to be maintained, and one theme of the questions I want to ask the Minister to deal with is how he sees its being maintained.
It is only human nature that when people are in the middle of a crisis, they suddenly put at the top of their political and economic priority list things that have been around for years, although they were never really at the top of the list. Suddenly, transparency, the exchange of information and the ability to supervise global institutions cross-border and globally acquire far more importance. Everybody is very exercised by them, and there are a load of international meetings at the OECD and the G20; indeed, that is what happened, as we can see. The crisis then abates, and people turn back to dealing with more domestic things. If we are not careful, the momentum for change—the momentum behind introducing transparency and opening up cross-border supervision—could wilt. It is important that the new Government continue the momentum that the previous Labour Government created in the aftermath of the crisis. I would certainly be interested to hear how the Minister sees the issue and what plans and actions he has in train to ensure that that momentum is maintained.
The hon. Member for Southport touched on the fact that, domestically, the huge bank bail-outs that were necessary to deal with the immediate threats that the crisis caused to our economic well-being have brought two important truths home to us all. If those truths had not been brought home to us before the election, they certainly would have been once we had spent months on doorsteps in our constituencies listening to our constituents’ experiences and opinions. The first of those truths is that there is growing hostility among the majority of our hard-working constituents who pay all their taxes towards those who avoid paying their fair share. That phenomenon is growing and is more noticeable than it has been, and it will only continue to grow if it is not addressed by policy and Government action. Secondly, where tax revenues have been hard hit by the downturn and the recession caused by the irresponsible greed of a few, there is an even greater responsibility on the tax authorities to collect the tax that is due. That responsibility can only be reinforced when next week’s Budget takes a scythe to the public services that many of our most vulnerable citizens rely on.
The previous Government measured the tax gap and published estimates of it, setting it at £40 billion, as the hon. Gentleman rightly said. He had some other estimates, and the Trades Union Congress has a much larger estimate, as does the Tax Justice Network, which the hon. Gentleman mentioned. For the sake of argument, however, let us say that the tax gap is £40 billion. We know that it is impossible to collect such sums and completely to close the tax gap so that it does not exist at all, but we could certainly do with some of the revenue that is due, but which is not being collected. Even if we closed the tax gap by half, we would avert real pain and suffering among those who are often the most vulnerable in our society and who particularly rely on services provided through public expenditure. In that context, it is even more important than it has been that we do all we can to ensure that we close the tax gap.
As the hon. Gentleman again pointed out, and as the hon. Member for Amber Valley (Nigel Mills) also described in his speech, that is easier to say than to do: it is easier to speak in principle or theory about tax laws that work and are simple for everyone to understand, and that no one tries to game, than it is to bring them about. But just because it is difficult—some might say very difficult—it does not mean we should not keep striving. With the policies established after the credit crunch by my right hon. Friend, we have made considerable progress towards such an approach. I should be interested to learn how the new Government intend to build on the solid foundations left by the previous Government, and to take things further.
It is not morally acceptable for a small minority to think that they can opt out of their obligations if they can buy the right advice or pay for sophisticated tax avoidance products. It is about time for all political parties to adopt and voice that moral approach more. Like benefit fraud, tax evasion undermines the confidence of ordinary taxpayers in the legitimacy of the system. It should be far less acceptable, socially as well as morally—it should not be thought reasonable and polite—to admit in company to earning a living by helping well-off people and companies to avoid their tax liabilities in the jurisdictions where they operate. I do not say that the vast majority of taxpayers or tax accountants do that, but some do, and the practitioners in question probably know who they are. The hon. Member for Amber Valley is nodding, and we can talk to him later—he does not have to say anything on the record. We know the practice when we see it, and it should be far less acceptable morally, and in company, than it has been in the past. We need that switch to happen.
Dr Pugh
I accept entirely what the hon. Lady says, and her reference to the free rider principle. We can identify free riders, but it is rather like identifying people who do not pay their bus fare; it does not mean to say that there is an easy way to do it. I refer her to an interesting discussion at the Public Accounts Committee with the landlord of the Treasury, whose office is based, I think, in Bermuda. All the people we interviewed and all the senior staff enjoy the advantages of London society, and the benefits that that bestows on them, but avoid tax by virtue of having a name plate—well, a little more than that, but not much more—in Bermuda.
Ms Eagle
The hon. Gentleman will be able to discern from the tenor of my remarks that I agree with him.
I hope we all agree that the world has changed and that there will be no hiding place for tax cheats. The previous Labour Government had a record to be proud of and it is important that the momentum we managed to create should be continued, especially internationally. In 2004 we introduced a requirement to disclose tax avoidance products in advance, to a storm of protest. In 2009 we strengthened the regime, and that has transformed the fight against avoidance. As the hon. Gentleman explained, that protects more than £12 billion of revenue.
The March 2010 Budget made the disclosure regime broader, increased the penalties for non-compliance and gave Her Majesty’s Revenue and Customs access to more information on those who use the schemes. The package was designed to tackle tax avoidance, non-compliance and offshore evasion and to protect £18 billion of revenue. Last year HMRC identified £12 billion in extra tax due—another point to which the hon. Gentleman referred—seized £57 million in assets and £9 million in cash forfeitures and successfully prosecuted 171 cases. Will the Minister set targets or expectations in HMRC to increase the rate of prosecutions, and perhaps achieve better figures this year? We also legislated to give HMRC more effective powers to ensure that the sanctions it could use would be effective and proportionate. There are to be more onerous reporting restrictions in future for those who are caught evading tax of more than £5,000, and as the amounts evaded get higher the consequences under the current law for those who are discovered doing it get worse, and end up with naming and shaming.
Internationally, and as the hon. Member for Southport also recognised, as president of the G20 we led a global clampdown on tax havens and offshore evasion. That is an important aspect of what we must do if we are to close the tax gap. The hon. Gentleman mentioned in passing the 100 tax information exchange agreements signed by OECD countries in the past year, including those the UK has agreed with Jersey, Guernsey, the Isle of Man and, perhaps more interestingly, Belize. In 2007 the offshore disclosure facility gave the customers of five major banks the opportunity to put their tax affairs right, yielding more than £400 million in tax revenue due. Last year, as part of the Budget process, HMRC served notice on more than 300 other financial institutions to hand over details of those who cheat on their tax by hiding income in offshore accounts.
We also concluded the ground-breaking Liechtenstein disclosure facility, which is expected to bring in nearly £1 billion in lost tax revenue. That agreement goes far beyond the tax information exchange agreements we have been discussing, and could be a model for future agreements. I should be interested to hear what the Minister has to say about that. Under the agreement, UK taxpayers with money in Liechtenstein accounts must demonstrate that their tax affairs are in order, and must have letters to that effect from HMRC; otherwise, their Liechtenstein accounts are closed down. They must then settle with the UK tax authorities. Thanks to progress made by the previous Labour Government, there are fewer places for large amounts of money to be sent if Liechtenstein accounts are closed down, and there are fewer places to hide.
We also persuaded the OECD to develop best practice guidelines on country-by-country reporting, as was also mentioned earlier—an excellent initiative that was put on the agenda by the development community, and in particular Christian Aid, ActionAid and Oxfam. Tax evasion costs developing countries billions of pounds each year in lost revenues, and is a barrier to social and economic development and growth.
Ahead of next week’s emergency Budget, I want to ask the Minister a few questions. Will he recognise the excellent work that the previous Government bequeathed him in this important area, and tell us how he intends to build on it? Will he set a target for the tax gap; and what percentage of the fiscal consolidation that we all expect, given the softening-up process of the past few weeks, does he expect closing that gap to represent in the Budget? Will he maintain the hidden economy advisory group to inform that vital work? It was in the middle of extremely important work—particularly on creating routes back to legality for those who might have been in an illegal position, and to allow them to settle their tax.
Does the Minister agree that, in an international setting, maintaining the momentum to clamp down on tax havens and non-compliant jurisdictions is vital, and does he therefore share my disappointment with the perfunctory mention that the entire agenda received in the recent G20 communiqué? Why did it receive such a perfunctory comment at the G20 Finance Ministers’ meeting? I hope the Minister can reassure us that that does not mean this important area is to be less of a priority.
