House of Commons
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Oral Answers to Questions
(14 years, 5 months ago)
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Philip Davies (Shipley) (Con)
1. For what reasons he has ended the Building Schools for the Future programme for Ilkley and Bingley grammar schools.
The Secretary of State for Education (Michael Gove)
As I set out in my statement last week, the Building Schools for the Future programme has been over-bureaucratic and inefficient. I therefore decided that where financial close had not been reached, future projects provided under BSF could not go ahead. Ilkley and Bingley grammar school projects have not reached financial close, and BSF plans for those two schools have therefore stopped. However, we will continue to invest in schools capital projects.
Philip Davies (Shipley) (Con)
In the catchment areas for both Ilkley and Bingley grammar schools, there has been excessive house building, so there is no longer sufficient capacity on their existing sites to meet local demand. Can my right hon. Friend ensure that those schools that need new build to increase capacity to meet local demand will still receive capital expenditure?
Michael Gove
I very much take the point made by my hon. Friend. One of the defects of the BSF scheme was that, in many parts of the country where there was real need as a result of a growing population, the money was not there to provide new school places. As a result of our capital review, we will ensure that where there is additional population pressure and additional basic need, particularly in primary schools, which BSF did not cover, we will provide the support that is necessary. I look forward to working with my hon. Friend to help the parents and teachers in those two great schools.
Ed Balls (Morley and Outwood) (Lab/Co-op)
For parents, children and teachers in Ilkley and Bingley, the initial shock of learning that their new school building has been cancelled will have turned to outrage at the seemingly arbitrary and chaotic way in which the Secretary of State has made and announced his decisions. The right hon. Gentleman must now know that there is widespread anger in all parts of the House. Following weekend reports that he was advised by his officials not to publish a list of schools at all, I wrote to him yesterday to request answers in advance of today’s oral questions. I have received a reply that does not answer any of my questions: it merely attaches a new list—list No. 5—containing 20 additional cancelled schools compared with a week ago.
I shall ask the right hon. Gentleman for a straight answer to a specific question. Did he at any point receive written or oral advice from departmental officials or Partnerships for Schools urging him not to publish a list of schools until after he had consulted local authorities, to make sure that his criteria were sound and his facts were right?
Michael Gove
The right hon. Gentleman says that there was anger across the House. There was—at the way in which the BSF project had been run by the right hon. Gentleman. There was justifiable anger at the way in which a project that was originally supposed to cost £45 billion ended up costing £55 billion, and it was shared by those who were shocked that under the previous Government, one individual received £1.35 million in consultancy fees—money that should have gone to the front line. From the moment that I took office, everyone involved in this process said to me, “Make sure that you ensure that this faltering and failing project ends.” That is what I have done. I inherited a mess from the right hon. Gentleman, and we are clearing it up.
Mr Speaker
Order. Both the Secretary of State and the shadow Secretary of State have had their say, and I know that we will now want to return to Ilkley and Bingley.
Ed Balls
The right hon. Gentleman cannot give a straight answer to a straight question. The people of Bingley and Ilkley will not be satisfied by that answer, and nor are we. Interestingly, his letter today says very clearly that his fifth list has been validated by local authorities—presumably a clear admission that the information should have been validated before the list was published in the first place, including by Bradford authority, in which the schools of Bingley and Ilkley are situated.
Let me ask the right hon. Gentleman another straight question. Is it not the case that he was advised of the risk of legal challenge from private contractors, but that he personally decided to ignore that advice and take that risk with taxpayers’ money? That is a very simple question. We all know that he is on shaky ground, and that he is fast losing the confidence of pupils, parents and teachers. If he had any sense, he would end this shambles, withdraw these error-strewn lists, and let our communities have new schools.
Michael Gove
I am grateful to the right hon. Gentleman for once again stretching so far the geographical definition of Bingley and Ilkley. Let me point out that under him the cost of setting up the procurement vehicle for Building Schools for the Future was £10 million, before a single brick was laid. The taxpayers of Bingley and Ilkley have re-elected a Conservative MP because they are disgusted with the waste and squander of the right hon. Gentleman. There is a dividing line between this side of the House and that side of the House: when mistakes are made, we apologise and we take responsibility. The right hon. Gentleman has never apologised for a single mistake in his life; that is why he is on that side of the House and we are on this side of the House clearing up his mess.
Mr Speaker
Order. I want to help the House. I appreciate the enormous interest in the subject of BSF in Ilkley and Bingley—conceivably also elsewhere—and there will be opportunities, if Members look, to raise these matters later.
Julian Smith (Skipton and Ripon) (Con)
3. How many expressions of interest in academy status have been received from schools in (a) Skipton and Ripon constituency and (b) North Yorkshire.
The Minister of State, Department for Education (Mr Nick Gibb)
So far five expressions of interest in academy status have been received from schools in Skipton and Ripon. Fifteen expressions of interest have been received from schools in North Yorkshire.
Julian Smith
Does the Minister agree that schools with foundation trust status should be given credit for the work they have already done in moving along the path to independence, and can their path to academy status therefore be made slightly easier?
Mr Gibb
May I welcome my hon. Friend to the House and congratulate him on his election? I understand his point. Trust status was a useful form of independence, which is why it surprises me that Labour Members are so critical of our moves to boost the academies programme and to give more schools the independence and the trust in professionals that is inherent in the trust school system. Our concern about the trust school basis is that it did not give sufficient freedoms to schools; we want to ensure that schools have those extra freedoms.
Mr Speaker
Order. May I gently say to Members that Stoke-on-Trent and Chesterfield are a considerable distance from Skipton and Ripon and, more widely, North Yorkshire? This is what we call a closed question, I am afraid.
Esther McVey (Wirral West) (Con)
4. What steps his Department is taking through the education system to assist children from poor families.
The Minister of State, Department for Education (Sarah Teather)
We have made a clear commitment to narrowing attainment gaps between children from disadvantaged backgrounds and their peers through our recently announced pupil premium. This will help us to give more support to the children who are most disadvantaged and who need it most, and to their schools. We will announce more details of our proposals in due course.
Esther McVey
I would like to push the Secretary of State for greater details on the pupil premium and on where the extra funds will be allocated.
Sarah Teather
I thank my hon. Friend for promoting me, but it is a little premature.
We will be announcing more information about the pupil premium in due course. However, to quote the Prime Minister, it will involve a “substantial” extra sum from outside the education budget. We are determined, in particular, to tackle the pockets of deprivation that have not been dealt with by other forms of deprivation funding, ensuring that the funding follows the students and that schools then have the freedom to decide how best to spend the money.
Mr Tom Watson (West Bromwich East) (Lab)
Sandwell is home to some of the poorest families in the country. Last week, officials confirmed that school cuts in the borough were made because the outline business case for their wave 5 bid was not signed off until after 1 January. Can the Minister confirm that no school that retained funding missed that deadline? Does she think that the criteria used for the funding is fair given that children in Labour-controlled Sandwell lose £140 million of support while those in the neighbouring borough, Conservative Wolverhampton, gain £360 million?
Sarah Teather
I appreciate the particular difficulties with Sandwell. However, I remind the hon. Gentleman that BSF was set up by his Government, and it is because of the slowness and inefficiency of BSF that schools in Sandwell were so late in getting anything from the bid at all.
Mr Graham Stuart (Beverley and Holderness) (Con)
Children from poorer areas of Hull have rightly had additional funds come to their local authority to help with their education. However, when those children travelled across the border to be educated in East Riding, the money that was given to support their education in Hull did not follow them. Ministers in the previous Administration, despite repeated representations, refused to make that change. Will the pupil premium follow the child wherever they go to school?
Sarah Teather
The hon. Gentleman makes a very good point. It is precisely for that reason that we need a funding system that follows the student and reflects their individual needs. We see widely varying levels of deprivation funding from one area to another.
Helen Jones (Warrington North) (Lab)
Does the hon. Lady believe that cancelling new schools in the most deprived areas of my constituency will assist poor children with their education? Did she have any discussions with Warrington borough council about deprivation in the borough before cancelling those building projects?
Sarah Teather
Simply because some projects under BSF have been cancelled does not mean that schools will not be rebuilt or renovated in the future. That is precisely the reason why the capital review is happening—to ensure that we have enough money to rebuild and renovate schools in the future. Unfortunately, BSF is such an inefficient way of doing that that there would not have been any money left.
Laura Sandys (South Thanet) (Con)
5. What progress has been made on the Munro review of child protection; and if he will make a statement.
The Parliamentary Under-Secretary of State for Education (Tim Loughton)
Professor Munro’s review, which was launched on 10 June, appointed a top-level reference group to advise her. It met for the first time on 6 July. Professor Munro has issued a call for evidence with a 30 July deadline. We have asked her to report in three stages, the final report being in April 2011. The review has come about because the system of child protection in our country is still not working as it should be, despite the immense dedication and hard work of front-line professionals.
Laura Sandys
Does the Secretary of State agree with me and many children’s charities that out-of-area placements for children taken into care should be considered only in extreme circumstances?
Tim Loughton
I, too, am grateful for the promotion.
I know that my hon. Friend has already established her credentials in this matter. She will be pleased to know that as part of the care planning guidance that came out of the Children and Young Persons Act 2008, which we supported, a new sufficiency duty will come into effect from next April, which should lead to a significant drop in the number of children placed far away from their original homes. I know that that is a particular problem in her constituency, as it is in mine and those of other hon. Members with seaside constituencies in particular.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Would the Minister be concerned if, as a result of the review of the role of the Children’s Commissioner that I understand has been announced, more children who are in care because of abuse were put at risk because no one was there to stand up for their interests? Will he confirm that there will be no dismantling of the office of the Children’s Commissioner prior to the completion of the review that he has referred to and the implementation of its recommendations?
Tim Loughton
The hon. Lady makes a point about the review of the role of the Children’s Commissioner and her office, which is quite separate from the Eileen Munro review. I share her concerns about the rights of children in care, and she will be aware that the children’s rights director has a direct role in that matter, which he has carried out with enormous respect over recent years, ensuring that the concerns and voices of children in care are heard loud and clear.
Mary Creagh (Wakefield) (Lab)
6. Pursuant to the written ministerial statement of 5 July 2010, Official Report, columns 1-2WS, on public spending control, how much of the £1 billion of reductions in his Department’s expenditure in 2010-11 will take effect in (a) Wakefield constituency and (b) West Yorkshire.
The Secretary of State for Education (Michael Gove)
The budgets that will be affected were published on the Department’s website on Monday 5 July. We will shortly write to all local authorities setting out the impact on their allocations.
Mary Creagh
I thank the right hon. Gentleman for that reply, but the promises of rebuilding and repairing schools ring a little hollow in the light of the £1 billion cut to the schools capital programme that he is making in-year. Given that almost a third of the financial year has passed and he has not yet written to Wakefield or any other West Yorkshire authority with the details of how much will be cut from their reparation programmes, is his cut not in effect more like £1.3 billion or £1.5 billion, as the cuts will have to be made in-year?
Michael Gove
I am grateful to the hon. Lady for her question, but I refer her to a letter from the permanent secretary of my Department to the right hon. Member for Morley and Outwood (Ed Balls). He pointed out last week that, last year, the Treasury wrote to clarify its expectations of the use of end-year flexibility capital. The Treasury wanted to limit its use, but the Department refused to acknowledge it. The Treasury said clearly to the right hon. Gentleman that he was playing fast and loose with that capital stream. The issue had not been resolved by the time of the election, and instead of the dysfunctional relationship between the right hon. Gentleman and the Treasury, we now have a proper relationship involving a coalition Government who are clearing up the mess that we inherited from the hon. Lady’s Government.
Mr Iain Wright (Hartlepool) (Lab)
Why was not a single word about that further £1 billion cut in education mentioned in the Secretary of State’s oral statement to the House last week? Will he confirm that the additional cuts in education, at the expense of hundreds of thousands of pupils in Wakefield, West Yorkshire and elsewhere, are being made so that he can open free market schools for the benefit of mere hundreds of pupils?
Michael Gove
I am grateful to the hon. Gentleman, but he made two mistakes in his question. First, in my statement to the House last week, I explicitly mentioned that the right hon. Member for Morley and Outwood had abused end-year flexibility. That is why he was kind enough to write to me, and why the permanent secretary was kind enough to write to put the record straight and to explain that the Treasury was in dispute with the right hon. Gentleman—not for the first, nor, I suspect, the last time. The hon. Gentleman’s other mistake is over the fact that the reduction in the—to my mind—unwarranted exploitation of end-year flexibility has been to restore sanity to the public finances after the mess that the right hon. Gentleman created. The capital allocation for our free schools is just £50 million, and it comes from a lower priority set of IT programmes. The permanent secretary makes it clear in his letter that the previous Government left us in a mess, which we are trying to resolve.
Amber Rudd (Hastings and Rye) (Con)
7. What assessment he has made of the educational achievement of pupils in receipt of free school meals in (a) Hastings and (b) England.
The Minister of State, Department for Education (Sarah Teather)
Information is published on an annual basis on the performance of all pupils, including those eligible for free school meals, and it can be accessed on the Department’s website. We have made a clear commitment to narrowing attainment gaps between children from disadvantaged backgrounds and their peers through the pupil premium. We will announce more details of our proposals in due course.
Amber Rudd
I thank the Minister for that answer. Will she confirm that the children who are eligible for free school meals will qualify for the pupil premium? Those who have high numbers of children on free school meals in our constituencies, as I do in Hastings, are looking forward to having that advantage to help our children do well.
Sarah Teather
We are looking at the best measure to ensure that we can target extra money at students. It is a question of ensuring that we have a system that is attached to the child, the child’s background and the particular school. We will be able to say more about that shortly. However, we are clear that extra money will follow the student.
Emma Reynolds (Wolverhampton North East) (Lab)
Thanks to the previous Labour Government, a further 8,000 pupils in Wolverhampton now benefit from free school meals. As somebody who benefited from free school meals, I know that there is a link between nutrition and the ability of pupils from lower income families to do better at school. Does the Minister acknowledge that link, and will she extend the pilot scheme in Wolverhampton and roll it out throughout the country?