Does the Minister intend to pursue new disclosure facilities, similar to the ground-breaking example we have managed to negotiate in Liechtenstein; and what progress has been made between the UK and the authorities in Belize, given the recent signing of the tax information exchange agreement? How much lost tax revenue does he expect to raise as a consequence of that agreement? I look forward to his response.
Dr William McCrea (in the Chair)
Before I call the Minister, let me say—I do not think that I am out of order here—that we wish the right hon. Member for East Ham (Mr Timms) a speedy and full recovery, and that we look forward to him taking part in many debates in the House.
The Exchequer Secretary to the Treasury (Mr David Gauke)
It is a great pleasure to serve under your chairmanship, Dr McCrea. Let me begin by endorsing your words with regard to the right hon. Member for East Ham (Mr Timms). It was a great privilege to shadow him for a number of years, and I look forward to his return. I know that he has a formidable intellect and is a fine parliamentarian, so he will be a very testing person to have as a shadow. He is also a very good man, and I wish him well. I endorse the words of the hon. Member for Wallasey (Ms Eagle).
I congratulate my hon. Friend the Member for Southport (Dr Pugh) on securing this debate and on his excellent contribution. He has the benefit and experience of serving on many Finance Bill Committees. The second excellent contribution was from my hon. Friend the Member for Amber Valley (Nigel Mills), who, I suspect, will serve on many Finance Bill Committees. He brought great expertise and considerable practical experience to the debate.
We had a thoughtful debate on some of the matters relating to the general anti-avoidance rule, and I shall say more on that during the course of my remarks. The quality of this debate has been extremely helpful, and I am very grateful to my hon. Friend the Member for Southport for highlighting this particular issue, and for giving me the opportunity to say a bit more about tax avoidance and the tax gap.
I am grateful to the hon. Lady for her kind remarks in respect of my position. I had the pleasure of shadowing her to some extent. I did not directly shadow her position, but we served on Finance Bills together. She has demonstrated today that she is as tenacious in her Opposition role as she was as a Minister, and I hope to be able to answer her questions.
The issue of the tax gap, which incorporates tax avoidance but does not consist solely of it, is important for the Government. As earlier speakers have mentioned, it has been brought into even sharper relief by the dreadful state of the public finances, which we have inherited from our predecessors. As the hon. Lady pointed out, there is a public mood for people to do the right thing and to play by the rules, and that includes paying the taxes that are due under the law. Those who do not do that have very little public sympathy. The hon. Lady said that she felt that the previous Government are being traduced and unfairly criticised over their record. Although I would be the first to point out the failings of the previous Government with regard to the public finances, there are elements of both HMRC and the previous Government that I want to address in a fair manner, and their record is not all bad.
We are grateful to HMRC for publishing, for the first time, tax gap figures across all of its regimes in December 2009. It was the right thing to do and we welcome that greater transparency of information. Tax gap figures for VAT have been published for some years, but this was the first time that figures for direct taxes had been published. As we have heard, HMRC estimated the UK tax gap to be around £40 billion in 2007-08. That figure is net of the amounts collected through HMRC’s compliance activity.
The tax gap is the result of several different factors, ranging from tax evasion and organised criminal attacks on the tax system through to errors made by customers. One of the largest factors contributing to the tax gap is avoidance. Tax avoidance is estimated to contribute around 17.5%—around £7 billion—of the total tax gap. It is worth making that point at the beginning because, although those contributing to this debate today have not fallen into this trap, there is sometimes a conflation between the tax gap, which is a considerable figure, and tax avoidance, which is still a considerable figure but is only part of the £40 billion figure. None the less, £7 billion is a substantial sum, and this Government are determined to reduce it as far as possible.
As our coalition programme for government says, we will make every effort to tackle tax avoidance, which will include considering the Liberal Democrat proposals. I hope that my hon. Friend the Member for Southport will forgive me, but with the Budget in six days’ time, I do not intend to pre-empt anything that my right hon. Friend the Chancellor may say on that day. My hon. Friend rightly says that my previous responses in this area have been more like holding answers, and perhaps they have, but I hope, given the proximity of the Budget, that he will understand why. For that reason, and that reason alone, I do not intend to wander down the path of capital gains tax, which he gently mentioned. I have no doubt that my hon. Friend will be paying attention to what the Chancellor has to say next Tuesday.
I will say a word or two about the general anti-avoidance rule, which was well debated by both my hon. Friends. They managed to tease out some of the issues as well as outline some of the questions that have to be asked. The hon. Lady talked about the balance between principles and something that is much more targeted. One of the questions that we must consider is whether it enables us to reduce targeted anti-avoidance rules. Do we know the answer to that until we know what the attitude of the courts is? That is clearly something that is worth exploring. Does it require a clearance regime in order to make it work? If it does—in some countries it does and in others it does not—what resources will be necessary? My hon. Friend mentioned HMRC resources in that area. In total, HMRC has something like 17,000 tax professionals. Not all of them work exclusively on tax avoidance matters, but many of them do. There is a question, therefore, over how resources are deployed.
Nigel Mills
If the Minister was minded to proceed down that line, a clearance mechanism would be essential to avoid creating huge uncertainty for taxpayers. Having had much experience of dealing with the clearance system, I can say that it would take huge amounts of resources to deal with the amount of clearances that we would get for a general anti-avoidance rule. Almost everybody would want to get that certainty. In any remotely complicated transaction, there would be some element of doubt in the situation. There is a real risk in the case of a purpose transaction. For example, someone may say, “My intention here is commercial and not to avoid tax.” They want HMRC to write back and say, “Yes, we agree.” However, they would have to give a lot of information to achieve that response. There is a risk that if the transaction changes slightly, the claim becomes invalid, or that a hugely long and detailed inquiry would be needed covering many aspects and many different taxes, and that would take a huge amount of time and a lot of resources to complete, which will discourage the transaction from taking place at all.
Mr Gauke
I am very grateful to my hon. Friend for that intervention. At this point, given that we will have a Budget next week, I will say that there are a number of issues here. The Government are not hostile to exploring these areas. The coalition agreement is very clear in saying that we want to look at the Liberal Democrat proposals, which included a general anti-avoidance rule. However, my hon. Friend is right to raise some of the complexities and difficulties that may exist and that may need to be overcome. That is a debate that I think the Government, across the board, welcome and want to take forward.
Dr Pugh
Again, we have a situation where a proposal is put forward and, as it were, speculative possibilities that could result from that proposal are alluded to. Presumably in any process of investigation, however, one looks at how things actually pan out in the real world in other places. Clearly, if it was the case that, in every regime where a proposal such as this one was introduced, there was this massive clearance backlog, rather like the Independent Parliamentary Standards Authority—heaven forbid—one would never implement such a scheme. In fact, there is no obvious reason why a scheme such as the one that IPSA has should be as complex and as poorly managed as it actually is.
Mr Gauke
That tends to be the way of things now, I understand. There is a need for a sensible debate in this area, and today we have heard two excellent contributions, from my hon. Friends the Members for Southport and for Amber Valley, and I for one am very grateful for those contributions.
The hon. Lady raised a number of points and I hope that, in the course of my remarks, I am able to address those points. As far as building on the previous work undertaken by the previous Government and by HMRC, the underlying point that I want to make is that this Government take tax avoidance very seriously. We want to use HMRC’s resources as effectively and as efficiently as possible to ensure that we address this particular matter and so that those who do the right thing and who pay the taxes that are due do not find themselves essentially subsidising those who have not paid their taxes properly. Again, further details will be announced in the Budget.
The hon. Lady raised the specific point about whether one should have a target for the number of prosecutions in this area, and so on. That is perhaps more symptomatic of how the previous Government tended to work, which was on the basis of having targets. However, in the number of meetings that I have had with HMRC officials in the five weeks or so that I have been in my post, I have said that we take tax avoidance seriously. We want to work with HMRC in developing proposals on how we tackle tax avoidance and on how we deploy resources most effectively.
That will continue to be the Government’s position, including on tackling matters such as the hidden economy, which the hon. Lady rightly raised as an important area, and on working on the international stage and engaging with other countries in finding ways to exchange information more effectively. The hon. Lady highlighted the Liechtenstein agreement and that is one agreement that we welcomed in opposition and that we continue to support. I am not in a position to say anything more about particular matters today, for reasons that I am sure she will understand, but we continue to encourage HMRC to engage with other tax authorities to ensure that those people who should be paying tax in this country do pay tax in this country.
The hon. Lady raised the issue of greater disclosure. We support that. She referred to the disclosure of tax avoidance schemes. We think that that was a very successful initiative by HMRC and we wish to continue with that initiative and build on it. We will continue to encourage HMRC to engage with other tax authorities on double taxation treaties and tax information exchange agreements. I have shadowed Ministers in Committees on many statutory instruments on this particular matter and frequently asked how much these agreements will actually raise for the Exchequer, so I know that the answer is that it is not possible to provide the answer. Nevertheless, these agreements apply for Belize as much as for any other jurisdiction and we will continue to encourage HMRC to pursue those agreements and to look to progress as many of them as possible as quickly as possible.
Ms Eagle
In general, does the Minister view the Liechtenstein agreement, which is new, as an interesting model, in that it goes further than the tax information exchange agreements? I am not asking him to declare today which country is going to be next. I am just trying to tease out from him what he thinks about that approach, which was quite groundbreaking. We know the history of it, but something extremely effective came out of it. Does he see that general approach as a model that ought to be promoted around the world, to ensure that we begin to clamp down on jurisdictions and tax havens where people can hide money that is illegitimately held and untaxed?
Mr Gauke
I would say that there is something there for us to build on, and I think that that probably answers that question as effectively as I can.
The hon. Lady highlighted the issue of country-by-country reporting. Our view is that we certainly want to do everything we can to help developing countries to improve their ability to collect tax. The OECD informal taskforce on tax and development is currently exploring with non-governmental organisations and with industry whether country-by-country reporting would be effective in improving tax transparency. We shall certainly consider this matter very carefully to see what is the most effective way of doing things.
There is also something that the previous Government achieved, which the hon. Lady did not particularly mention but for which I think they deserve some credit, in ensuring that the tax capacity of developing countries can be improved. Again, we are certainly very interested to see what we can do to explore that issue.
Let me turn to one of the key points, which I think was raised by my hon. Friend the Member for Amber Valley, which is the need to do what we can to improve tax law so as to remove uncertainty. That is a very important point. We are committed to reforming the tax system to make it competitive, simpler, greener and fairer, and to ensuring that the quality of tax law is improved. The most effective way to tackle avoidance is, as far as possible, to stop it at source, rather than tackling it once it has happened. Prevention is better than cure.
A simpler tax system that presents fewer boundaries and complexities to be exploited is clearly preferable. As a Government, we are committed to making sure that, when we consider reforms to tax policy, we take into account from the start the impact on avoidance opportunities. We want a tax system that is noted for fairness and simplicity, and addressing tax avoidance risks is a key part of that.
Nevertheless, it is widely acknowledged, including by the Institute for Fiscal Studies, that tax avoidance requires a multifaceted response. There will always be taxpayers who attempt to achieve tax savings that were not intended by Parliament. We intend to be a reforming Government that put in place a better tax framework for business. As we do that, we will take the opportunity to construct a tax framework that reduces the risk of tax avoidance.
Of course, those are the longer-term objectives. In the short term, we will need to introduce specific targeted measures when an avoidance risk is identified. We will take that kind of action when it is justified, but our aim over time is, as far as possible, to move away from the need for short-term measures.
HMRC has published an anti-avoidance strategy that recognises that a range of responses is required. The strategy has three key elements: first, prevention; secondly, detection, and finally counteraction. Prevention focuses on developing robust law. HMRC clearly has a key role in recommending to Ministers changes to strengthen the legislative framework to defeat attempts at tax avoidance.
Another tool in preventing avoidance is deterrence. HMRC publicises details of avoidance schemes that it considers ineffective, to put taxpayers on notice that it will challenge their use of those schemes. For large businesses and the wealthiest individuals, HMRC uses real-time dialogue to obtain early information about transactions under consideration and influence behaviour. To be fair, progress has been made in recent years, and we welcome that. The regime for the disclosure of tax avoidance schemes, in particular, has proved invaluable to obtaining real-time intelligence on avoidance activity, as I acknowledged earlier.
Where HMRC detects avoidance, counteraction involves thorough and expert investigation and, where necessary, litigation. We believe that that range of responses strikes the right balance between providing certainty to taxpayers in their tax affairs and protecting the Exchequer against unacceptable threats to tax revenues. It also maintains flexibility so that the Government can respond quickly and in a targeted way where necessary. We also want to consider longer-term solutions to the problems of tax avoidance, and I hope that I will have all parties’ support as we do so.
Dr Pugh
The Minister has mapped out a strategy that we can all understand and appreciate. However, it would be helpful to know whether he has assessed the personnel requirements to fulfil that strategy. Are the staff currently in place in the Treasury, or will he need to acquire more? I ask because we are, obviously, in a time of head count reduction, and we do not want to remove the heads that are most useful in collecting tax revenues.
Mr Gauke
I am grateful for that intervention. My hon. Friend raises a perfectly fair point. Because of the crisis in the public finances, all parts of Government face great pressure to find savings. As we prepare for the spending review in the autumn, I have said to HMRC that I want it to focus resources on reducing the tax gap and achieving yield. I hope that during the months ahead, we can develop a strategy to ensure that HMRC has the resources that it needs in the right places to do so. Guaranteeing a certain yield or making estimates about a particular area of expenditure or the expansion of staff in a certain Department is not easy.
The hon. Lady acknowledged that there will always be a tax gap. To respond to her remarks, one can go only so far in making firm predictions about the tax gap reduction, as we must be sufficiently confident that any predictions will withstand the scrutiny of the Office for Budget Responsibility. However, that is not to say that I as a Minister am not keen to see what we can do to reduce the tax gap.
My hon. Friend mentioned the £120 billion estimate, although he did not necessarily say that he thought it was right. It is mentioned frequently among hon. Members and in the media. That figure was produced by the Tax Justice Network, or Tax Research LLP, which is essentially the same organisation. It is a striking figure, and is often repeated. It is very different from the £40 billion estimated by HMRC. The £120 billion figure has clearly focused attention on the matter, and that is no bad thing, but scepticism about it is widespread; indeed, I expressed some scepticism myself from the Opposition Benches a year or so ago. Given the disparity between the £120 billion and HMRC’s numbers, I have asked officials to review it.
It must be accepted that in preparing estimates, organisations external to Government have access to much less data than HMRC. The types of methodology available to them are therefore restricted. It is reasonable to assume that HMRC is clearly in a better position to make an assessment, but there is no reason why outside bodies should not contribute to the debate. However, having considered the methodology used to produce the figure of £120 billion, I must tell the House that even a brief analysis reveals that it is deeply and systematically flawed.
For example, Tax Research LLP estimates total revenue lost due to tax evasion at £70 billion. That figure is obtained by applying the percentage tax gap from VAT to direct taxes. There are two main problems with that. First, different tax regimes have different tax gaps. According to independent research by the OECD, for example, the operational experience shows that tax regimes such as pay-as-you-earn that withhold tax at source have far smaller tax gaps than other types. To apply the VAT gap percentage to taxes collected by PAYE or otherwise at source greatly overstates the tax gap, because the VAT tax gap is considerably higher.
Secondly, an element of double counting is involved, although, to be fair, that might not be apparent from the numbers used by Tax Research. The VAT gap already includes amounts due to tax avoidance and tax debt. Applying that percentage to direct taxes and then adding additional amounts for both avoidance and tax debt, as does Tax Research, results in the double counting of losses from the avoidance of direct taxes and non-payment.
The Tax Research estimate of tax debt is £28 billion. That is a snapshot figure of all tax owed to HMRC on 31 March 2009, which does not represent the actual losses to the Exchequer from non-payment. Almost all tax owed to HMRC is eventually paid, sometimes within days of becoming due. A proportion of debts outstanding are in staged repayment plans, such as those covered by the business payment support service. Only the tax debt written off as uncollectable by HMRC is an actual loss to the Exchequer from debt. That is therefore the amount that HMRC uses in its estimate of the tax gap, which in the 2007-08 tax gap figures was not £28 billion but £3 billion. Of course, we must take steps to reduce that figure further, and I am keen to encourage measures to do so, but we should get the number right.