Sarah Teather
I recognise the link, and I agree with the hon. Lady. However, we are in difficult financial circumstances and unfortunately we were unable to extend free school meals simply because it was an unfunded pledge. However, I recognise the hon. Lady’s point, which was well made.
Chris Skidmore (Kingswood) (Con)
After 13 years of the previous Government, only 75 free school meals pupils gained three As at A-level. That is a disgrace. What do the Government propose to do about it?
Sarah Teather
I agree with my hon. Friend that it is a scandal that, after 13 years of a Labour Government, the greatest predictor of achievement at school is still parents’ income. That is precisely why the coalition is so committed to introducing a pupil premium and investing in early years. It is also why the Prime Minister appointed the right hon. Member for Birkenhead (Mr Field) to conduct a review of life chances.
Diana R. Johnson (Kingston upon Hull North) (Lab)
The publication last week of figures showing, contrary to claims by the Health Secretary, the biggest increase in the take-up of school meals, proves that Labour’s policy on school food worked. The work of people such as Jamie Oliver was also successful. Does the Minister wish to reconsider the coalition’s reversal of those successful policies, as the Government let the junk food industry call the tune and snatch free healthy school meals from the poorest half million children in England?
Sarah Teather
I think that Jamie Oliver did the nation a great service in raising the issue of standards in school food, but the next stage is for the Government to take forward, particularly on take-up. I was pleased that take-up of school meals has increased, but there is a lot more work to do.
Margot James (Stourbridge) (Con)
8. What his most recent assessment is of the level of discipline in schools.
The Minister of State, Department for Education (Mr Nick Gibb)
The latest Ofsted reports tell us that in 95% of primary schools and 80% of secondary schools inspected in 2008-09 pupils’ behaviour was good or outstanding, but that means that behaviour in one out of five secondary schools is still no better than satisfactory. To address this, I announced to the House on 7 July a series of measures that will give head teachers and teachers the powers they need to ensure discipline in the classroom and to promote good behaviour.
Margot James
I thank my hon. Friend for his answer. Two teachers from a primary school came to my surgery in despair over school discipline. They and others have advised me that schools are deterred from excluding pupils because they believe that doing so would have a negative impact on their Ofsted score and budgets. Does he agree that discipline and a head teacher’s ability to exclude pupils is being undermined by that and other aspects of schools policy that prevailed under the previous Government?
Mr Gibb
I thank my hon. Friend for that question. I welcome her to the House and congratulate her on her election. She is right: head teacher authority must be absolute in the classroom and we will remove deterrents that may prevent schools from properly exercising their powers to exclude pupils. The vast majority of head teachers intervene early to prevent exclusions becoming necessary, but when they are necessary we need to be sure that any deterrent is removed.
Mr Marcus Jones (Nuneaton) (Con)
9. How many expressions of interest in academy status his Department has received from schools in (a) Nuneaton constituency, (b) Warwickshire and (c) England.
The Secretary of State for Education (Michael Gove)
So far, 15 expressions of interest have been received from schools in Warwickshire, including one from an outstanding school in Nuneaton. A total of 1,836 expressions of interest have been received from schools in England.
Mr Jones
I thank my right hon. Friend for his reply. Several schools in my constituency may wish to become academies. However, after 13 years of the previous Government, they are carrying a tremendous amount of debt, which seems to prevent them from doing so. Will he consider what he can do to make it easier for such schools to become academies?
Michael Gove
I sympathise with my hon. Friend, who was so handsomely elected at the last general election—a fact that reflects how angry people in Nuneaton and across Warwickshire were at the scandalous way in which education was underfunded and managed by the previous Government. Let me assure him that I look forward to working with him and the local authority to ensure that the many outstanding schools and teachers in Warwickshire have the chance to enjoy the benefits of academies.
Vernon Coaker (Gedling) (Lab)
We know that the Secretary of State has had one or two problems with lists of schools in recent days. Is he aware that he has listed a number of schools almost as if they have applied to become academies, when all they have done is request information from his Department? Is he also aware of the comments of people such as Mark Lacey, head teacher of Parson Street primary in Bedminster, who said:
“We responded out of a desire to receive the information in order to keep up with what is happening—not because we want to become an Academy”?
Is that not another inaccurate list that the Secretary of State should now withdraw, just like the inaccurate remark he made earlier? As he will know, the letter from the permanent secretary actually corrected his mistakes, not the mistakes of my right hon. Friend the Member for Morley and Outwood (Ed Balls).
Michael Gove
I am grateful for that “two for the price of one” question from the shadow Minister. The letter from the permanent secretary actually did correct the errors of the right hon. Member for Morley and Outwood. On the question of lists, as I said in my earlier answer, there were 1,836 expressions of interest. As the hon. Gentleman should know, being a former teacher, it is vitally important for people to listen in class before they put their hands up.
Charlotte Leslie (Bristol North West) (Con)
10. What assessment he has made of the effectiveness of local education partnerships; and if he will make a statement.
The Secretary of State for Education (Michael Gove)
As I set out in my statement to the House last week, local education partnerships are part of an over-bureaucratic and inefficient procurement model. The capital review that I announced last week will consider alternatives to ensure that, at last, capital spending achieves value for money, raises standards, and actually helps the most disadvantaged.
Charlotte Leslie
I have raised concerns about the local education partnership in my constituency in relation to the project with Elmlea school. Essentially, money has been snatched from children and schools to line the pockets of contractors and consultants. I am sure that Opposition Members will share my concern about that. Will my right hon. Friend promise to stop this terrible reverse Robin Hood approach to public spending?
Michael Gove
I could not agree more with my hon. Friend. There is a dividing line between this side of the House and that one. As far as the Opposition are concerned, a Building Schools for the Future programme that enriches consultants and ensures that one man can earn £1.35 million is defensible, whereas we believe that that money should be going to the front line to ensure that the most dilapidated schools are repaired as quickly as possible. It is the contrast between a Government who wasted money like there was no tomorrow and a Government here at last who are building a better tomorrow for all our children.
Fiona Mactaggart (Slough) (Lab)
In that capital spending programme, will money be reserved for areas such as Slough, which has a rapidly growing school population and insufficient secondary school places to educate the children?
Michael Gove
I sympathise with the hon. Lady and she is right. One of the reasons why we had to halt the Building Schools for the Future programme was that far too much money was being wasted inefficiently on secondary schools when that money is needed to ensure that children who arrive at primary school in Slough, the south-east and across the country receive the classrooms that they need. Our first priority is ensuring that every child who needs it has a good school place, instead of ensuring that money goes to consultants, architects and the others in receipt of the cash that was being funnelled to them by the right hon. Member for Morley and Outwood (Ed Balls).
Mr John Redwood (Wokingham) (Con)
Does the Secretary of State accept that many of us, and many people outside, would love these quangos that cannot count and cannot provide accurate lists to be abolished, saving the money on salaries to spend on bricks and mortar?
Michael Gove
My right hon. Friend, as ever, is a redoubtable scourge of waste, and it is always a pleasure to hear him as he turns his eye to yet another non-departmental public body.
Ed Balls (Morley and Outwood) (Lab/Co-op)
The letter from the Secretary of State, which was published at 2.35—the fifth list—refers to local education partnerships. It will be no surprise to the House to learn that already, within 25 minutes, the first mistake in this list has been found. The right hon. Gentleman referred earlier to past mistakes and the SATS fiasco. In that case, there was an independent inquiry. If he would like to establish an independent inquiry now into the BSF shambles, he would not find it easy to repeat his failure to answer questions in this House. Is not the truth that he should withdraw this list, apologise to local education partnerships and stop treating children and this House with such total contempt?
Michael Gove
I am grateful once more to the right hon. Gentleman for his question. I would welcome an inquiry into just what went wrong with Building Schools for the Future and Partnerships for Schools under the previous Government. The Chairman of the Public Accounts Committee pointed out in February 2009 that the estimates of progress for which the right hon. Gentleman’s Government were responsible were fanciful, but steps were not taken to ensure that we were moving in the right direction. The list that we have issued today is one that has been verified by Partnerships for Schools and by the Department for Education. The most important thing that we need to ensure is that the waste that characterised the previous Government does not characterise this one. That is why we have taken steps to ensure that in future the public money that should be going to the front line is protected. The mess that the right hon. Gentleman and his team created is being cleared up by this Government—these two parties—who are at last acting in the public interest.
Tracey Crouch (Chatham and Aylesford) (Con)
11. How many expressions of interest in academy status his Department has received from schools in the Kent and Medway local authority area.
The Minister of State, Department for Education (Mr Nick Gibb)
Ninety-five expressions of interest in academy status have been received from schools in Kent, and nine expressions of interest have been received from schools in Medway.
Tracey Crouch
I thank the Minister for his reply, and I am sure that he will be reassured to hear that many of the head teachers I have spoken to are genuinely very enthusiastic about the programme. The Minister will be aware that many of the schools in Kent and Medway that have expressed an interest are grammar schools. Can he assure the House that if they were to become academies they would retain their selective status?
Damian Hinds (East Hampshire) (Con)
12. What steps he is taking to reform early-years provision.
The Minister of State, Department for Education (Sarah Teather)
Last week, the Government asked Dame Clare Tickell, chief executive of Action for Children, to carry out an independent review of the early years foundation stage to consider how the framework could be less bureaucratic and more focused on young children’s learning and development. The review will formally start in September this year, and will report in spring 2011. It is our intention to undertake a full consultation before any changes are implemented. A statement has been placed in the House outlining further details of the scope of the review.
Damian Hinds
We all want to see the very highest standards promoted in pre-schooling, but does the Minister agree that the over-prescriptive, box-ticking approach favoured by the previous Government is likely only to stifle the sector and reduce parental choice?
Sarah Teather
Indeed. This is a question of building on some of the good things about the foundation stage, but ensuring that we can reduce the burden on the sector, and particularly on the smaller providers. In fact, I was in a nursery school in Brent on Friday, and the head teacher said to me that she was grateful that we had begun a review of the foundation stage, because although there were many good things about it, the assessment is bureaucratic and she was hoping for something rather better.
Mr Gerry Sutcliffe (Bradford South) (Lab)
Can the Minister explain why my constituents in Bradford should trust what this coalition Government say on education? We have lost Building Schools for the Future and the free school meals pilot, and we have an education authority that needs to be developed because of the failure of the private sector. Can the Minister tell us that Sure Start in particular will remain a key part of early years provision?
Sarah Teather
The current review of the foundation stage is independent, and we have asked Dame Clare Tickell—who I am sure would command respect right across the House—to conduct it.
Guy Opperman (Hexham) (Con)
13. What recent representations he has received on funding for schools in Hexham constituency; and if he will make a statement.
The Parliamentary Under-Secretary of State for Education (Tim Loughton)
We have received just one representation on the subject of school funding from a school in Hexham. We will bring forward our proposals for school funding in due course.
Guy Opperman
Schools in the Hexham constituency in rural Northumberland all complain of a funding shortfall that was dramatic under the previous Government. What assurances will the Minister give me and the teachers in that particular school that this imbalance will be changed?
Tim Loughton
I am only too well aware of many of the discrepancies in the system that prevailed for far too many years under the previous Government. I am aware that Hexham middle school in my hon. Friend’s constituency has raised concerns about problems in tackling rural deprivation and sparsity of population that have not been dealt with in the past. That is one area that we will be looking at, and the pupil premium will be a priority in ensuring that we recognise deprivation and have effective measures to deal with it.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
14. What steps he is taking to ensure availability of continuing professional development for teachers.
The Parliamentary Under-Secretary of State for Education (Tim Loughton)
I am sorry, Mr Speaker—[Interruption.]
Mr Speaker
Order. I do not need to be advised by the Government Whip on the Front Bench. The hon. Member for Rochford and Southend East (James Duddridge) should remain quiet. We are on Question 14 and we have a Minister at the Box; I require no advice from the hon. Gentleman whatever.
Tim Loughton
Thank you, Mr Speaker. I was expecting some interest in Hexham from the Opposition, but clearly there is none.
I agree with the hon. Member for Huddersfield (Mr Sheerman) that the quality of teachers and professional development is important. International evidence shows that teachers learn from observing good teachers, and this happens best in schools. That is why the Government are committed to encouraging schools to demonstrate a strong culture of continuing professional development, with teachers leading their own development and that of others, and sharing effective practice within and between schools. That is why we are currently reviewing our policies and existing activities to ensure that they focus on that vision.
Mr Sheerman
Is the hon. Gentleman aware that teachers are finding it much more difficult to get out of the classroom to go to good CPD sessions, particularly in places such as the science learning centres in York and elsewhere, because of the way in which the “rarely cover” provision is being interpreted as part of the work force agreement? Not only is CPD suffering; so are kids’ visits to out-of-school facilities.
Tim Loughton
The hon. Gentleman makes a good point. I am aware of the limiting factors of “rarely cover”, which is an area that we will look at in our assessment of the problems facing teachers in getting continuing professional development. Having to pay supply teachers can be an obstacle to getting CPD, which is why this Government want to free up school pay and conditions and give greater powers back to heads to ensure that they can devise the best methods for ensuring that their teachers get the best continuous professional development and training.
Stephen Gilbert (St Austell and Newquay) (LD)
15. What assessment he has made of the educational achievement of pupils in receipt of free school meals in St Austell and Newquay constituency.
The Minister of State, Department for Education (Sarah Teather)
Information is published on an annual basis on the performance of all pupils, including those eligible for free school meals, and these can be accessed on the Department’s website. We have made a clear commitment to narrowing attainment gaps between children from disadvantaged backgrounds and their peers through the pupil premium, and we will announce more details on these proposals in due course.
Stephen Gilbert
Children across the country who are in receipt of free school meals are only half as likely as their peers to get good GCSE results. Does the Minister agree with me that only the pupil premium proposed by this Government will address the educational inequality left by the previous Government?
Sarah Teather
I absolutely agree. The scandal of educational inequality left by the previous Government is testament to their legacy, and I am very sad that they have not been willing to support the pupil premium. I hope that, with their change of leader, they will consider a U-turn on this policy.