The final and most significant point concerns tax loss due to tax avoidance, which Tax Research estimates at £25 billion. That estimate includes the use of legitimate reliefs promoted by the Government to encourage certain activities, such as capital allowances to encourage investment and research and development tax credits to encourage innovation. Tax avoidance is generally regarded as the use of legal structures and allowances to reduce tax bills in manners not intended by Parliament when enacting the legislation. It is simply nonsense to categorise as tax avoidance the use of allowances for purposes intended by Parliament.
If I have been unfair in setting out those points, I am sure that Tax Research will correct me, but that appears to be the methodology used. Furthermore, the Tax Research estimate does not provide HMRC with any credit for the significant amount of tax that it recovers by challenging avoidance schemes. The figure of £25 billion therefore seems somewhat wide of the mark.
I thank my hon. Friend for this debate. This Government take tax avoidance seriously. We must take every possible step to minimise tax avoidance. We cannot afford to let it undermine our efforts to reduce the deficit, and it is not fair that by deliberately creating schemes that avoid tax, some people pay less while the vast majority of the hard-working public pay their fair share. Action against tax avoidance will be a priority, alongside improving the tax law-making process, introducing robust legislation and targeting HMRC counteraction and investigation.
Bullying (Schools)
(13 years, 11 months ago)
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Annette Brooke (Mid Dorset and North Poole) (LD)
I start by congratulating the Minister on his appointment. We have had many exchanges in different guises, so this makes a little change today. I am extremely pleased to have secured the debate, so that I can raise further issues relating to the tragic case involving one of my constituents and also by chance—this is very timely—raise further awareness of a recent report from Beatbullying.
The significance and impact of bullying are undeniable. Indeed, it was the most frequently raised issue in calls to ChildLine in 2008-09, with a total of 26,134 calls. I am sure that that remains the case. There were considerably more calls from girls than boys, and it has been pointed out to me that boys possibly wait until they are very desperate before seeking help. Interestingly, the latest research from Beatbullying suggested that there was a higher tendency towards suicide among young girls aged 10 to 14, with 65% of bullying-related suicides committed by girls. Beatbullying concluded that bullying accounted for up to 44% of child suicides and further estimated that the actual number over a nine-year period could be as high as 78 in the 10-to-14 age group. There are undoubtedly many more cases in the 16-to-19 age group.
In the report, Beatbullying notes that in every child suicide case related to bullying, school was cited as the main place of persecution. In four cases, cyber-bullying, in which bullying takes place online by e-mail and on social networking sites, was also named as a factor leading to a child taking their own life.
The Minister will be aware that Beatbullying is campaigning for greater openness about and research on the causes of child suicide, so that our society can better understand why children feel driven to take their own lives. We can reflect on the depth of the issue with the number of tragic suicides, but of course if we add in the acute misery caused by bullying but not resulting in suicide, we are looking at simply enormous numbers. How many people in this room can remember not being able to sleep at night as a child because of cruel verbal bullying? I certainly can.
Parentline Plus, which receives thousands of calls and e-mails from parents concerned that their child is being bullied, points out that not only can bullying be harmful to children in both the long and the short term, but parents whose child is being bullied often also find the situation very traumatic and difficult to manage.
We shall never eliminate bullying, but we can do better. I visit schools and see excellent work with peer mentoring and other schemes. I have been very impressed by the work of CyberMentors. I understand that since its launch in March 2009, more than 600,000 young people have used the site. There is a great deal of excellent work by the voluntary sector—I apologise for mentioning only a few organisations by name today—and I ask the Minister to do all that he can to protect the funding of effective anti-bullying schemes. Indeed, we need to aim to have such schemes in all schools and, of course, to protect funding for services such as ChildLine and Parentline.
Like many other people, I am heartened by the coalition’s commitment to help schools to tackle bullying, especially homophobic bullying, but today I am hoping that the Minister will outline exactly what his plans are. Consistent recording by schools of instances of bullying is very important, but what action should follow on from that recording? Having policies in place is all-important, but what checks are there on their implementation? Should a specific governor have prime responsibility for this area? Is there a lead teacher, well trained in dealing with all aspects of bullying? What checks will there be on outstanding schools, which will not be inspected regularly in the future and could become academies? In the case of academies currently and in the future, who do parents complain to if they feel that the school is not responding to their concerns?
Often, we attribute the reasons for being bullied to some difference from others. Perhaps a child or young person has special educational needs. Autism comes immediately to mind. The behavioural characteristics and social naivety that accompany the autism spectrum disorders—for example, overly formal speech, unusual behaviour and obsessive interests—can make pupils with autism very vulnerable to bullying. Pupils with autism are particularly vulnerable to backhanded bullying, because they take friendship at face value and find it difficult to discern ulterior motives. It is the case that 40% of parents who have a child with autism say that their child has been bullied. The figure is even higher for children with Asperger’s syndrome, rising to 59%.
I should like to refer to a few stories from the Parentline website.
Mr Robert Buckland (South Swindon) (Con)
For children and young people with autism and related disorders, systematic bullying in schools can often lead to mental health disorder as well. The two conditions often run in a coterminous way. I wonder what the hon. Lady thinks about my view that schools, particularly mainstream schools, may need to develop more awareness of and more policies on autism and related conditions among students and pupils in their establishments.
Annette Brooke
I thank the hon. Gentleman for his intervention; I agree with his sentiments. This is a question of having a well trained work force all the way through. I become concerned when we talk about cutting the length of training courses, because we must allow more time for training in special educational needs across the board.
One parent said:
“My daughter is different—I think she has ADHD”—
attention deficit hyperactivity disorder—
“or autism, she just doesn’t seem to be OK around people. She is loving and trusting but the girls at school are tormenting her. She doesn’t complain—she goes back for more because she is desperate to make friends.”
Another person said:
“My granddaughter has been bullied over the last year at school and it got so bad that she took an overdose and was lucky to be alive…it took a long time for her to be gently integrated into school again but she was just getting on better and there was another incident this week where girls were threatening her. She has not been back since”.
The girl is now in a terrible situation: does she stay away from school and have her parents risk prosecution, or is she sent to school for more unhappiness?
I have a case in my constituency in which the parents in the end removed their child from a secondary school because they lost all confidence in the school dealing with the bullying that the child, who had autism, was facing. In sheer desperation, many parents end up home educating because of the bullying that their children experience, so support for home educators, not legislation and regulation necessarily, is all-important.
I have received a representation from the Juvenile Diabetes Research Foundation, which is calling on the Government to do more to raise awareness of type 1 diabetes after a survey revealed that a high proportion of children with diabetes are bullied. There is evidence that young carers are bullied. The list goes on and on with health conditions and disabilities, home situations and homophobic bullying. Homophobic bullying is worryingly prevalent. The issue affects all young people in every type of school. Just like other forms of bullying, it continues beyond the school gates on school transport and into young people’s homes through cyber-bullying with mobile phones and the internet.
Recent research by Stonewall with significant numbers of young people and teachers across the country concludes that homophobic bullying is almost endemic in Britain’s schools. Almost two thirds of young lesbian, gay and bisexual pupils have experienced direct bullying. Half of secondary school teachers who are aware of homophobic bullying say that it happens outside school premises. Secondary school teachers also say that homophobic bullying is the second most frequent form of bullying, and one in five say that pupils who experience it are subjected to cyber-bullying.
It is a complex subject, but we also have to look at the other side of the coin: the bullies, and the parents of bullying children. The parents of children who are being bullied often feel that too much attention is given to the bullies in schools, but, clearly, we have to tackle such behaviour. Why is it occurring?
As part of a programme of work to tackle bullying in schools in Stevenage, Parentline Plus works with the families of children who display the challenging behaviour of bullying. The project is enormously successful, and the organisation believes that part of the solution to bullying is providing parenting support to the families of children who bully, so that they can help their child change their behaviour.
The constituency case I wish to refer to involves a young man who was extremely good at sports, which was perhaps his difference. I must stress that the incident did not actually take place in my constituency—the parents have moved into my constituency. Ben, aged 11, committed suicide after being persistently bullied on a school bus taking pupils to and from school in a rural area. The bus driver joined in the verbal bullying.
Ben’s parents now live in my constituency, and I have been supporting them as they pursue changes so that, hopefully, a case like Ben’s will never arise again. They repeatedly raised the problems with the school, the local authority and the bus company before the dreadful tragedy occurred. Ben’s father asked what other situation exists in which an adult who is expected to be responsible for 50 or more children receives no training and has nothing more than a Criminal Records Bureau check.
In rural areas, children can be on a school bus for periods of an hour or more. When schools take pupils on educational trips, they are required to carry out risk assessments, provide first-aid cover and ensure the appropriate ratio of adults of the appropriate sex to pupils. Local authorities are expected to provide transport for school children, and there is a great deal of difference in provision among the various authorities. There are excellent authorities, yet our experience with what happened to Ben shows that some local authorities expect the bare minimum from their transport providers.
Mr Edward Timpson (Crewe and Nantwich) (Con)
The incident of bullying on a school bus that the hon. Lady describes is tragic, but, sadly, it is not an isolated one. I had a constituent whose son was the only child on the school bus who, because he was outside the catchment area, had to pay for the travel, so he always had to be last on to the bus. He was bullied as a result, and the parents had to withdraw him from the school. Does she agree that the role that the bus companies play in the strategy for dealing with bullying must be much more prominent when the local authority provides guidelines and contracts for how the bus companies go about their business?
Annette Brooke
I do agree with that, and I shall go on to elaborate on it.
The Department for Children, Schools and Families, as it then was, produced guidance in “Safety from Bullying on Journeys”, which highlights good practice. One of the schools mentioned, Purbeck upper school, is in my constituency, so I shall mention it briefly. Over 67% of the students travel to school by bus—it is a rural area. The students themselves did a survey. They worked with absolutely everybody and held a consultation. The issue was taken seriously by the student parliament, which came up with a travel plan. It drew up a student bus conduct code, which is obviously very good practice.
Despite all the work that has gone on and the new guidance, my constituent Mr Vodden continues to be concerned with the bad practice. He asks why we do not name all the authorities with bad practice.
Earlier this year, I carried out a survey in conjunction with 4Children on local authorities and their policies. It is one year on from the publication of Government guidance on tackling bullying on journeys, yet our survey shows that the majority of local authorities still do not have a safer travel policy in place.
The guidance states:
“Local authorities have a key role in co-ordinating the anti-bullying activities of partners in their area to ensure an effective joined up approach.”
The document goes on to state that the first key step is for relevant stakeholders to agree a safer travel policy.
However, the figures from the research say it all. Of the 67 local authorities that responded—quite a high number, for a long questionnaire—60% did not have a safer travel policy, and 52% did not have a safer travel team. Of those local authorities that did have a safer travel policy, only 50% said that it covered all forms of bullying, and only 38% said that it covered all forms of journey. The survey revealed what I had long suspected: paperwork and policies may well be in place but implementation of strong anti-bullying policies is not consistently happening, particularly for bullying beyond the school gates.
It is so important that as a society we learn the lesson that bullying must be tackled at all levels, and that appropriate training must be given to everyone involved, including school bus drivers. The implementation of anti-bullying policies outside the school gates has been incredibly slow, with many local agencies still not working together as well as they could. We must drive up efforts to stamp out bullying outside as well as inside schools to protect children from a daily misery that can lead to the tragic outcomes with which I began.
For a start, directors of children’s services, head teachers and governing bodies must have greater awareness of all the guidance that exists on bullying outside the school gates. I look forward to the Minister’s responding to all my concerns about bullying, both in and out of school. I am sure that he will tell me that we will never eliminate bullying, but I hope he will agree that we can and should do much better on the issue.
The Minister of State, Department for Education (Mr Nick Gibb)
I thank my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) for her kind comments. It is nice, after all these years, to call one another “honourable Friend”. I congratulate her on securing this important debate.
Tackling poor behaviour both in and, as my hon. Friend pointed out in her compelling remarks, out of school is one of this Government’s top priorities. I know that she has been a tireless advocate on this issue in her constituency and in championing the work of 4Children, Beatbullying—a charity I know very well—and others to improve pupils’ behaviour in the wider community.
Our coalition agreement places a sharp focus on robust standards across the education system, the highest quality of teaching and high standards of discipline in the classroom. Poor behaviour is a real concern. Pupils cannot learn if they are late to class or if their lessons are disrupted. Teachers do not want to stay in the profession if they feel intimidated by poor behaviour. Parents need assurance that their child’s school provides a secure, happy environment in which their child is focused on their education. However, the fundamental driver for dealing with poor behaviour is the impact on pupils themselves. The disruption and distress caused by bullying can be very damaging, as my hon. Friend said. Education is important, but children’s safety is paramount, so we have made an explicit commitment in the coalition agreement to help schools to tackle bullying, especially homophobic bullying.
As my hon. Friend said, the problem is not confined to the classroom. There has been much recent media coverage of extreme cases of poor behaviour, linking bullying to suicide. She cited the statistics and research produced by Beatbullying, and spoke about how bullying has directly affected some of her constituents. I, too, have met Paul Vodden, the father of Ben. The case of his son, who tragically committed suicide as a result of bullying on a school bus, highlights the catastrophic effects that bullying can have and the urgent need for action.
As my hon. Friend the Member for South Swindon (Mr Buckland) pointed out in his intervention, bullying can lead to serious mental health problems, and children with special educational needs can be particularly vulnerable to it. The Department for Education, through the anti-bullying alliance, is looking at the most effective way to deal with the bullying of children with special educational needs and disabilities. Although guidance on bullying on school transport was produced in April last year, we will look closely at the issue as we review the work on bullying and behaviour more widely. This is a top priority for our Government and, as my hon. Friend the Member for Mid Dorset and North Poole said, there is much room for improvement.
In a survey last year, 28% of pupils said that they had been bullied in the last year and 59% said that they feel that their schools deal with bullying well, which prompts questions about the other 41%—the four in 10 who feel that their schools should be doing more. Currently, a raft of guidance advises schools on anti-bullying policies, written policies and specific forms of bullying. It is lengthy and confusing, so we have asked officials to sharpen and strengthen it to ensure that it has practical value and, as my hon. Friend points out, is implemented in our schools. We also need to make sure that the law is clear so that teachers feel confident when they use the powers that Parliament has vested in them.
Schools have a duty to prevent and tackle bullying but in tackling bullying they need to address the specific problems that their schools face, based on intelligence about what is driving bullying and where it is taking place. I recently visited a school where pupils were desperate to get home at the end of the day and did not take part in any of the school’s extracurricular activities. The reason they were hurrying home was not that they wanted to watch “The Magic Roundabout” or “The Flintstones”, but that they were thirsty. Further investigation revealed that the reason they were thirsty was that they were not drinking any water during the day because they did not want to go into the school toilets where the gangs were hanging out. That problem was relatively straightforward to solve once it was known what was happening. Building that awareness and sharing information within the school is very important so that teachers know what is going on in their school.
We also need to be sure that teachers can confidently and effectively deal with poor behaviour. Trainees on initial teacher training routes need to demonstrate that they have met certain standards, including standards relating to discipline, behaviour management and bullying.
Andrew Percy (Brigg and Goole) (Con)
The Minister is talking very eloquently about the need to ensure that proper training is in place and I fully support that, but we also need to ensure that, once teachers have been trained and are in post, the pressures on them from above do not work against dealing with bullying. At present, the exclusion targets, the emphasis on social inclusion and the pressure on teachers within schools in some cases almost to deny that there are any behaviour problems work against the interests of the school and ultimately against the interests of pupils. We have to make sure that teachers feel able to deal with the problems and that means having proper powers in place to ensure discipline.