Mr Speaker
Order. It is always a pleasure to hear the hon. Lady, but I must observe in passing that Hampstead and Kilburn are some considerable distance from St Austell and Newquay.
Hywel Williams (Arfon) (PC)
16. What recent discussions he has had with Welsh Assembly Government Ministers on teachers’ pay in Wales.
The Secretary of State for Education (Michael Gove)
I met the Minister for Children, Education and Lifelong Learning in the Welsh Executive, Mr Leighton Andrews, on 28 June, as part of a schedule of meetings since taking up my post. I look forward to having an ongoing discussion with him and his colleagues on this and other important issues.
Hywel Williams
I thank the Secretary of State for that answer. What consideration is he giving to introducing regional variation in teachers’ pay outside London?
Michael Gove
As I am sure the hon. Gentleman knows, teachers’ pay and conditions are set by the School Teachers Review Body, which governs England and Wales. I will have ongoing discussions with the Welsh Assembly Government, and it is important that we ensure that teachers have certainty in the future. It is my understanding that the current arrangements are working in the interests of teaching unions and teachers across England and Wales, but I would be very happy to receive any representations from the hon. Gentleman to ensure that the recruitment and retention of teachers in his constituency—in a very beautiful part of north-west Wales—are made as easy as possible.
Barry Gardiner (Brent North) (Lab)
17. What recent representations he has received on the provisions of the Academies Bill; and if he will make a statement.
The Secretary of State for Education (Michael Gove)
Many schools have told us that they welcome the opportunity to acquire academy freedoms through our Bill. Officials and Ministers have had positive meetings so far with teaching unions, the Special Education Consortium, the Church of England and the Catholic Education Service. Alongside these representations, we have also had approaches from individual peers and MPs, which have been dealt with through correspondence and meetings with Ministers.
Barry Gardiner
Why does the Secretary of State continue to call these schools academies? Under the old system, academies were a means of getting extra money from outside the system to children from poor and disadvantaged backgrounds who were not doing well. Under the new system, academies are taking money from within the system away from poor and disadvantaged children and giving it to schools that are already doing very well. Why does he continue to call them academies?
Michael Gove
I know that the hon. Gentleman served with distinction as a Minister in Tony Blair’s Government, and was then defenestrated when the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) took over. He should be aware that Tony Blair made it clear, when he was Prime Minister, that academy freedoms should be extended to all schools. In that respect, we are simply carrying on the good work that was begun under the Prime Minister who was wise enough to have the hon. Gentleman on his Front Bench, rather than following the disastrous course that was taken by Gordon Brown and the right hon. Member for Morley and Outwood (Ed Balls).
Dr John Pugh (Southport) (LD)
I have here a press cutting in which a local head teacher in my constituency complains about his school appearing on the Department’s database as “interested in academy status”, when all that he had actually done was to ask for details of a sketchy scheme. He now says that the chances of his school wanting academy status are minimal and that people are “playing politics” with this. How could such things happen? Could it be that the demand for academy status is being overstated? Also, will the Secretary of State correct the database?
Mr Speaker
Order. One question will probably suffice; one answer certainly will.
Michael Gove
I have consistently made it clear that all those who have expressed interest have only ever expressed interest. I am delighted that so many have done so, but as I am sure my hon. Friend knows, our legislation is permissive, and it will be for schools to decide, rather than Ministers or bureaucrats. That will be a welcome change from the dirigiste methods that so scarred education under the right hon. Member for Morley and Outwood.
Lilian Greenwood (Nottingham South) (Lab)
18. What plans he has for support for children with special educational needs.
The Minister of State, Department for Education (Sarah Teather)
I will launch a Green Paper in the autumn to look at a wide range of issues for children with special educational needs and disabilities. Before then I will be looking at the results of the Ofsted review of special educational needs expected later this summer, along with the many other reviews of policy in recent years. I will also be listening to the views of parents, teachers and organisations with an interest in this area.
Lilian Greenwood
Does the Minister agree that children in Nottinghamshire with the most profound special needs deserve to be taught in first-class facilities? Is it not therefore fortunate that the previous Government were committed to investing in their education and that they built the wonderful new Oak Field school under Building Schools for the Future?
Sarah Teather
As I said in an earlier answer, simply because some projects have been stopped under Building Schools for the Future does not mean that schools will not be rebuilt or renovated in the future. This Government are absolutely committed to renovating school buildings, which is why we have had to have a review of capital—to ensure that there is still money for children to be able to learn in decent facilities.
Patrick Mercer (Newark) (Con)
This morning, I met all the head teachers in my constituency, the most vocal of whom was the head teacher of the Orchard special educational needs school. When it rains heavily, the children in this school have to stop being taught in order to hold buckets under the leaking roof. I ask the Secretary of State, or one of his Ministers, to visit the Orchard school and others in my constituency to find out exactly what the situation is.
Christopher Pincher (Tamworth) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Education (Michael Gove)
As I pointed out earlier, because of the dysfunctional system we inherited, it has been difficult to establish the absolute truth about the number of schools affected by the rules-based announcement I made last week. Today, an hour and a half before the House met for questions, I distributed to the right hon. Member for Morley and Outwood (Ed Balls) and others the latest updated list of the schools affected. This list has been verified by Building Schools for the Future and by my Department, which has contacted every local authority affected. I am looking forward to hearing from the individual local authorities in due course.
May I also take the opportunity to correct the record on one further matter? In last week’s statement, I referred to six schools built under BSF that had suffered from design or construction flaws. On Thursday evening, I was told that three of the schools I mentioned—Carr Manor, Lawnswood and Primrose high—were, in fact, built under a predecessor private finance initiative scheme that sought to renovate the school estate in Leeds. Some of the renovation was financed through BSF; the schools themselves were not procured through BSF, but instead through that predecessor programme. The other schools I referred to in last week’s statement were procured through BSF.
We have also issued a written ministerial statement today, pointing out that we are going to review the Office of the Children’s Commissioner. As I am sure the whole House will appreciate, this is very much a season for ensuring that we get value for money from our quangos.
Christopher Pincher
Will my right hon. Friend confirm that fewer than 100 schools have been rebuilt under Building Schools for the Future, none of which, incidentally, are in Tamworth, where we have been waiting more than three years for this labyrinthine process to happen, but not a brick has been laid? Will he confirm that this is yet another example of the former Government failing to keep their promises?
Michael Gove
I sympathise hugely with my hon. Friend. Only 97 schools were built under Building Schools for the Future during the period when the previous Government were in charge. Now we know that under this coalition Government, 706 schools will benefit from BSF and more than half of those will be new builds. Where the previous Government failed, this Government are succeeding.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
T5. On Friday, I visited Holly Lodge school—one of six in my constituency affected by last week’s announcement. For Liverpool, investment in our schools is crucial to our economic future. Will the Secretary of State undertake to visit Liverpool between now and the end of September to meet schools, the business community, my colleagues and the local council to discuss this crucial issue for the future of our city?
Michael Gove
I am very grateful to the hon. Gentleman, who was a distinguished schools Minister, for that question. I know how hard he works for his constituents and, indeed, for every parent, child and teacher in Liverpool. I am aware that the consequences of the regrettable decision we had to take last week will be felt particularly hard in Liverpool, so either I or a member of my ministerial team will commit to come to Liverpool to talk to him and those affected—by the end of the year, I hope, but certainly as soon as possible.
Damian Collins (Folkestone and Hythe) (Con)
T2. Under the previous Government, 186 special schools closed. On Thursday, I will attend the annual prize-giving at Highview special school in my constituency—one that you, Mr Speaker, have visited. May I take the Secretary of State’s message of support for special education under the new Government as meaning that the school will have a sustainable future and the support it needs?
Michael Gove
I am grateful to my hon. Friend for his question. It is a tragedy that the ideologically driven closure of special schools under the last Government meant that so many children with special educational needs did not receive the education they deserved. That ideologically driven closure will end under this Government, and under the Minister of State, Department for Education, my hon. Friend the Member for Brent Central (Sarah Teather) we will review support for children with special educational needs. Their care should always be our first concern.
Chris Bryant (Rhondda) (Lab)
T9. The Secretary of State will know that one problem in many of the poorest constituencies in the land is the high level of teenage pregnancy in this country—five times higher than in the Netherlands. Before Government Members start blaming Labour—or, for that matter, me personally—let me tell them that the figures rose dramatically under the Conservative Government and then did not fall sufficiently under a Labour Government. The Secretary of State fought hard in the previous Parliament to ensure that we did not have good compulsory sex and relationship education, for every child, in all schools in the land. Will he reverse the argument that he advanced then, because in countries with low levels of teenage pregnancy, the existence of such education is the big difference?
Michael Gove
The hon. Gentleman is a former vicar of the Church of England; he has been accused of many sins, but contributing to teenage pregnancy has never been one of them, to my knowledge. May I say that I entirely appreciate the importance of proper sex and relationships education? My dispute with the previous Government was simply over a question of individual liberty. I felt it important that parents had the right to withdraw their children from sex and relationships education if they thought it inappropriate. I agree, however, that it is vital that all children have high-quality sex and relationships education, in order to ensure that they make the right decisions later in life.
Mr David Burrowes (Enfield, Southgate) (Con)
T3. Further to my right hon. Friend’s answer to the question from my hon. Friend the Member for Shipley (Philip Davies), is he aware of the situation in Enfield, where increasing housing, migration and birth rates are putting acute pressure on primary and secondary school places? Will he ensure that future capital funding focuses more on increasing capacity and less on increasing bureaucracy, as happened under the previous Government?
Michael Gove
My hon. Friend makes a very good point. One of the demographic changes to which the previous Government did not pay sufficient heed was the increase in the number of pupils arriving at primary schools, particularly in London and the south-east. That growth in basic need is our first priority.
Mr Gordon Marsden (Blackpool South) (Lab)
T10. The Secretary of State has already spoken of his great concern about special schools. Has he done any cumulative assessment of the impact on special schools of his BSF cuts last week? The programme for all three such schools in Blackpool—Woodlands, Park and Highfurlong—will be affected and stopped, because they were co-operating with other secondary schools. What assurance will he give the House that he will consider the cumulative impact on special schools, and what assurance will he give me that he will look at the problems in Blackpool in particular?
Michael Gove
I am very sensitive to the problems in Blackpool. I had the opportunity to visit one of the schools that the hon. Gentleman mentions—Highfurlong—with my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard). I appreciate the problems on that site and want to do everything possible to ensure that our capital review guarantees that children attending special schools get the money that they need for the facilities that are crucial to their education, as quickly and efficiently as possible.
Amber Rudd (Hastings and Rye) (Con)
T4. Is my right hon. Friend aware that, under the overly cumbersome Building Schools for the Future, it took on average 13 months from first meeting to first construction of a site? What can be done under this Government to ensure that that does not happen again?
Michael Gove
My hon. Friend makes a critically accurate point. As a result of the massive bureaucracy that used to exist under the Building Schools for the Future scheme, people in dilapidated classrooms were denied the resource that they needed, as it was going into the pockets of bureaucrats rather than into bricks and mortar for those most in need.
Jack Dromey (Birmingham, Erdington) (Lab)
The Secretary of State will be aware that in his announcement to Parliament last week, a special needs school in my constituency of Birmingham, Erdington was listed under two separate titles, “Stopped” and “Unaffected”. Hopes were raised, confusion was then caused, and hopes have been shattered. Will the Secretary of State come to my constituency to meet the head of Queensbury school, which, along with its sister school Kingsbury, has a remarkable vision for a world-class centre of excellence catering for the children of Birmingham with special needs?
Michael Gove
I am grateful to the hon. Gentleman for his question and for showing me the great courtesy of calling me before the weekend to explain precisely the question that he would ask. We will have the opportunity to meet one on one later this week to discuss the precise circumstances of the school that he mentions. I or one of my ministerial team will certainly join him in a visit to that school, to provide the head, teachers and parents with all the information that they need to ensure that in future we do everything possible to help to support them and the great work that they do.
Conor Burns (Bournemouth West) (Con)
T6. I thank my right hon. Friend for visiting St Michael’s primary school in Bournemouth with me last week. If the head teacher of St Michael’s, Mr Bob Kennedy—or, indeed, any other head teacher—were to ask him what excuse could be given for spending £60 million of local authority Building Schools for the Future money on consultants rather than the front line, what on earth would he say in reply?
Michael Gove
It was a pleasure to meet my hon. Friend and the teachers who were doing such outstanding work at St Michael’s. It was a fantastic school, and a pleasure to visit.
If a head teacher were to ask me why the last Government spent so much money on consultants rather than on teachers, for once I would be dumbstruck.
Stella Creasy (Walthamstow) (Lab/Co-op)
I recognise that there are many pressing issues in Ministers’ diaries, but may I beg the Secretary of State to take seriously the request by Willowfield school in Walthamstow to host a meeting for him, for parents from the Walthamstow area, and for parents affected by the decision to stop all the wave 1 school projects in Walthamstow, including those involving William Morris school and Holy Family college? There could then be a discussion about how we can meet our urgent need for school places in the locality, given that all those buildings have been condemned as not fit for purpose—a bit like the present Government.
Michael Gove
I am grateful to the hon. Lady for asking a very good question with a nice scorpion sting in the tail. I appreciate that in some parts of the country, because of the way in which Building Schools for the Future was run, the decision that we had to make bites more sharply. Waltham Forest is one of them, Somerset another, and Liverpool a third. For that reason, I will ensure that one of my Ministers or officials contacts the hon. Lady very quickly to see what we can do to alleviate this necessary blow.
David Mowat (Warrington South) (Con)
T7. Given that last week’s announcement on BSF has had an impact on several schools in Warrington—including Penketh high school, where the need is great—will the Secretary of State tell us when his capital review is likely to report, and what criteria will be used in the review to prioritise schools? Is he willing to meet me and Warrington educationalists to discuss their needs?
Michael Gove
My hon. Friend was good enough to lobby me several weeks ago about the fate of the school that he mentioned, and schools in Warrington overall. He was, as ever, articulate and powerful on behalf of his constituents. I recognise that his constituents have been let down by the fact that Building Schools for the Future spent so much money on bureaucracy, and not enough on bricks and mortar. The purpose of our capital review is to ensure that money reaches the front line more quickly, and that the dysfunctional system that was established under the last Government—which they took no steps to reform or abolish—is transformed. I believe that there will be an interim report in a few months’ time and a final report by the end of the calendar year, both of which will transform school buildings for the future.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
Is the Secretary of State aware that figures from his department show that academy schools are, on average, teaching one third less GCSEs in history and geography than schools in the maintained sector, and are often inflating their grades through the use of GCSE equivalents? If that is to be the model for the future, what steps is the Secretary of State taking to ensure that academic subjects are protected in academies?
Michael Gove
Like the hon. Gentleman, I am committed to academic excellence, so I should point out that he should have said “fewer”, not “less”. However, he has made a good point. I am worried about the use of so-called equivalent qualifications instead of academic GCSEs. When I raised the issue from the Opposition Benches, the then Secretary of State said that I was talking achievements down, but I am glad to note that we can now form a coalition for excellence across the Dispatch Box.
Andrea Leadsom (South Northamptonshire) (Con)
Does my right hon. Friend agree that it is regrettable that five secondary schools in my constituency which are in dire need of expenditure on the framework of their buildings have received absolutely nothing under the Building Schools for the Future programme, simply because in theory they are in a reasonable area where children are, in theory, receiving a good education?
Michael Gove
I am grateful to my hon. Friend for her question, which points to one of the many weaknesses in the Building Schools for the Future programme. Because its operation was area-based, some schools which were not dilapidated and which occupied serviceable buildings—not ideal, but serviceable—received large sums of money, while in many other parts of the country children suffered poor education in dilapidated buildings that were not prioritised for investment. That has to change.
Julie Hilling (Bolton West) (Lab)
Will the Secretary of State or a member of his team undertake to meet the pupils of Westhoughton high school, who will be making an educational visit to Parliament this Thursday, to explain to them why they have wasted the last two years designing and developing their programme for their new school and why they will now have to spend the rest of their school career in a crumbling school?
Michael Gove
The hon. Lady is an impassioned advocate for Bolton West, but I have to tell her—and she can tell this to the children and parents concerned—that the reason why this process took so long is because of the bureaucracy her Government put in place. The reason why those children are losing out is because of the decisions made by the right hon. Member for Morley and Outwood, and if she is angry, as I am, that children’s destinies have been compromised, that anger—that righteous anger—should be directed at the right hon. Gentleman, the person who presided over this debacle in the first place.
Graham Evans (Weaver Vale) (Con)
Free schools have the potential to make a massive positive impact on the education of children in my constituency, Cheshire and the north-west as a whole. When does the Secretary of State anticipate that the first free schools will be able to open and begin their vital work?
Mr Speaker
Order. I am grateful to the Secretary of State for that pithy reply, but I am afraid that demand has exceeded supply and we must now move on to the statement.
NHS White Paper
(14 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Health (Mr Andrew Lansley)
With permission, Mr Speaker, I would like to make a statement on the future of the national health service.
The NHS is one of our great institutions, and a symbol of our society’s solidarity and compassion. It is admired around the world for the comprehensive care it provides and for the quality, skill and dedication of its staff. I begin today by paying tribute to the staff of the NHS and the commitment they daily show to patients in their care.
This Government will always adhere to the core principles of the NHS: a comprehensive service for all, free at the point of use, based on need, not ability to pay. That principle of equity will be maintained, but we need the NHS also consistently to provide excellent care.
The NHS today faces great challenges: it must respond to the demands of an increasing and ageing population, advances in medical technology and rising expectations; it remains stifled by a culture of top-down bureaucracy, which blocks the creativity and innovation of its staff; and it does not deliver outcomes in line with the best health services internationally—many of our survival rates for disease are worse than those of our neighbours. The NHS must be equipped to meet those challenges. We believe it can do much better for patients, so today I am publishing the White Paper, “Equity and Excellence: Liberating the NHS”, so that we can put patients right at the heart of decisions made about their care, put clinicians in the driving seat on decisions about services, and focus the NHS on delivering health outcomes that are comparable with, or even better than, those of our international neighbours.
For too long, processes have come before outcomes, as NHS staff have had to contend with 100 targets and over 260,000 separate data returns to the Department each year. We will remove unjustified targets and the bureaucracy that sustains them. In their place, we will introduce an outcomes framework setting out what the service should achieve, leaving the professionals to develop how.
We should have clear ambitions, and our approach will be set out shortly in a further consultation document. For example, our aims could be: to achieve one and five-year cancer survival rates above the European average; to minimise avoidable hospital-acquired infections; and to increase the proportion of stroke victims who are able to go home and live independently—in short, care that is effective, safe and meets patients’ expectations.
The outcomes framework will be supported by clinically established quality standards, and the NHS will be geared across the board towards meeting them. We will do that by rewarding commissioners for delivering care in line with quality standards; strengthening the regulatory regime so that patients can be assured that services are safe; and reforming the payment system in the NHS, so that it is a driver not just for activity, but also for quality, efficiency and integrated care.
Patients will be at the heart of the new NHS. Our guiding principle will be “no decision about me, without me.” We will bring NHS resources and NHS decision making as close to the patient as possible. We will extend “personal budgets”, giving patients with long-term conditions real choices about their care. We will introduce real, local democratic accountability to health care for the first time in almost 40 years by giving local authorities the power to agree local strategies to bring the NHS, public health and social care together. Local authorities will also be given control over local health improvement budgets. This will give an unprecedented opportunity to link health and social care services together for patients. We will give general practices, working together in local consortiums, the responsibility for commissioning NHS services, so that they are able to respond to the wishes and needs of their patients. This principle is vital, bringing together the management of care with the management of resources. With commissioning support, GPs collectively will lead a bottom-up design of services.
In addition, we will introduce more say for patients at every stage of their care, extending the right to choose far beyond a choice of hospital. Patients will have choice over treatment options, where clinically appropriate, and the consultant-led team by whom they are treated. They will have the right to choose their GP practice, and they will have much greater access to information, including the power to control their patient record. We must ensure also that patients’ voices are heard, so we will establish HealthWatch nationally and locally, based on local involvement networks, to champion the needs of patients and the public at every level of the system.
To achieve these improvements in outcomes, we need to liberate the NHS from the old command-and-control regime, so all NHS trusts will become foundation trusts, freed from the constraints of top-down control, with power increasingly placed in the hands of their employees; and we will allow any willing provider to deliver services to NHS patients—provided that they can deliver the high-quality standards of care we expect from them. Our aim is to create the largest social enterprise sector in the world, but it is not a free-for-all. Monitor will become a stronger economic regulator to ensure that the services being provided are efficient and effective, and that every area of the country has the NHS services it needs to provide a comprehensive service to all. The Care Quality Commission will safeguard standards of safety and quality. An independent and accountable NHS Commissioning Board will be established to drive quality improvements through national guidance and standards, in order to inform GP-led commissioning. The board will allocate resources according to the needs of local areas, and lead specialised commissioning.
In the coming weeks, detailed consultation documents will enable people to comment on the implementation of this strategy, leading to the publication of a health Bill later this year. I recognise that the scale of today’s reforms is challenging, but they are designed to build on the best of what the NHS is already doing. Clinicians are already working to facilitate patient choice, giving patients the information they need to make effective decisions. GP consortiums are already established in some areas of the country and are ready to go. Local authorities in some areas are already working closely with local clinicians to co-ordinate health and social care and improve public health. Payment by results already gives us a starting framework for building a payment system that really drives performance. Foundation trusts are already using the freedoms they have to innovate. We will build on this progress, not dismantle it.
With this White Paper we are shifting power decisively towards patients and clinicians. We will seek out and support clinical leadership. That means simplifying the NHS landscape and taking a further, radical look at the whole range of public bodies. We will reduce the Department of Health’s NHS functions, delivering efficiency savings in administration. We will rebalance the NHS, reducing management costs by 45% over the next four years and abolishing quangos that do not need to exist, particularly if they do not meet the Government’s three tests for public bodies. We will also shift more than £1 billion from back-office to the front line. Form must follow function. As we empower the front line, so we must disempower the bureaucracy. Therefore, after a transitional period we will phase out the top-down management hierarchy, including both strategic health authorities and primary care trusts.
Later in the summer, we will be publishing a report setting out how we see the future of NHS-related quangos. I can say now that this will mean a reduction of at least a third in the number of such bodies. This is part of a wider drive across government to increase the accountability of public bodies and reduce their number and cost. The dismantling of this bureaucracy will help the NHS realise up to £20 billion of efficiency savings by 2014, all of which will be reinvested in patient care. Today’s reforms set out a long-term vision for an NHS that is led by patients and professionals, not by politicians. It sets out a vision for an NHS empowered to deliver health outcomes as good as any in the world. I commend this statement to the House.
Andy Burnham (Leigh) (Lab)
I thank the right hon. Gentleman for his statement and for giving me advance sight of it, although in keeping with the style of this Government, it would appear that this House was the last to find out, behind every media outlet in the land.
Last month, the Commonwealth Fund gave its verdict on Labour’s NHS, saying that it was top on efficiency and second overall on quality compared with other developed health care systems. Today, we have further evidence of progress, with figures from Cancer Research UK showing that long-term cancer survival rates have doubled. This progress was hard won; it took 10 years of painstaking work piecing together a detailed jigsaw. The right hon. Gentleman, with this White Paper, has today picked it up and thrown the pieces up in the air. It is a huge gamble with a national health service that is working well for patients.
The right hon. Gentleman’s spin operation bills this as
“the biggest revolution in the NHS since its foundation 60 years ago”.
That is something of a surprise, given the ink was barely dry on a coalition agreement that said:
“We will stop the top-down reorganisations of the NHS that have got in the way of patient care.”
What has happened since the publication of the coalition agreement to justify a U-turn of such epic proportions? Manifesto commitments have been casually dropped but this must be the first time that that agreement has been so spectacularly ripped up.
This reorganisation is the last thing that the NHS needs right now; it needs stability, not upheaval. All its energy must be focused on the financial challenge ahead. It needs confident, motivated staff, but the 1.3 million people who work for the NHS will not be comforted by this White Paper and they will be alarmed that their systems of national pay bargaining are being torn up. We support a strong say for clinicians and GPs in improving quality. That was the direction that Lord Darzi set out, after broad consultation. We introduced practice-based commissioning within a framework of public accountability and population-wide commissioning supported by primary care trusts. What we do not support is the wiping away of oversight and public accountability, and the handing over of £80 billion of public money to GPs, whether they are ready or not. Michael Dixon, chair of the NHS Alliance, says that only about 5% of GPs are ready to take over commissioning. Sir David Nicholson, chief executive of the NHS, has judged that even the best GP practice-based commissioners are “only about a three” out of 10 in terms of the quality of their commissioning. So what sound evidence does the right hon. Gentleman have that 100% of GPs are ready, willing and able to commission services for the entire population?
The right hon. Gentleman’s statement talked of rewarding commissioners who hit outcomes. Does he mean yet more money for GPs? How much will all GPs be paid for taking on this role? How many jobs does he expect to be lost in the NHS and how much money has he put aside for redundancy costs? What guarantees can he give the House that people will not simply be paid off by the NHS to be re-employed by a GP practice?
How does the right hon. Gentleman think loyal primary care trust staff felt when they read this quote—I apologise, in advance, for the language, Mr Speaker—from
“a senior Department of Health source”,
which was anonymously briefed to the Health Service Journal? It reads:
“PCTs are screwed. If you’ve got shares in PCTs I think you should sell”.
That is no way to treat loyal public servants, who have served the NHS and are now worried about their future. On page 10, the right hon. Gentleman says that the reforms are vital to deal with the financial situation, but is it not the case that there has never been an NHS reorganisation that did not cost money and divert resources in the short term? Is not the handing of the public budget to independent contractors tantamount to the privatisation of the commissioning function in the NHS? Will there be any restrictions at all on the use of the private sector by GPs?
Added to this, the right hon. Gentleman is bringing a series of market reforms into hospitals. He tells us that the first role of Monitor will be to promote competition and talks of any willing provider and freedoms for foundation trusts. Is not that the green light to let market forces rip right through the system with no checks or balances? Are not the hearts of NHS staff sinking as they read the White Paper?
On bureaucracy, we will support the Government where sensible reductions can be made, but what he calls pointless bureaucracy, we call essential regulation. What are his plans for the Food Standards Agency and are the reports correct that he has waived his right to regulate in return for funding for Change4Life? Can he explain how 500 or more GP consortiums, all of whom will need administration and management, can be less bureaucratic than 152 primary care trusts?
Lastly, where are the public accountability and the accountability to this House? How will GPs be held to account for the £80 billion of public money for which they will be responsible and how will the new NHS commissioning board—the biggest quango in the world—be accountable to this House and to Members of Parliament?
In conclusion, this White Paper represents a roll of the dice that puts the NHS at risk—a giant political experiment with no consultation, no piloting and no evidence. It is the right hon. Gentleman at his confused and muddled worst, but the sadness is that he is taking an £80 billion gamble with the great success story that is our national health service today. At a stroke, he is removing public accountability and opening the door to unchecked privatisation. He is demoralising NHS staff at just the time we need them at their motivated best. For patients, it opens the door to a new era of postcode prescribing where services vary from street to street. It turns order into chaos, and we will oppose it.
Mr Lansley
I am just astonished that the shadow Secretary of State seems to have gone to the barricades for the primary care trusts. The primary care trusts and strategic health authorities are organisations that, under his watch as Secretary of State—for about a year—increased their management costs by 23%. In the year for which he was in charge, they spent £261 million on management consultants. Before the election, when it had a majority of Labour Members, the Select Committee on Health said that PCT commissioning was weak and that it was not delivering what was intended. He set up a programme called world class commissioning—it never worked. Central to delivering better commissioning in the health service is ensuring that those people who incur the expenditure—the general practitioners, on behalf of their patients—and who decide about the referral of patients are the same people who, through the commissioning process, determine the shape of the services in their area. It is more accountable.