Mr Gibb
I am grateful to my hon. Friend for that important intervention. He is absolutely right. One of the things that I have discovered from visiting schools is the importance of support from the head teacher for teachers, so that when parents come into the school to complain about a teacher, the head supports that teacher—certainly unless there are serious allegations. If teachers do not know that they have the backing of the head teacher, it makes their job twice as hard as it need be.
We have committed in the coalition agreement to
“give heads and teachers the powers they need to ensure discipline in the classroom and promote good behaviour.”
We will introduce legislation in the autumn that will give teachers the right to remove disruptive children from the classroom without fear of legal action and give them greater powers to search pupils for particular banned items. The list of banned items will be extended beyond the list that my hon. Friend the Member for Mid Dorset and North Poole and I discussed during the Committee stage of the last couple of education Bills that went through the House. There will also be no-notice inspections for schools where behaviour is a serious problem.
All schools must look at behaviour and not be complacent. It is not always a given that poor behaviour happens in the most challenging areas. Over the past five years, I have visited nearly 300 schools around the country. I have been to schools in very affluent areas where behaviour is a real problem because the processes and policies for dealing within bullying are simply not sufficient. Sometimes, as my hon. Friend said, those policies are not implemented on the ground. It is all very well having them written down, but they have to put into practice. In contrast, a school such as Mossbourne community academy in Hackney—one of the most deprived parts of London—has an immaculate behaviour record.
In its inspection framework, in relation to behaviour, Ofsted draws a clear distinction between good schools and outstanding schools. In good schools, pupils are compliant with the rules, fearing the consequences if they misbehave; but in outstanding schools, pupils do not just comply, but take responsibility for their own behaviour. That is the gold standard that I am sure my hon. Friend and I both want to achieve throughout schools in this country.
I had lunch fairly recently with some pupils in the school canteen at Mossbourne academy, and I asked them about bullying. They told me that bullying does not happen in their school and said, “We’re not allowed to engage in verbal bullying.” They volunteered that information to me, which showed an acute awareness of what constitutes bullying and its impact on others. When such an approach works well, the effects are often seen in the wider community, too. On becoming an academy last September, a school in my constituency introduced a new blazer and tie uniform and shaped a clear ethos and identity for the school. Pupils’ behaviour improved in the school to such an extent that it was noticeable in the town. People have commented to me about the behaviour of young people in the town since the school had adopted that new approach to behaviour.
We must be clear about responsibilities outside schools. Under the Education and Inspections Act 2006, schools have powers to take measures to regulate the conduct of pupils off-site, including journeys to and from school. The best schools take that responsibility very seriously and use those powers when appropriate. A head teacher in Cumbria told me that he felt responsible not just as a head, but as a member of the local community. Any poor behaviour that he heard about in, say, the town during the weekend, he took up with pupils first thing on the Monday morning, and because it was a tight-knit community, he could often trace and track the perpetrators of the poor behaviour. Such behaviour creates a bigger challenge if the school is situated in a larger, urban city such as London, but the answer to the problem must be partnership.
Justin Tomlinson (North Swindon) (Con)
The Minister has set out some excellent actions to take within the school environment and now he is touching on actions to take outside that environment, such as on journeys to and from school, which the hon. Member for Mid Dorset and North Poole (Annette Brooke) spoke about; but does that apply also to social network sites and cyber-bullying, which are not under the direct control of schools or teachers?
Mr Gibb
I am grateful to my hon. Friend for raising such an important issue. Dealing with cyber-bullying is important, and we are working with industry to make sure that, when offensive material appears on a social network, it is removed instantly. There is good guidance for teachers on how they should tackle incidents of cyber-bullying that are reported to them.
Annette Brooke
When a parent makes a complaint about bullying to the school and that bullying has taken place on the school bus or outside the school, what will definitively trigger the school taking the complaint seriously? Such behaviour is out of sight, so it is easy to ignore it. The essence of Mr. Vodden’s argument is that the problems were not taken seriously.
Mr Gibb
My hon. Friend hits the nail on the head. My sense is that when schools do not take such matters seriously, that is a symptom of a deeper problem with the management of the school. I suspect that if we undertook a survey of schools’ attitudes to reports of poor behaviour from parents, we would see a direct correlation with the standards in those schools generally. We have to raise standards in the way schools are lead throughout the country. That is what we hope to achieve in our general policy of trusting professionals more and giving them more autonomy and more freedom to run their schools as they see fit. I believe that if we can get away from the culture that exists in some areas, we can reach a position where that professionalism means that every aspect of the school is run more professionally and that complaints are taken seriously by head teachers and teachers. It is also important to ensure that teachers understand their own powers and responsibilities, which is what we want to sharpen up and focus on when reviewing the guidance.
We believe strongly that there is a duty not only in schools but in local authorities to safeguard and promote the welfare of children. It is a collective responsibility that must be shared by those in the community, including the school, the staff of children’s services, the police, transport providers and so on. Sharing the responsibility among services is vital.
This has been an important debate. School and the routes to and from school—indeed, anywhere that pupils congregate—should not be places of dread, but places where children can feel safe, confident and focused on their education. The Government are committed to reducing bullying significantly and to securing for generations to come the progression, knowledge and supportive educational environment that will provide pupils with a platform for future success.
Electoral Administration Reform
(13 years, 11 months ago)
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Meg Munn (Sheffield, Heeley) (Lab/Co-op)
It is a pleasure to have you in the Chair today, Dr McCrea. I am delighted to have secured an Adjournment debate this afternoon on the reform of electoral administration. Before I start, I wish to congratulate the hon. Member for Forest of Dean (Mr Harper) on his new role in the Government and wish him well in his post. I hope he will be able to respond to my concerns and lay out the Government’s proposals for the reform of this important part of our democratic system.
Electoral administration sparked much discussion following incidents that arose during the recent general election. In total, many hundreds of people were denied their vote—something we should take seriously and should ensure cannot happen again. In my constituency on election day, a number of people were unable to fulfil their democratic right to vote. At one polling station in Woodseats, people who were queuing to vote in the general and local elections were turned away at 10 pm and the doors were locked, not because they had turned up late or were not on the electoral register, but because of administrative blunders. That polling station was responsible for 2,772 electors, but it had been allocated only one presiding officer and two poll clerks to officiate. The acting returning officer later disclosed that there had been queues throughout the day and that extra assistance had been provided, but obviously not enough. The problem of queues and people being turned away was repeated at three polling stations in the neighbouring constituency of Sheffield, Hallam, as well as in Chester, Hackney, Leeds, Lewisham, Manchester, Newcastle and Islington. Similar problems were seen across the country, which points to a problem in administration greater than that found in just one location.
Both the Electoral Commission and Sheffield city council undertook reviews into what happened on 6 May to find out why those problems were not anticipated. Each review investigated the processes that led to the deplorable challenge to the democratic system, and indicated possible changes for the future. The Electoral Commission review concluded that the substantial queues at a number of polling stations on 6 May came about for a wide variety of reasons. The most common factor was poor planning and an inadequate system, specifically
“unrealistic, inappropriate or unreliable assumptions; inadequate risk management and contingency planning”.
In addition, a number of reports suggested that many polling stations were not adequate venues for a continuous flow of voters.
Some polling stations where voters had difficulty were responsible for more than 3,000 people, while others had as many as 4,500 possible voters. That is contrary to the guidance issued, which indicates that numbers should not exceed 2,500. Guidance also recommends that, in addition to the presiding officer, there must be a poll clerk for the first 1,000 electors and one further poll clerk for the next 750, with an extra necessary for the maximum of 2,500 electors. Across constituencies, the Electoral Commission found that there were various levels of staffing. Some provision was effective; other provision, of course, was not.
The Electoral Commission heard that almost all the areas that reported problems with queuing had higher levels of turnout than expected. Some advised that polling staff were simply unable to cope with the demand. A contributing factor, certainly in Sheffield and a number of other areas, was the combination of local and general elections, which of course slowed the whole operation. Even where extra staff were deployed, the problems were not always resolved, even when several hours’ notice was given. A common problem was that polling station staff were not always clear regarding when they should contact the acting returning officer to ask for help; and when they did ask for help, it did not always result in prompt, decisive action. The Electoral Commission was made aware that in some areas, after the close of poll at 10 pm, presiding officers continued to issue ballot papers to people who were queuing within the polling stations. Legislation is clear that no ballot papers should be issued after the close of poll.