How often have all of us, on both sides of the House, asked Labour Ministers about what primary care trusts are doing locally in terms of service change only to be told, “It’s nothing to do with us; it’s all happening locally”? We are going to be very clear about the accountability. One thing that the coalition programme has enabled us to do, as two parties bringing our programmes together, is to strengthen the accountability to local authorities. Local authorities, through their strategies that mesh NHS services, public health and social care, will ensure that major service changes and the design of services reflect the interconnection between those things. Those who have complaints and problems will be able to have them addressed through HealthWatch and through their local authority. We will be able, through local authorities, to ensure that the commissioning support to GP commissioning consortiums can be more effective.
The shadow Secretary of State talked about the Commonwealth Fund. I do not know whether he has even read the Commonwealth Fund report, but it said that the UK health care system was the second worst on hospital-acquired infections, that the UK delivers the poorest level of patient-centred care and that, on outcomes, we performed the second worst overall on mortality amenable to health care.
The right hon. Gentleman stood up and said that cancer mortality rates have improved. They have—since the 1970s, and all over the world. However, the issue is where we stand in relation to the rest of the world. If we were to meet the European average on cancer survivals, 5,000 more people would live each year rather than die. If we were to do the best in Europe, 10,000 more would live each year. For stroke, the figure is 9,000. We have to measure ourselves on the outcomes relative to the other health systems that are comparable to ours.
Nine years ago, the right hon. Gentleman’s Prime Minister, Tony Blair, said that we must spend as much as Europe. Through this White Paper and the reforms that we will bring in, we are determined to achieve results for patients that are at least as good as those in the rest of Europe. It is not just about inputs and spending, but about the results we achieve. The right hon. Gentleman, on behalf of his party, has just abandoned the reforms that his Prime Minister, Tony Blair, put forward. In 2006, Tony Blair said that we must have patient choice, practice-based commissioning, the independent sector and foundation trusts—reforms that Labour failed to deliver and, indeed, undermined. We, as a coalition Government, are now determined to put those reforms in place to deliver results for patients.
Mr Stephen Dorrell (Charnwood) (Con)
I congratulate my right hon. Friend on setting out a clear vision for the NHS that is committed to high-quality outcomes for patients and good value for money for the taxpayer. Does he agree that the delivery of that objective depends critically on effective commissioning? Does he recall that the last Labour Government said that engaging GPs with the commissioning process was the key to success? Does he recall that the White Paper setting out the plan for practice-based commissioning said that GP commissioning was not a new idea to the NHS? Indeed, it is not. He is to be congratulated on holding out the prospect that, at last, this idea can be made good and made powerful in the interests of patients.
Mr Lansley
I am grateful to my right hon. Friend for his comments. In his capacity as the Chairman of the Select Committee on Health, we will be responding to him very shortly regarding the Select Committee’s report from before the election on commissioning in the NHS. What he has just said is absolutely right; we have to be able—this is a central task in commissioning—to bring together the responsibility for the management of patient care with the responsibility for the commissioning of services. The current situation is akin to a shopping trolley being pushed to the checkout while the primary care trust is standing there with a credit card, bleating about whether things should be taken out of the trolley. We have to ensure that the design of services follows the best clinical leadership in terms of the services that are required for patients. He and I very much agree on precisely that objective.
Mr Speaker
Order. More than 30 hon. and right hon. Members are seeking to catch my eye. As always, I would like to accommodate everybody, but what is required, both in questions and in answers, is brevity—a legendary example of which I am sure will now be provided by the right hon. Member for Don Valley (Caroline Flint).
Caroline Flint (Don Valley) (Lab)
Thank you, Mr Speaker. Is it not already the case, in PCTs, that it is clinical directors, who are professionally trained as doctors, who lead in terms of providing services in conjunction with GPs at a local level? Can the Secretary of State assure the House that his proposals will make the system any better? I do not think so.
Mr Lansley
I am sorry, but when the right hon. Lady was a Minister, she should have talked to more GPs. Overwhelmingly, they would have told her that they do not feel that the PCTs listen to them. They feel that the PCTs tell them what to do and get in the way. We are going to empower GPs to deliver services for their patients.
David Tredinnick (Bosworth) (Con)
I, too, congratulate my right hon. Friend on his statement. If he is going to get more choice for patients in treatment options, he will have to expand integrated health care so that herbal medicine, acupuncture, back treatments and homeopathy are more widely available across the country. Will he look at the American model of the consortium of 44 academies that has been considering integrated health care? Can he reassure me that his NHS commissioning board will not block options for integrated health care across the country?
Mr Lansley
The job of the NHS commissioning board will be to inform GP-led commissioning through scientific evidence, clinical evidence and guidelines, but it will be for GPs themselves, managing their budgets, to enable patients to exercise greater choice. The working out of what that choice looks like should not be dictated by politicians, but should be determined by patients and their clinical advisers.
Miss Anne Begg (Aberdeen South) (Lab)
The Secretary of State has not answered the question of my right hon. Friend the Member for Leigh (Andy Burnham) about the future of the Food Standards Agency. The Scottish arm of the FSA is based in Aberdeen, and I wonder whether the Secretary of State has had any discussions with the Scottish Government about its future. If not, is this yet another example of the new relationship that is meant to be in place between Scotland and the rest of the UK?
Mr Lansley
The shadow Secretary of State will have had the chance to see that there is nothing in today’s White Paper about the FSA—no such proposal.
Mr Lansley
I have not been briefing anything to anybody. [Interruption.] I have not. It is very straightforward. The FSA, along with other bodies associated with our public health responsibilities, will be the subject of a public health White Paper in the autumn. There is no proposal.
Andrew George (St Ives) (LD)
In seeking to reassure the House that this is not the top-down reorganisation that the coalition agreement derided, would my right hon. colleague reassure my constituents, who are quite excited by the idea of more patient and local authority involvement in local decision making, that where the primary care trusts in which they are going to be appointed will be abolished, there will be more GP commissioning groups than PCTs at the end of the process?
Mr Lansley
Yes, I am grateful to the hon. Gentleman. The number of GP-commissioning consortiums will be determined not least by GPs themselves, deciding what makes sense in their locality. He and his Cornish colleagues have often been frustrated by the way in which a top-down bureaucracy has sought to dictate to the people of Cornwall, often in specific localities, at a considerable distance from their hospital services, what services should be provided locally in places such as Hayle and Penzance. He and his constituents can be really comforted by the thought that their clinical advisers and general practitioners in local consortiums can in future make those decisions about their services.
Hazel Blears (Salford and Eccles) (Lab)
Despite the tremendous improvements that have been made in Salford and Eccles over the past few years in tackling cancer and heart disease, significant inequalities remain that require substantial resources. Will the Secretary of State confirm that in shifting commissioning powers to GPs and allowing the NHS commissioning board to allocate resources, the funding formula will still properly reflect the needs and deprivation factors in areas such as mine and right across the country?
Mr Lansley
The White Paper makes it clear that the NHS commissioning board will be required to allocate resources across the NHS in England on the basis, as far as possible, of seeking to secure equivalent access to NHS services. That will clearly be relative to the prospective burden of disease. In tackling health inequalities, the right hon. Lady will know that we need separately to allocate resources to local health improvement plans, which will be led through local authorities, and which will enable them to create local public health strategies to secure improvements in health outcomes and to reduce health inequalities.
Nadine Dorries (Mid Bedfordshire) (Con)
May I congratulate the Secretary of State on what is a truly exciting White Paper? Will he confirm that in addition to GPs having responsibility for commissioning, there will be the opportunity for them to become actively involved in the provision of care and deciding what care is allocated to which patients?
Mr Lansley
Yes, my hon. Friend understands that GPs are often providers beyond their primary medical services responsibilities. One of the difficulties with fundholding was that there was an opportunity for that conflict of interest to arise and not be properly resolved, so we have made it clear that, in the commissioning framework that we will publish, we will set out consultation proposals on how we ensure that that conflict of interest is not allowed to arise. Where GPs wish to be providers, we do not constrain them, but how that contract is arrived at is transparent and open.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
How can the Secretary of State, with a straight face, say that he opposes the culture of top-down bureaucracy and decisions being taken by politicians, when he himself, in the past six weeks, has stopped the implementation of a clinically led and agreed programme for improving health care provision in south-east London, which was going ahead until he stopped it? Does he now accept that his words carry very little force for those of us who know what his actions indicate?
Mr Lansley
No is the answer. I set out on 21 May criteria on listening to patients and understanding what patient choice will be in future; on engaging the public, including local authorities, which are now following through on that accountability; on following the clinical evidence of what can best deliver outcomes; and on ensuring that GPs, as we have made clear, must be supportive and engaged. If any proposal in London is made at local level, such as the one the right hon. Gentleman refers to in Oxleas, that satisfies those criteria, which are bottom-up and locally led, there is no difficulty in its proceeding.
Mr Steve Brine (Winchester) (Con)
I congratulate the Secretary of State on his statement, which many people outside the House will recognise is a breath of fresh air for our NHS, unlike the flagging leadership bid we heard earlier—the second this afternoon—from the Opposition.
Will the Secretary of State confirm that the new consortiums of GPs can regain responsibility for out-of-hours care, the provision of which is a great worry for many of the people I represent across Winchester and Chandler’s Ford?
Mr Lansley
Yes. The commissioning responsibility will include urgent and out-of-hours care. I commend to my hon. Friend what the White Paper says about how we can deliver improvements in efficiency and effectiveness in terms of urgent care, 24 hours a day, seven days a week.
Mr Dennis Skinner (Bolsover) (Lab)
Speaking as someone with a successful outcome, twice, under the national health service in recent times, could the Secretary of State explain to me why these private elements within the NHS—that is, the GP practices—which are getting another £80 billion to spend are not going to be watched over by the primary care trusts or, seemingly, anybody else? Who is going to watch them spend that money—the private sector?
Mr Lansley
I am astonished that Labour Members are still attacking general practice. I thought that shadow Ministers—former Ministers—had had enough of doing that. [Interruption.] I will answer the hon. Gentleman. GP practices will be accountable to patients who exercise choice; accountable to their local authority, through which a strategy is established; and accountable to Parliament and to Ministers through the NHS commissioning board with which they will have their contract.
Jacob Rees-Mogg (North East Somerset) (Con)
In welcoming this statement, I wonder whether the Secretary of State will be able to put in place any interim measures for people such as a constituent of mine who have been prescribed life-prolonging cancer drugs such as Lapatinib but are being denied them.
Mr Lansley
I am pleased to be able to tell my hon. Friend that as part of the coalition programme we have said that we will implement a cancer drugs fund from April 2011. Indeed, my ministerial colleagues—not least the Minister of State, Department of Health, the hon. Member for Sutton and Cheam (Mr Burstow)—and I are looking urgently at what we can do in the meantime to try to ensure that we no longer continue with a situation where patients do not have access to cancer drugs that are routinely available in other countries.
Mr David Lammy (Tottenham) (Lab)
Most people will recognise that GPs are at the cornerstone of the NHS, but also that since 1948 they have been independent practitioners running for-profit businesses. What safeguards has the Secretary of State put in place, and what is he doing about conflicts of interest? He said nothing about that in his statement. Is not what is proposed like asking pharmaceutical companies to be in charge of the NHS drugs bill?
Mr Lansley
I must not be unkind to the right hon. Gentleman, because he has not yet had a chance to read the White Paper—
Mr Lansley
That is my statement. When the right hon. Gentleman reads the White Paper, it will become obvious to him that, yes, we are looking to GPs to take responsibility for commissioning, but, unlike the problems that arose with fundholding, there will not be an opportunity for GPs to generate surpluses on their commissioning budget, and so money in their pocket. It will not work like that: there will be a clear separation between the commissioning budget and their personal budget. We will focus on the thing that really matters, which is GPs taking a commissioning responsibility in designing services.
Nicholas Soames (Mid Sussex) (Con)
I welcome the Secretary of State’s bold and imaginative statement on a White Paper that I am sure will be broadly welcomed in the NHS, not least because it will give people within the NHS the opportunity to give true vent to their creativity. Does he agree, however, that he is setting very demanding targets and challenges; and what time line does he envisage before this is finally implemented?
Mr Lansley
I am grateful to my hon. Friend. I will not go through the White Paper in detail now, but within it he will find that we look towards some GP commissioning consortiums taking an early adopter place from 2011-12, with consortiums generally taking, as it were, a shadow responsibility but not a legal responsibility in 2012-13, and then taking full responsibility, subject to the passage of the legislation to establish that, from April 2013 onwards—the point at which we anticipate that primary care trusts will be abolished.
Liz Kendall (Leicester West) (Lab)
The Minister will know that about 80% of patient contact with the NHS is in primary care. Will GP commissioning groups be allowed to commission GP and other primary care services from themselves, and if so, how will they be held to account for that decision?
Mr Lansley
No, the NHS commissioning board will contract for the primary medical services provided by GPs themselves. GPs will commission for the additional services, including all the community and hospital services. There will be a combination of individual practices taking a responsibility, rewarded through their quality and outcomes framework for the service that they provide to their patients individually, and a general commissioning responsibility for those practices together with others in a local consortium.
Ben Gummer (Ipswich) (Con)
Could the Secretary of State confirm what will happen to those trusts that have not yet achieved foundation trust status and those that are in the middle of applying for it?
Mr Lansley
I am grateful for that question, because what is important is that we have coherent reform in relation to both commissioners and providers. That means that by 2013-14, we should not only have energised the commissioning process and patient choice but set free the hospital providers. My objective, set out in the White Paper, is that by that time all NHS trusts should become foundation trusts. We will need to put in place measures to support them to do that.
Mr Geoffrey Robinson (Coventry North West) (Lab)
Is the Secretary of State aware that those of us who listened to his speeches in opposition were much encouraged, but that with this first statement he has totally disillusioned everybody who believed that he was going to avoid the faults of the past? He has now introduced the biggest top-down, ill thought-through reorganisation that there has ever been in the NHS, and it has about as much chance of success as any previously introduced.
Mr Lansley
I would encourage the hon. Gentleman to go and talk to GPs in Warwickshire whom I have talked to, and to talk to those at Walsgrave about the freedoms that they want to enjoy.
I wish to make it absolutely clear to the hon. Gentleman that there is great consistency between what we said in opposition and what I am announcing today, but that there are some major improvements. Frankly, they have come about because of the conversations that I have had with my colleagues from the Liberal Democrat party. Not least, those conversations have enabled us to focus on the fact that instead of leaving what was a diminishing, residual role for primary care trusts, which withered on the vine, it is better and stronger for us to create a strategic responsibility for local authorities on public health and on joining up health and social care. That will allow us to remove the bureaucracy associated with PCTs, and it is more coherent and stronger than the proposals that we had in opposition.
Dr Sarah Wollaston (Totnes) (Con)
My right hon. Friend recognises how toxic many targets were in the NHS, but they were not all bad. There were some that ensured that standards were maintained—for example the two-week wait for cancer referrals. How will he ensure that standards are maintained when targets are abolished?
Mr Lansley
I am grateful to my hon. Friend, who is absolutely right. That is why, as I said in my statement, not only will we be clear about what we are trying to achieve—for example, where cancer is concerned, one and five-year survival rates at least as good as the European average and hopefully as good as any in Europe—but we will require the NHS to look towards clinically led, evidence-based quality standards that enable those working in the NHS to be clear about what constitutes quality. That will enable us to deliver those outcomes.
Glenda Jackson (Hampstead and Kilburn) (Lab)
Some of the greatest health inequalities occur in areas of the greatest deprivation, which are not infrequently areas that are not attractive to GPs. We also have in London a very large number of people who have never registered, and will never register, with a GP. They tend to use accident and emergency departments. How will their medical needs be presented to this top-down body, the NHS commissioning agent, when there can be no input from GPs? If I read the Secretary of State’s statement correctly, GPs’ recommendations will be disregarded by the NHS commissioning board.
Mr Lansley
I do not recognise the hon. Lady’s latter point. Some 7% of the population in London are not registered with a GP, which is one reason why commissioning consortiums of GPs will take responsibility for their locality, not just their registered patient population.
In relation to hospitals such as the Royal Free, one reason why the hon. Lady, I and other Members were campaigning against her Government before the election was that we recognised that we cannot shut down accident and emergency departments when patients are coming in the door by the tens of thousands because there is no alternative provision. The best way to design services in the community that better meet the needs of patients is through general practitioners designing them around the needs of their patients.
Mr John Baron (Basildon and Billericay) (Con)
I very much welcome the White Paper’s increased focus on improving outcomes, and particularly my right hon. Friend’s comments about the introduction of one-year and five-year cancer survival rates, for which the all-party group on cancer has been pushing. How does he envisage GP commissioning of cancer services improving with the White Paper, given that part of the problem is that a typical GP will see only eight new cancer presentations a year?
Mr Lansley
I pay tribute to my hon. Friend’s work. He will have noted that I deliberately said both one-year and five-year cancer survival rates—he made an important point about that. Clearly, there are many specialist commissioning services, which will become the NHS commissioning board’s responsibility. To that extent, GPs should not be expected to commission specialised services—they have little experience of that. However, GPs as commissioning consortiums, like primary care trusts at the moment, are capable of having a relationship with their cancer networks to establish the services that they need for their patients. Indeed, that applies more to GPs because many of the patients and those who work in cancer services to whom I speak are critical of the lack of awareness on the part of PCT commissioners of the available services. Those who work in cancer services do not believe that PCT commissioners understand the service that they provide. Not every GP understands every aspect of cancer care, but they are much better placed to work with cancer specialists to design the services.
Mr Michael Meacher (Oldham West and Royton) (Lab)
Given the transfer of £70 billion of NHS funds from PCTs to 500 GP consortiums, the vast majority of which have neither the expertise nor the inclination for such a huge administrative task and will have to buy in specialists from the private sector to do it for them, is not it clear that the real motive behind the reforms is to enable US multinational corporations, such as UnitedHealth, or UK corporations, such as BUPA or Virgin, to parcel out health care to the private sector on a vast scale?
Dr Julian Lewis (New Forest East) (Con)
I congratulate my right hon. Friend on his firm grasp of the subject and on taking an axe to the forest of bureaucracy. As he proposes to phase out the strategic health authorities, may I nominate the South Central strategic health authority—he knows what is coming—because that would ensure that it was no longer able to waste hundreds of thousands of pounds of our money on fighting a hopeless legal case to impose fluoridation on a population, three quarters of whom have indicated that they do not want it?
Mr Lansley
Yes, I am indeed aware of precisely what my hon. Friend says and will certainly take it into account.
Jeremy Corbyn (Islington North) (Lab)
The Secretary of State has been asked by many Members about the accountability of GPs, and he has not answered. Some £80 billion is to be pumped through GPs, who will then buy in services. Who manages them? Who monitors them? Who checks on what they are doing? Will we get value for money or, as my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) said, will the system in reality be administered by private health companies, just as GPs are private contractors in the NHS?
Mr Lansley
At the risk of repetition, let me say that GPs will be accountable to patients, who will exercise more control and choice. They will be accountable to the NHS commissioning board, which will hold their contracts, for financial control and for their performance, through the quality and outcomes framework. They will be accountable to their local authority for their strategy and for the co-ordination of public health services and social care.
Jason McCartney (Colne Valley) (Con)
Thousands of patients in my constituency are desperate for specialist maternity care to be returned to Huddersfield royal infirmary, which was downgraded under the previous Government. Does the White Paper make the return of consultant-led maternity services to Huddersfield more likely?
Mr Lansley
The White Paper will enable GPs in an area, plus their local public and their local authority, to make decisions about the shape of services rather than its being done by ministerial diktat.
Alex Cunningham (Stockton North) (Lab)
The Secretary of State referred to delivering for the patient. Will he guarantee that patients such as those who need a new knee or a new hip can expect their treatment in 18 weeks, or is it more likely to be 18 months under today’s proposals, as it was under the previous Tory Government?
Mr Lansley
Ah! That was one of the Opposition Whips’ handout questions, wasn’t it? I will tell the hon. Gentleman that actually, patients are more likely to get their treatment more quickly. Let me give him an example. Patients with rheumatoid arthritis need rapid treatment, but they were losing out and suffering as a consequence of the 18-week target, because hospitals were hitting 18 weeks, but not providing the care needed by those patients in the light of their conditions. We must focus on what is in the best interests of patients, not on what is in the best interests of political grandstanding.
Bob Blackman (Harrow East) (Con)
The Secretary of State’s announcement will be warmly welcomed in my constituency. On Friday, I went to see a group practice of 12 GPs who are totally frustrated by the local PCT. They are concerned that when the reforms are introduced, they will also be frustrated by the GP consortiums. Will my right hon. Friend give me some assurances on how the GP consortiums will be formed? What will happen if some GPs disagree with how a consortium is set up?
Mr Lansley
I can tell my hon. Friend that I am looking to GPs in a locality to create GP commissioning consortiums that represent an area. They must decide on the geography of that and make proposals. It will not be possible for GPs simply to say, “This is nothing to do with us,” because in future, we must expect GPs, who are senior professionals in public service and paid appropriately, to be responsible not only for the care of the individual patient in front of them, but collectively for the quality of care provided to their population at large.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
Prior to 1997, there was no cancer strategy and cancer was not a priority. The Secretary of State is absolutely right to make reaching European levels of one and five-year survival rates one of his priorities and an aspiration, but he knows very well that the one thing that is holding us back is the problem of early diagnosis. Precisely how does he think his abolition of targets and his woolly assurances will ensure early diagnosis? I will wager him that under his proposals, we will fall backwards rather than make progress.
Mr Lansley
Let me tell the hon. Lady that only just over 40% of those who were diagnosed with cancer actually came through the two-week wait process at all. She is right that it is very important that patients’ signs and symptoms should be identified at an earlier point and that they should have earlier diagnosis. Whom does she imagine is best placed to identify signs and symptoms and to take action on them other than patients and the GPs who are responsible for their care? [Interruption.] If Opposition Members stop interrupting from a sedentary position, I can continue. Actually, patients need—[Interruption.] The shadow Secretary of State should understand this, having held responsibility for it. For early diagnosis, awareness of signs and symptoms on the part of patients is critical. Only 30% of members of the public had any idea what cancer signs and symptoms were beyond the presence of a lump or swelling. We need to change such things and the responses of GPs to those early signs and symptoms.
Mr Speaker
Order. Members really should not chunter, witter or otherwise heckle from a sedentary position, because they thereby reduce their chances of getting in, or of their colleagues getting in.
Margot James (Stourbridge) (Con)
Older people and people with long-term medical conditions have not been well served by the division between health and social care, which has lasted many years. I congratulate the Secretary of State on his plan to give local authorities control over local health improvement budgets. Can he say any more about how those reforms will break down the barriers between health and social care?
Mr Lansley
I am grateful for my hon. Friend’s question. There is an unprecedented opportunity for local authorities and the NHS to create a much more integrated and effective strategy for health and social care working together. That is partly about focusing on outcomes, partly about listening to patients, and partly about extending personal budgets for patients, so that they themselves can break down such barriers. However, critically, it is also about local authorities exercising the responsibility that we will give them, plus their existing powers in relation to well-being right across their areas, to seal that working together, to deliver better public health and better integration between their social care responsibility and NHS commissioning plans.
Tony Lloyd (Manchester Central) (Lab)
Without any shame, the Secretary of State is introducing an internal market in the health service. In that context, how will he guarantee that GPs will not look for cheaper medicine rather than better medicine?
Mr Lansley
Because patients will have increased choice—[Hon. Members: “How?”] Because patients will make their choices on the quality of service they receive, because the service will be free to them.
Dr John Pugh (Southport) (LD)
The coalition agreement pledges to introduce true local democratic accountability through citizens actually being elected on to a health board. What can the Secretary of State do to persuade me—because he has not so far—that we will have local citizens, not doctors, making any decisions about the shape and configuration of local NHS services other than in public health, and will any of them be consulted about his structural changes or allowed to do things differently locally?
Mr Lansley
Yes. I feel very strongly that we have deliberately set out to improve local democratic accountability and we have found an effective mechanism for doing so. Local authorities will themselves have statutory powers to agree local strategies that encompass not only local health improvement, but the commissioning plans and the social care commissioning strategies locally. If a major service change is contemplated as a consequence, the commissioning consortiums will not be able to proceed without the agreement of the local authority through its joint strategic assessment. The White Paper makes it clear that if they do not agree, the local authority will continue to have the capacity to send the proposals to the independent reconfiguration panel and, if necessary, to the Secretary of State.
Austin Mitchell (Great Grimsby) (Lab)
May I tell the Secretary of State that north-east Lincolnshire has developed an effective care trust plus, which worked with the local authority to link care and health in exactly the way that he proposes, but the effect of his proposals on that trust will be to deprive it of most of its functions and cause it to issue redundancy notices to most of its staff. Has he heard of the old adage, “If it ain’t broke, don’t fix it”?
Mr Lansley
It is broke, and we are fixing it. We are fixing it because primary care trusts have not succeeded in delivering the outcomes that we are looking for, and they have consumed an enormous amount of money. I remind the hon. Gentleman that in the last year, at a time when we knew that there was a financial crisis facing the public sector and that the NHS would have to deliver more for less, the strategic health authorities and primary care trusts increased their management costs—not their spending on patients—by 23% in one year. It was outrageous.
Jeremy Lefroy (Stafford) (Con)
I thank my right hon. Friend for his statement. As he will know, concerns were expressed about the role played by Monitor in the authorisation of the Mid-Staffordshire NHS Foundation Trust. Does he have any plans to beef up Monitor’s role and ensure that it plays a better role in the future in the authorisation of trusts?
Mr Lansley
Yes, and hon. Members will see in the White Paper the way in which we can strengthen the role of Monitor. It is not just about the authorisation processes for foundation trusts, but a continuing responsibility for the quality and standard of care being provided in all our trusts, NHS trusts or foundation trusts. It is important to focus on quality, on what constitutes quality and on ensuring sufficient incentives to support quality. In addition, I hope that some of the lessons that will be learnt from the inquiry being conducted by Robert Francis QC will inform how we can put a better system in place.
Paul Flynn (Newport West) (Lab)
How much will be created in additional bureaucracy and new costs by dumping on GPs tasks for which they are not trained?
Mr Lansley
The hon. Gentleman has not talked to GPs across England who are keen to take on this responsibility. In the process, we will reduce the costs of bureaucracy in the NHS by more than £1 billion a year.
Nick de Bois (Enfield North) (Con)
Does the Secretary of State agree that where moratoriums are in place, practising GPs should be encouraged to seize the opportunity to determine the future of hospital accident and emergency departments, as with Chase Farm hospital in my constituency?
Mr Lansley
Yes, I very much agree. As he knows, his local GPs, patient representative groups and the local authority are already demonstrating how they can come together to devise the right solutions for the people of Enfield and the district around Chase Farm.
Valerie Vaz (Walsall South) (Lab)
The Secretary of State talks about choice in the NHS, but could he confirm that GPs will be given the choice to join a consortium?
Mr Lansley
GP practices will all have to be members of a consortium, otherwise it will not be possible for them collectively to commission emergency and urgent care, and they will need to do that.
Clive Efford (Eltham) (Lab)
The Secretary of State seems to misunderstand one thing. When patients go in to be treated by a GP, they expect to get the best possible treatment available. The Secretary of State said in an earlier answer that he would expect patients to have the knowledge of drugs to be able to determine whether a GP was supplying cheaper or better drugs. What local accountability will there be of GPs, what resources will be put into HealthWatch networks, what resources will be left available for local health improvement budgets, and what teeth will local authorities have to impose local health plans?
Mr Speaker
Order. That was four questions, to which one answer will suffice.
Mr Lansley
The answer is that I said no such thing as what the hon. Gentleman suggested, and the record will show that.
Harriett Baldwin (West Worcestershire) (Con)
I welcome the fact that my right hon. Friend has said that an extra £20 billion will be going into patient care by 2014. Can he clarify how much more that is under our Budget, compared with Labour’s Budget, which would have cut the NHS budget?