The Electoral Commission review concluded that there are a number of areas where change is needed. The time allowed for voting is generous—15 hours in general elections—but the rules for close of poll are restrictive and leave no leeway to allow people who have made the effort to vote to do so. The commission found that there would be benefits if the rules were revised, and that those within the polling station at its closing should be able to vote. That, I understand, requires primary legislation, and I urge the Government to ensure that that happens as soon as possible.
Dr Alan Whitehead (Southampton, Test) (Lab)
I am interested to hear my hon. Friend’s account of the problems that arose, and the role of the Electoral Commission in putting right a number of those and wider problems. On the question of the close of poll, does she accept that a one-clause Bill is perhaps required to amend the Representation of the People Act 2000 and thereby put things right? That should not be confused with wider reform of electoral administration, such as constituency management and individual electoral registration. Will she urge the Minister to say whether he will consider the early introduction of a one-clause Bill to put that right—perhaps in this Session—ahead of any wider review of the administration of the Electoral Commission that might take place?
Meg Munn
My understanding is that it is a relatively simple, straightforward matter, but that it does require primary legislation. Perhaps the Minister can give us more information. It seems that it could be resolved relatively easily, so that the problem of people waiting to vote at 10 o’clock should no longer arise.
Andrew Percy (Brigg and Goole) (Con)
I congratulate the hon. Lady on securing this important debate. The problem in my constituency was not so much voting on the day, but the issuing of polling cards telling people when to apply for a postal vote, which appeared way after the deadline actually printed on the cards. People in my constituency were disfranchised in a different way. I agree with everything the hon. Lady has said, but such legislation should include a provision that polling cards must be sent out before the deadline for postal votes.
Meg Munn
I am very interested to hear that, as I was not aware of that issue. Later, I will address a different way that that issue could be resolved.
Local authorities and acting returning officers should review their planning to ensure adequate numbers of polling stations and adequate staffing, and address the question of their location. Those local reviews should obviously reflect on the individual problems identified during the May elections, including the one just raised by the hon. Gentleman. I understand that the Electoral Commission will give more prescriptive guidance on those issues.
We should take the opportunity to modernise comprehensively this country’s electoral administration. We should ensure that we obtain a professional electoral administration that takes into account the recommendations made in the commission’s August 2008 review of administration. The Government could consider changes, such as advanced voting in a suitable location—for example, the town hall—for up to five days before election day, and perhaps a trial of weekend voting.
Justin Tomlinson (North Swindon) (Con)
When I was a councillor in Swindon, I was elected in all-postal elections and in elections involving internet and telephone voting—a form of advanced voting. Those very successful pilots took place over two years, and I would like to see that system introduced, as it would reduce the numbers coming through on the day.
Meg Munn
The hon. Gentleman raises an interesting point. Clearly, we should learn from those processes. I know there have been concerns about fraud, but I think all approaches should be examined. I am suggesting that people could vote perhaps just in one central place in the days before the election, in order to give another option and reduce the number of people turning out on election day.
Compiling the electoral register must be a higher priority, and acting returning officers must receive the resources necessary for that to be done. We know that many people—perhaps as many as 3 million—are missing from the register. It is time for greater effort to be put into producing accurate records. Local councils must use all available data banks to get electoral registers up to date, such as council tax lists and information from other local services—Sure Start, for example—that offer services to people who are otherwise hard to reach.
I also propose that the Electoral Commission be given a power of direction. At the moment, it can advise but cannot direct local authorities. There is no way to intervene if there is poor decision making at the local level, and a power of direction might be able to deal with the issues raised by the hon. Member for Brigg and Goole. The commission could look at what happened, make recommendations and direct so that it did not happen again.
Wider issues need to be addressed. I found on the campaign trail—I am sure this was also true for other Members—that many young people did not know how to vote, where to go, or how to find out about that basic democratic right. We should use advertising much more to reach out and inform people about the basics of voting. A 20-second advert could be sufficient to encourage more first-time and new voters to get out and vote. Too many people are afraid of looking silly by having to ask how to vote at a polling station; a quick advert could resolve that.
The Electoral Commission ran a successful campaign aimed at young people and students, using brands such as Kiss, Heat and Closer magazines, and 4Music. The message was, “Don’t be part of the silent generation,” and it encouraged young people to register to vote. The campaign resulted in some 540,000 registration forms being downloaded or posted, 2.3 million visits to the About My Vote website and 53,000 calls to the commission’s call centre.
We should also look at the design of ballot papers and how candidates are presented on them, an issue I have raised before in the House. In its 2003 report, the Electoral Commission stated that a randomised system for the names of candidates was the most attractive option, rather than an alphabetical system that provides an advantage to candidates with surnames beginning with A or B. I am sure my hon. Friend the Member for Southampton, Test (Dr Whitehead) agrees with that. When testing that approach, the commission also recommended that grouping party candidates together could assist both the electors and counting clerks.
As a Labour and Co-operative candidate, I faced an entirely unexpected issue during the general election. It became clear, just as nomination papers were due to be filed, that candidates standing for two parties could not use a party symbol. I had to choose whether to use one symbol and describe myself as standing for only one party, or to not use a symbol and use the names of both parties. That has not previously been an issue, and I have never had a problem before in describing myself as a Labour and Co-operative candidate. Indeed, I have been a Labour and Co-operative Member of Parliament throughout my time in the House. Legislation needs to be amended to ensure that Labour and Co-operative candidates can present themselves to the electorate in a clear way.
The method of challenging an election result—fortunately, I have never had to follow that path—is complicated, expensive and antiquated. Although I do not want to encourage frivolous attempts to frustrate the democratic process, I want the laws governing the electoral system to be understandable and easy to follow if the need to challenge arises.
We need an election administration system fit for the 21st century. The current system was designed when fewer than 5 million people had the vote; now, we have more than 44 million electors. Being able to vote is a fundamental part of our democracy. I understand—as I am sure the Minister does—the frustration and anger of those who were unable to exercise the most basic democratic right of giving their vote to the candidate of their choice. We cannot rewrite the past, but we can use this opportunity to ensure that the administration of our democratic system is brought up to date, and that we not only enable all our citizens to register and vote, but encourage them to do so.
Dr William McCrea (in the Chair)
I call the Minister, Mark Harper, who seems to be very popular in Westminster Hall today.
The Parliamentary Secretary, Cabinet Office (Mr Mark Harper)
I am grateful, Dr McCrea, for my third Westminster Hall debate this week and the second under your chairmanship today. It is, however, slightly less popular than this morning’s debate, when almost 50 Members of Parliament turned up to talk about something completely different.
I am grateful to the hon. Member for Sheffield, Heeley (Meg Munn) for securing the debate, which gives us the opportunity to discuss some important issues, and for her kind and generous words at the beginning. She raises some important issues, and she will know that the issues in her constituency at the close of poll also affected the constituency of my right hon. Friend the Deputy Prime Minister, who has taken a close personal interest in the matter. Indeed, we discussed it when he and I met the chair of the Electoral Commission earlier this month. The hon. Lady can therefore rest assured that close attention will be paid to what we need to do as a result of the commission’s recommendations.
It is worth reminding hon. Members of the need to be clear about the role of the Government versus that of returning officers and the Electoral Commission, for a sensible reason. Clearly, the Government have no role in the administration of elections on the ground, which is what independent returning officers are for; we need to remember that there are good reasons for that. The Electoral Commission is also not responsible for running elections on the ground, but as the hon. Lady correctly says, it has a role in providing guidance for the people who run them.
It is worth setting out for clarity what the law says about the end of polling. The law is clear: ballot papers cannot be issued after the close of poll at 10 o’clock. Courts have considered the situation where people have turned up just before the deadline but were not able to cast their vote. It is clear that once someone has been issued with a ballot paper, they are allowed the time to cast it, even after 10 o’clock. After that time, no one should be issued with a ballot paper, even if they are inside the polling station. That is clear; the law has not changed. The guidance was also clear, and apart from a change in the close of poll from 9 pm to 10 pm, the law on when voting ends has not changed since 1949. It is therefore surprising that returning officers were not clear about what to do in those circumstances.