Mr Lansley
My hon. Friend is right. It appears that the Labour party’s policy is to cut the NHS. Our policy is to do something that Labour never achieved: deliver greater efficiency and greater productivity in the NHS, not least through the reforms that I have announced. Every penny saved will be a penny reinvested to the benefit of patient care.
Meg Munn (Sheffield, Heeley) (Lab/Co-op)
Sheffield is one of the areas that already has GP consortiums. They have been developing their relationships with the primary care trust and are now starting to make progress. What guarantee can the Secretary of State give to my constituents that today’s unwanted change will not set back that process and not cause significant problems with the progress that has already been made?
Mr Lansley
It is not an unwanted change. All over the country, GPs themselves have resisted the concept that they do what the primary care trust tells them to do, when they are better placed to design services on behalf of their patients. They can, and I know that the GP commissioning consortiums in many places will want to take on board the key teams in primary care trusts that they think would help them deliver commissioning. However, GP commissioning consortiums will not be required to do so, although they will be required to deliver better outcomes for their patients.
Charlotte Leslie (Bristol North West) (Con)
If hon. Members speak to GPs and professionals, who do not just sit here and talk about the NHS, but actually run it, day by day, they will find that it is not change or the White Paper that has caused demoralisation, but the machine-gun fire of targets and the monolith of management. The reason why that has caused so much demoralisation among the work force is that target box-ticking is so often different from the provision of quality care, as we have tragically seen in Staffordshire. Can my right hon. Friend reassure me that his reforms will mean that box-ticking is replaced by quality of care?
Mr Lansley
My hon. Friend is absolutely right and expresses her point superbly. The process is going to be about quality, not tick-box targets, and it is going to enable the front-line staff of the NHS to have not only access to the resources that they need, but the power to use them more effectively.
Fiona Mactaggart (Slough) (Lab)
Who will have the legal responsibility for delivering the Secretary of State’s welcome promise of a health care service free at the point of delivery? If we have expensive patients who are not being well treated by the GPs, what resource do we have, as Members of Parliament representing the interests of those patients?
Mr Lansley
The hon. Lady will see, in the White Paper and the subsequent legislation, the continuation of the existing legal framework, which does not allow additional charges to be levied inside the NHS.
Derek Twigg (Halton) (Lab)
It is interesting that the Secretary of State said in the statement, “We will allow any willing provider to deliver services to NHS patients”. Does he rule out any area of services in the NHS where private providers will be able to provide services?
Mr Lansley
I am adopting an any-willing-provider policy that was the policy of the hon. Gentleman’s Government, until the shadow Secretary of State abandoned it in September 2009 at the behest of the trade unions. I am adopting a policy designed to achieve the best possible care for patients by giving them access to all those who will deliver NHS services within NHS prices.
Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)
Is my right hon. Friend aware that Hartismere hospital in my constituency was closed by Suffolk PCT, while at the same time, the PCT was able to afford to spend £500,000 on opening a new car park for managers? Does he agree that community hospitals such as Hartismere are still a valuable part of health care and that the White Paper might see a return to valuing them once again?
Mr Lansley
I am grateful to my hon. Friend for that question. I did in fact visit Hartismere hospital with his predecessor, and I entirely sympathise with his point. At that time, the primary care trust in his part of Suffolk was regarded as “initiative central”. It had to pursue every initiative from the Department of Health, and the money just went out the door. Those initiatives lasted just a year or two and then disappeared. That is not the basis on which to design the national health service. GPs are an excellent basis for this work because they are committed to their areas, and to the patients they look after, in the long term.
Alan Keen (Feltham and Heston) (Lab/Co-op)
If the Secretary of State is correct in saying that we need clinicians and GPs to have more influence and even control over the commissioning process, will he explain why he does not simply legislate for them to take over the current trusts? That would achieve his aim immediately, and if any inefficiencies appeared and changes to the management commissioning structure were needed—whether in the present PCTs or following reorganisation—they could take place after a period of time. Instead, these slash and burn proposals are going to cost millions of pounds and cause a lot of disruption.
Mr Lansley
The simple answer is because GP commissioners want to create their own commissioning consortiums according to their own needs and local circumstances. They do not want to be saddled with the legislative structures and costs that currently bedevil primary care trusts.
Rachel Reeves (Leeds West) (Lab)
In my constituency, a local charity called Healthy Living Network Leeds is commissioned by the PCT to provide health services in the most deprived areas, including among the Traveller community. What guarantee can the Secretary of State give to my constituents that those community-based health services will continue, and that they will be overseen to ensure that those treatments continue in the most deprived areas?
Mr Lansley
The answer is that GP commissioning consortiums will have a responsibility that goes beyond their registered patient population, and that when they set out their commissioning plans, those plans will have to be agreed by the local authority. In the hon. Lady’s case, Leeds city council will have a responsibility to ensure, through its health improvement plan and through NHS commissioning, that the needs of groups such as Travellers are properly met.
Sajid Javid (Bromsgrove) (Con)
My right hon. Friend will know that community hospitals, including The Princess of Wales community hospital in my constituency, have been under threat because of the policies of the previous Government. Does he agree that these new initiatives will make it more likely that local communities will take back control of their health care?
Mr Lansley
Yes, exactly. Last Thursday I was in Cumbria, and that is exactly what has happened there. The GP commissioners have collectively taken over responsibility for the Cockermouth community hospital. Instead of its being run down, as was intended, they have built it up as a base from which they are providing services for their area.
Andrew Gwynne (Denton and Reddish) (Lab)
Given that not all primary care trusts are coterminous with local authority areas, how will the public health aspect of the reorganisation be dealt with in areas such as Tameside and Glossop? It will not be as simple as just moving functions across to a single local authority in an area where a single health economy is greater than just one district.
Mr Lansley
As I am proposing to abolish primary care trusts, the problem of a lack of coterminosity will no longer apply. Health improvement plans, led by local authorities, will be set out on a basis consistent with many of the other services that make a significant contribution to delivering the kind of health and well-being that we are looking for.
Emma Reynolds (Wolverhampton North East) (Lab)
Wolverhampton primary care trust, working closely with GPs, has been at the forefront of driving improvements throughout Wolverhampton. For example, there has been a reduction in teenage pregnancies and in infant mortality. What evidence does the Secretary of State have that GP-led consortiums will be better placed than primary care trusts to carry forward further improvements in those areas, which affect the poorest communities in my constituency?
Mr Lansley
There is good evidence that physician-led commissioning of services for patients is very effective. Precedents in this country and across the world have shown that. The hon. Lady mentioned teenage pregnancy and infant mortality, and this is principally about the relationship between NHS services and wider public health services. Given such responsibility, I am sure that the local authority will be able to deliver local health improvement strategies that will impact on those factors more effectively than has been possible with the NHS doing it solely using NHS services and resources.
Chris Leslie (Nottingham East) (Lab/Co-op)
If the Secretary of State is going to force GPs to spend all this extra time on bureaucracy and managing the NHS, does it not mean that they will have less time to spend with their patients? Is that the reason why he scrapped patients’ right to see a GP within 48 hours?
Mr Lansley
Many GPs will find that they spend much less time trying to negotiate services for their patients through a PCT and NHS bureaucracy that get in the way. Of course GPs are operating collectively in a commissioning consortium, and I am not going to turn them into individual managers. Some GPs will be leaders—I am looking for clinical leadership—but they will also look for commissioning support. They can derive that from existing primary care trust teams if they think they are doing a good job; they can do it via local authorities or from independent sector providers of commissioning services as well.
Joan Walley (Stoke-on-Trent North) (Lab)
Does the Secretary of State not realise that there are greater health inequalities in some parts of the country, as in Stoke-on-Trent? Can he explain how this new arrangement of GP-led commissioning is going to deal with those health inequalities? Is it all going to be rolled out at one and the same time, or will there be pilot projects as part of a rolled-out programme? How is he going to ensure that health inequalities are dealt with, when local authorities in Stoke-on-Trent have to make £70 million of cuts over the next three years? How is it all going to be provided for?
Mr Lansley
It would be a good idea if Labour Members at least acknowledged that over the last 13 years health inequalities have widened in this country. We have not achieved health outcomes here that are at least as good as the European average, and in some respects regarding some diseases we are among the worst in Europe. We are going to turn this around. In order to do so, we are going to work not only with national strategies but with local strategies that are geared towards identifying those health inequalities and that expressly set out to reduce inequalities by looking beyond the NHS. Local authorities, the NHS, social care, the community and the voluntary sector will work together to make it happen.
Alison Seabeck (Plymouth, Moor View) (Lab)
The right hon. Gentleman talks about empowering GPs—some willingly and some unwillingly, I suspect. Some of them will need upskilling and training in order to understand the new process. What assessment has he made of the time GPs will need to devote to their training, and that of their staff, and of how much it will cost—or will GPs themselves be expected to pay for it?
Mr Lansley
I wonder whether the hon. Lady has met doctors in Devon. I have been to their local medical committee conference and discussed these issues with them. They are keen to go. If there was any difficulty, it was that at least one Plymouth GP had very high referral rates. I do not think he had ever checked those rates with his colleagues. It was interesting to hear them talk to one another. It became perfectly obvious that peer review—that sense of working collectively to manage services in an area—is going to hold GPs to account very effectively within consortiums as well. [Interruption.] The hon. Lady and all her colleagues completely underestimate the capacity of general practitioners, who are responsible for the overwhelming majority of patient contact in the NHS, not only to take on the responsibility of deciding whether they should incur the expenditure for the referrals they make but to have a say in designing those services.
Points of Order
Helen Jones (Warrington North) (Lab)
On a point of order, Mr. Deputy Speaker. You will be aware that the Secretary of State for Education today issued his fifth list of schools affected by the cancellation of the Building Schools for the Future programme. That list was not available to Members until 2.35 pm—after the first question on Building Schools for the Future had been taken at Question Time. Is there anything you can do to ensure that Members have the right information in front of them before we debate these issues?
Mr Deputy Speaker (Mr Lindsay Hoyle)
The hon. Member has made the point that it would have been beneficial if this information had been in place before Education questions. She has now put the point on the record, so it can be taken into account.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
On a point of order, Mr. Deputy Speaker. In the statement on the White Paper, the Secretary of State for Health asserted in response to a question from my hon. Friend the Member for Wolverhampton North East (Emma Reynolds) that there was evidence that GP-led commissioning was superior in outcomes to PCT-led commissioning. Am I right to assume that the Secretary of State will either substantiate that assertion in a letter to the Member concerned or by lodging substantiating information in the Library?
Mr Deputy Speaker
We have already had our debate on that issue and we cannot carry on with it now. It is not a point of order for the Chair.
Finance Bill
(14 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
20:15 - The Committee divided: - Ayes: 228 / Noes: 318 - Question accordingly negatived.
John McDonnell (Hayes and Harlington) (Lab)
I beg to move amendment 11, page 1, line 6, at end insert—
‘(2) Subsection (1) shall not have effect unless the Chancellor of the Exchequer has laid before the House of Commons a report on the extent of avoidance and evasion of corporation tax and on the measures he proposes to take to ensure the payment of tax which is due.’.
I almost feel like apologising for returning to the issue of tax evasion and tax avoidance, which I have pursued for a number of years since the debate that we had about the merger of Inland Revenue and Customs and Excise to form Her Majesty’s Revenue and Customs. The amendment is fairly straightforward in seeking that a report be prepared by the Chancellor of the Exchequer before corporation tax and capital gains tax measures are agreed by the House. I will not repeat myself in relation to amendment 12 to clause 2, although I will move amendment 12 formally. We have argued consistently about how to tackle evasion and avoidance and the investment required to do so.
Let me explain the rationale behind the amendment. I listened to the Second Reading debate into the early hours, including the discussions about Randalls of Uxbridge, which were enlightening at that point in time—
John McDonnell
As my hon. Friend says from a sedentary position, the discussions were refreshing, to say the least. I think there is another sale on at the moment.
The debate was about how to resolve the deficit that has arisen as a result of the credit crunch and the economic crisis that we face. Clearly, the division was around the level of reductions in public expenditure required and the time scale for their implementation. There was fierce debate about the level of public expenditure decreases and their implications for jobs losses, cuts in services and the impact on communities.
What was absent from the debate was a discussion of increasing tax revenues as an alternative to cuts. Everyone appreciated that the deficit needs to be reduced. There was some agreement, even across Benches, on some cuts, particularly with regard to ID cards and, perhaps, Trident. With regard to cuts in education and welfare benefits, however, there were strong differences. We need to look again at tax avoidance and evasion. There has been confusion about definitions in previous debates. Tax evasion is defined closely as the illegal non-payment or under-payment of taxes, usually resulting from the making of false declarations, or from no declarations of taxes to tax authorities, and can result in legal penalties. Tax avoidance is seeking to minimise a tax bill without deliberate deception, but contrary to the spirit of the law.
John McDonnell
The difference is clear with regard to legality and illegality. The technical implementation of tax legislation can be complex, so people can misunderstand which side of the fence they fall. During earlier debates in the House, the Denis Healey quote was cited that the difference is a prison wall. The implementation of measures to tackle tax evasion in particular is critical to the sound management of public finances and, obviously, to probity in the management of tax resources.
Mr Andrew Love (Edmonton) (Lab/Co-op)
Does my hon. Friend agree that avoidance and evasion are the same to the extent that, in the context of both, it will take a motivated and full work force at HMRC to deliver the benefits that the Government supposedly seek?
John McDonnell
I agree wholeheartedly. I shall say more about that shortly, because it is one of the issues that we raised—I think—four years ago at the time of the merger of the departments. We hoped at that stage for a more detailed report on personnel management and the number of staff who would be employed to deal with tax evasion in particular.
The fact that Her Majesty’s Treasury does not distinguish between evasion and avoidance in its global figures suggests that the Treasury itself finds the distinction difficult to define. I tried to find a clear Treasury quantification of what is generally described as the tax gap in order to draft an amendment that would have some purchase in the real world, especially the world of Treasury practice.