The Electoral Commission has issued an interim report on the matter, and one of its recommendations, which the Government are considering, is to look at whether the law should be changed so that electors in a queue before 10 o’clock should be issued with a ballot paper. That raises a range of issues regarding how the queue is managed and what resources will need to be put in place. There are constituencies, such as my own, where there could be nearly 90 polling stations, so clearly there are some issues with resources if we had to put in place provision for queue management at all the stations. There are a number of concerns, but the Government are considering them carefully, and we will decide whether to include the recommendations in our parliamentary reform Bill, which is scheduled for later this Session.
The hon. Lady mentioned the case of Woodseats library in her constituency. What happened in a range of situations in her constituency, that of my right hon. Friend the Deputy Prime Minister and elsewhere seemed to have been driven largely by poor planning. Returning officers either had too many voters in one polling district or did not staff the districts properly.
The hon. Lady highlighted an issue of the combination of polls for local and general elections, which seemed to take people by surprise, and where there was a underestimate of the turnout.
Mr John Leech (Manchester, Withington) (LD)
I welcome the Minister to his position on the Government Bench.
The Electoral Commission’s report highlighted one of the causes of the queues, which was that explanations had to be given to a number of people on why they were eligible to vote in the local elections but not in the general election. Early-day motion 1, which stands in my name, suggests a practical step to ensure that queues are kept to an absolute minimum on election day: we can make sure that a general election does not take place on the same day as another election. That would solve many of the problems related to the difficulty of explaining to people who do not realise that they can vote only in one election and not the other.
Mr Harper
The hon. Gentleman makes half a good point in that he puts his finger on what caused some of the delays, but allowing that to drive whether we have combined elections would be letting the tail wag the dog.
Returning officers would need to consider the problem of combined elections, which happen in many parts of the country perfectly successfully. In my constituency, the two previous general elections coincided with county council elections, and there were no problems. It is necessary for acting returning officers to think about these issues. They know from the register those areas where many voters might be entitled to vote in one set of elections but not the other—perhaps a general election but not local or European elections. It will be for them to consider whether there are many people with different franchises in their area, and to estimate how much time that will take and plan accordingly. The hon. Gentleman is right to say that not taking that into account led to some of the issues highlighted by the Electoral Commission. However, saying that we should not have two elections on the same day is not the solution.
Mr Leech
I thank the Minister for giving way a second time. The reality is that in Manchester, Withington the turnout was about 62%. That is still low by some standards, and significantly lower than in the Minister’s constituency. If for some reason the turnout had been as high as 70% or 80%, as it was in some constituencies, literally thousands of people would not have been able to vote. That cannot be allowed. One practical way to prevent it from happening again would be to ensure that the general election was held on its own, as a single election.
Dr William McCrea (in the Chair)
Interventions on the Minister must be short, if they are to be allowed.
Mr Harper
The Minister will try to ensure that his answer is shorter than the intervention.
The hon. Gentleman makes a good point; it should be heard not only by his returning officer but by returning officers across the country. However, most parts of the country have local elections almost every year. Another factor is that splitting up the two sets of elections would hugely increase the cost of holding them. As I said, the better solution is to ensure that returning officers think about such matters and plan accordingly, ensuring that they staff the elections properly and have properly sized polling districts. Those are all matters within their control. That is a more sensible solution.
Justin Tomlinson
On the specific point about evenly sized polling stations, we must also take account of the demographics of polling stations. In my constituency of North Swindon, the problems occurred in areas where there were predominantly younger families and working professionals, who voted in particularly high concentrations between 5 pm and 10 pm.
Mr Harper
My hon. Friend makes a good point. He spoke earlier about internet and phone voting. I am familiar with some of the e-voting processes that took place in Swindon. We shall consider the evidence, to discover the extent to which they drove up turnout.
I pick up on the other points made by the hon. Lady. She highlighted the problem of jointly nominated candidates not being able to use their emblem. That affected my party in Northern Ireland, where we had candidates standing jointly for the Conservatives and the Ulster Unionists, and the hon. Lady and other Labour and Co-operative colleagues. We are considering that; it should be relatively straightforward to correct the problem, and we are looking for an opportunity to do so. That point was drawn to our attention after the election.
Before concluding, I shall touch briefly on a couple of other issues mentioned today. My hon. Friend the Member for Brigg and Goole (Andrew Percy) spoke about polling cards. He is right that they should be issued in good time, and returning officers should ensure that that happens. In most cases they do so, but in the case that my hon. Friend highlights that obviously did not happen. Constituents were therefore not adequately warned about some of the key dates in the process. Again, that will be a learning curve for those returning officers.
I was asked about venues, a problem for a number of candidates. The choice of venue is a matter for the local authority and the returning officer. They need to consider the nature of the area, its demographics and the likely voting patterns, and to choose venues that are accessible and able to cope with the throughput of voters. If they need to create extra polling places in those areas because of the size of the ward or polling district, they are empowered to do so. It is also worth saying that for general elections, it is not a problem for local authority funding because the properly incurred and documented costs of a general election are funded from the centre—from central Government—so there is no excuse for returning officers to have any concern about such funding if things are done properly.
Returning to the issue with which we began, which both the hon. Lady and my hon. Friend have mentioned, there clearly were problems, and if nobody is able to cast their vote that should be taken very seriously. It is, however, worth putting that in context. There were problems at 27 polling stations out of 40,000, and the Electoral Commission has estimated that about 1,200 voters out of 29.6 million were affected. Although we take the issue of electors being unable to vote very seriously, given that most of the 40,000 polling stations worked well, we perhaps need to consider solutions for those stations where there were problems and, as my hon. Friend said, for areas where there might well have been problems if circumstances had been different, but without making a wholesale change.
The hon. Lady made a number of wider points about individual voter registration and the extent to which electoral registration officers are getting voters who are entitled to vote on the register. The hon. Lady knows that the coalition Government have made a commitment to speed up individual voter registration and, as my right hon. Friend the Deputy Prime Minister set out in the Chamber in his speech on the Loyal Address, we want to ensure not just that the register is accurate and that no one is on it who should not be, but that electoral registration officers do a better job of getting people who are entitled to vote on the register, so that they have the opportunity, come polling day, to cast their vote.
Meg Munn
In that context, I wonder whether the Government would also look at when the registers are compiled. There usually is a considerable time lapse between when they are compiled and when elections take place. They are also compiled at a time when the nights are getting darker and people might not want to answer the door.
Mr Harper
In considering individual voter registration and our commitment to speeding that up, Ministers are looking at exactly some of those issues: how the registers are complied; the other data sources to which local authorities have access to check accuracy; the extent to which rolling registration is used; and how the annual canvass is used. They are looking at all the options, to see which is the most effective way of ensuring that registers are both accurate and as complete as possible. That work is under way.
George Hollingbery (Meon Valley) (Con)
Does the Minister agree that there is also a case for ensuring that the data are stored in the same way by different councils? From our experience of compiling registers for mailings on three different district councils, councils very often store data in completely different ways, which make them astonishingly difficult to use effectively.
Mr Harper
My hon. Friend makes a good point, but at the moment the election registration process is very localised and that has a lot of strengths, but also a number of weaknesses. I am somewhat reluctant to suggest that an all-singing national database is the right answer, since Governments of both parties are historically not terribly successful at implementing them. He is quite right, however, that we should look at how the data are stored. Another issue is ensuring that when voters move around the country, between registration areas, the data move with them. There are many issues there, which Ministers are considering.
The hon. Lady also made some wider points about the timing of voting and options for advance voting. Ministers are looking at those matters. The hon. Lady will know that the Government have set out a comprehensive programme of political and constitutional reform, of which electoral administration and the delivery of elections are part. Ministers are considering all those issues as part of our commitment in this area. At this stage, I cannot make any particular commitments. I have listened very carefully to what she and other Members have said, particularly as the events of the last general election are still fresh in our minds. Ministers will have further meetings and receive further advice from the Electoral Commission as we consider how to take matters forward. I am grateful to the hon. Lady for securing this debate; it has been very helpful for the House to consider these matters.
Question put and agreed to.