Lorely Burt (Solihull) (LD)
I am interested in the discussion of avoidance and evasion, but does the hon. Gentleman not agree that neither problem has been improved by his own party’s complication of the tax rules, to the extent that ordinary people require a professional to help them to interpret those rules?
John McDonnell
Complication is certainly an issue. That is partly why I want the Chancellor to report to the House on the measures that will be used to tackle tax evasion and avoidance. We need a simplification of the process, but we also need to know how many staff the Government will employ for collection purposes.
Mr Love
I thank my hon. Friend for being so generous in giving way. Does he agree with the Institute for Fiscal Studies that the terms of the Budget are likely to make the tax system more complicated, rather than introducing the simplicity that the Government claim is one of the objectives of their Budget?
John McDonnell
Let me say as objectively as I can that I have not yet seen a Budget that simplified the taxation system, and I have been here for 13 years. I live in hope, which is why my amendment requests a further report that might indicate the path that the Government intend to take. I am merely a humble seeker for truth in this matter, as always.
I investigated various sources in my search for estimates of the tax gap. The latest HMRC estimate that I could find was £40 billion, but there is an element of uncertainty reflected in a reported memorandum circulated to staff in HMRC and the wider Treasury, asking people to come up with ideas for identifying and calculating the gap.
The HMRC estimate has been challenged by others. I chair a group called the Left Economics Advisory Panel, which brings together a number of Left economists including some who have been working with the Tax Justice Campaign. Over the years many Members will have worked with Richard Murphy and John Christensen, who are held in respect across parties because of the work they have undertaken in this sphere, and the advice that they have given to the Treasury and other organisations for a number of years. According to their estimate over the past year, the tax gap could be anything between £70 billion and £120 billion.
Mr John Redwood (Wokingham) (Con)
If the gap is so enormous, can the hon. Gentleman explain why 13 years of Labour government did not close it?
John McDonnell
I can only say that that is one of the reasons why I have raised the issue so consistently. I hope that some Government will address it, and will do so effectively. It is also why I have sought to amend the Bill in a consensual way. All I am asking is for the Treasury to produce a report setting out our best current estimate of the extent of avoidance and evasion, and to propose measures that the Government could take. That would be a way for the Government to demonstrate that they are taking the issue seriously and tackling it.
There have been other estimates of the tax gap that go beyond that of Richard Murphy, some of which are as high as £150 billion a year. Interestingly in respect of the Treasury’s £40 billion figure, it estimated in a table it published earlier this year that corporation tax accounted for 16% of its tax gap and that capital gains tax along with national insurance contributions and so forth accounted for 6%, so the taxes this particular amendment addresses are significant contributors to the tax gap.
I fear that unless this issue is addressed we will continue to have a sterile debate in the House about cuts in public services, whereas if we tackled the tax gap we would avoid a significant amount of the public service cuts that will impact upon all our communities. I therefore urge that we have a serious debate and that the Treasury produces a report quantifying more exactly the levels of tax avoidance and tax evasion, and that we then look at possible measures—including, I agree, on simplification. Issues to do with what resources we apply to tackling tax evasion and avoidance are also of relevance, however, and that comes down to staffing.
Dr John Pugh (Southport) (LD)
Should we not recognise that tax avoidance and tax evasion are two very different things, and that although we can make a rational guess as to the extent of the former, tax evasion that is successful is not detected at all and therefore any estimate of it must be highly speculative?
John McDonnell
I fully concur, which is why I think that HMRC must apply a lot more resources to tackling quantification. The estimates I have been given range widely from the £40 billion from the Treasury for both avoidance and evasion—its figures do not distinguish between them—to the £25 billion from the TUC solely for tax avoidance, to the higher estimates of anything between £70 billion and £150 billion for both evasion and avoidance. I know that Richard Murphy in particular has focused on evasion, which could account for anything between 40% and 60% of the budget deficit—the structural deficit as well—that this House has recently been debating, and dividing on almost unnecessarily it seems to me.
Andrew George (St Ives) (LD)
I congratulate the hon. Gentleman both on raising the issue and on the manner in which he is doing so. He has made it clear that he has raised it under two Governments. Putting aside the tribal aspects of the debate, I agree that we need to bear down on this issue, and I have asked parliamentary questions on evasion and avoidance that are due for answer today. Does the hon. Gentleman agree that it is to be hoped that once we understand a great deal more about this issue, we will be able to close the loopholes, and address other issues such as where Treasury officials go and work after they leave the Treasury?
John McDonnell
I fully agree.
I have not included any reference to VAT, which is one of the largest areas of tax evasion and avoidance. Interestingly, it appears from the responses we have had over the years from the Treasury that it uses different methodologies to calculate the different forms of evasion and avoidance for particular taxes. I find that extremely confusing.
The amendment has been described as not tribalist. Well, I am a tribalist, but I am trying not to be on this issue; instead, I am being as consensus-seeking as I can be. Even though I come from a class-based politics, I am trying to come at this from a straightforward administrative perspective, asking how we can arrive at a situation in which HMRC will report to the House—to the Chancellor of the Exchequer—on the extent of evasion and avoidance and the measures that are going to be pursued. The reason why I am making a link to the changes in tax measures is that I want there to be a time limit, so that we get a report back to the House; otherwise, this situation will continue year after year.
This issue does relate to that of staffing, which I raised with the previous Government and am raising with this one. I chair the cross-party PCS trade union group in Parliament, which regularly meets PCS members who work in HMRC and who are tax inspectors. It is clear that they have performed an excellent service to our country over the years, and their productivity has been increasing year on year. However, over the past three years job cuts totalling 12,000 within HMRC have been announced that specifically affect staff involved in tax generation. At a time when we are desperately trying to tackle the deficit through measures other than reductions in public expenditure and cuts in public services, we could do that by tackling tax evasion and tax avoidance. However, at the same time, we have the prospect of another 12,000 jobs being lost within HMRC.
Mr Redwood
If a constituent of the hon. Gentleman’s had a deposit in a savings product that was paying interest, on which they were paying tax, and they switched that into a tax-free national savings product, would that be tax avoidance or sensible investment?
John McDonnell
That is an interesting point. Tax compliance should be a duty in law, so there should be a requirement on us all to pay our appropriate level of tax. Tax planning is perfectly consistent within the law and is appropriate for individuals and organisations in order to ensure that they pay the appropriate tax. However, such devices should not be used to avoid paying the rightful level of tax and certainly should not be used for the purposes of tax evasion, which is the illegal avoidance of tax.
As I was saying, my concern is that, just when we need staff to tackle tax evasion and avoidance, we are faced with the previous Government’s plan for a further 12,000 job cuts within HMRC. I urge the new Government to review the matter and to look again at the staffing level that will be required if we are seriously to address tax evasion and avoidance. That is another reason why my amendment calls on the Chancellor of the Exchequer to lay before us a report that sets out the measures he proposes to take
“to ensure the payment of tax which is due”.
In devising those measures, appropriate discussions will need to take place about the level of staffing and the qualifications and abilities required of such staff. Such factors will militate against the scale of job cuts that have taken place.
On another issue, but one that has certainly been close to the hearts of several Members over the past two years, such measures will need to take into account not just staffing levels but staff location. The closure in recent times of local tax offices has reduced HMRC’s ability to respond to tax evasion and tax avoidance on the basis of local knowledge, and to assist local companies and individuals in proper tax planning so that they can comply with the law. I request that any report that the Chancellor introduces deal with the implications of the closure of local tax offices and, therefore, the appropriate location of the staff themselves.
I have tabled two amendments, the first of which, amendment 11, deals with corporation tax.
Mr Love
Does my hon. Friend agree that any such report dealing with HMRC must also deal with the difficulties that arose on the amalgamation of Revenue and Customs because of the very different cultures within those organisations? We really must address those difficulties, which still reverberate around the organisation, even at this late stage.
John McDonnell
I appreciate the point that my hon. Friend makes. I accept that there have been issues relating to a new department settling down over time, but I want to pay tribute to the staff involved for the excellent job they have done in the set-up of the new organisation, for the flexible way they have worked and for the co-operation that has worked across past agencies as they have come together. I accept that that might be an issue and it could be referred to.
I will not repeat the same speech when we deal with amendment 12.
Sajid Javid (Bromsgrove) (Con)
May I say that there seems to be a big confusion between tax evasion and tax avoidance? The hon. Gentleman keeps referring to “avoidance and evasion” and treating them in almost exactly the same way. Clearly one of them, avoidance, is entirely legitimate—it is a basic human instinct for someone to try to hold on to more of their own money, which they have earned through their hard work—whereas the other, evasion, is an illegal activity. Would he not do well to focus on what might be the issue, rather than trying to confuse it?
John McDonnell
I understand the point that the hon. Gentleman is making. My amendment tackles tax evasion, which is clearly an illegal activity, but we need to address a wider issue that goes beyond the normal tax planning: tax avoidance beyond the spirit of the law. In previous debates, we have tried to insert into the tax laws of this country a general duty of tax compliance, which exists in other countries. Such an approach puts an onus—as a duty in law—on the individual to comply and to try to emphasise that duty, rather than to look for every possible means to avoid tax. There is a gradation in these matters, but I tackle both these things because they are both legitimate concerns in wider society and will become increasingly pressing ones as individuals experience the public expenditure cuts that will take place as we seek to tackle the deficit.
Stewart Hosie (Dundee East) (SNP)
The hon. Gentleman is making his case extremely well, but surely he should be pushing at an open door, given that the Red Book itself talks about changes
“to prevent avoidance of corporation tax using accounting ‘derecognition’ rules”.
It also discusses tax avoidance involving “the creation” of certain things “for corporate investors”, and mentions alternative investment funds, financial securities, inheritance tax on trusts and so on. There is also the possibility of a general anti-avoidance rule, as this is being considered informally by this Government as we speak.
John McDonnell
That is why I was hoping my amendment would achieve consensus in this House, although that might be a first for me. I was hoping that it went with the flow of Government policy, as well as with past Government policy, if not with past practice under successive Governments. A number of practices of tax avoidance clearly incur public opprobrium. The hon. Gentleman has cited a number that are listed in the Red Book, but there are others. These are seen as instances where people are not doing the right thing within the spirit of the law, which is why, no matter how difficult it can be at times, we can identify practices that fall within either tax evasion or tax avoidance by the practical response from the community.
This is an issue whose time has come, particularly because of the current financial climate. There is clearly a concern among Members in all parts of the House about tax evasion and tax avoidance, and there will increasingly be concern about it in the wider community. Therefore, my simply asking for the Treasury to produce a report before this latest round of taxes are implemented—this would give an element of timetabling and immediacy to the proposals that will be introduced by the Treasury—is nothing but helpful and will be seen in the wider community as actually getting the Treasury to examine this issue with some seriousness in a way that may not have been happening under previous Administrations of all political parties. I cannot see how anybody could vote or argue against this, but I shall sit down and wait for the argument to come.
The Chairman
(Mr Lindsay Hoyle) I call Karl MᶜCartney. May I just remind Members that this is a maiden speech?
Karl MᶜCartney (Lincoln) (Con)
Thank you, Mr Hoyle, in your role as Chairman of Ways and Means and as the House sits in Committee to consider the amendments to this Finance Bill, for allowing me the opportunity to make my first speech in the House.
I intend to comment on two matters of importance today: the amendments to the Finance Bill and Lincoln, the constituency that I have been elected to represent. Before I discuss either matter, however, I want to pause to pay tribute to my parents, John and Brenda McCartney, who are here in the Gallery, along with my wonderful wife, Cordelia. I am pleased that she is still here, as I am indebted to her for so much, not least our two sons, Henry and Freddie.
Let me now return to the Finance Bill. What concerns me most is the lack of support for long-term share ownership that is eminently displayed by the current capital gains tax regime, which, ironically, now seems to be based on principles that are at odds with how we are to treat banker bonuses whereby an increasing proportion of their compensation is compulsorily taken in shares of their employing parent company. That has the quite admirable aim of encouraging actions that have at their centre the long-term interests of the companies for which they work. This is commendable.
Less commendable is the loss of taper relief, which encourages long-term share ownership and investment. Surely many on both sides of the House see the retention of taper relief as desirable. Also less commendable is the loss of indexation relief. Following a change introduced by the previous Government, payers of capital gains tax will continue to be taxed on illusory gains. A simple example might help to explain my concern. Let us say that the average price for a pint of beer is £2.50. Instead of buying a pint, one could invest that £2.50. If inflation averages 7% per annum for five years and the investment keeps pace, the beer will have risen in price to £3.50, as will the value of the investment. The investor would therefore expect that the investment would still buy a pint, except that it would not, because 28% capital gains tax would have to be paid and the investment would therefore be worth only £2.50 net of tax. That is clearly inequitable. Given the widespread acceptance that short-termism from investors is a problem faced by businesses up and down the country that are trying to attract capital for start-up funding, working capital and expansion, surely that is short-sighted.
I know that this matter is important to a number of people who are resident and work in the city of Lincoln. My fellow constituents are industrious and hard-working, and many of them either own their own business, want to start their own business or work for a small family-owned business. They know the importance of access to capital as an owner, a manager or an employee. Enabling measures that encourage investment is surely what this House should be about. What we have in place now enjoys the invidious merit of achieving the exact opposite and I hope that my senior colleagues will rethink these issues at the earliest opportunity. I know that we are where we are because of the utter mess bequeathed to us by Labour in the last Government, so I hope that as soon we have rebalanced the nation’s finances, we can reverse these measures, if we cannot do so now.
Let me now say a few things about the history of Lincoln and some of the main issues that affect the constituency. I shall summarise my thoughts and areas of interest, as well as detailing my predecessors and the military links that the constituency enjoys.
It is a privilege and an honour to represent the constituency of Lincoln. When I first embarked on the long and arduous B-road to selection, reselection and election, I did not imagine that I would have the privilege of representing such an ancient, traditional and famous constituency as Lincoln. I aim to show my constituents that they chose wisely, as a Jedi might say.
Lincoln is not just another name in the list of 650 constituencies. It is a city that plays and will continue to play a pivotal role in our nation’s democratic tradition. Naturally, I am proud to represent Lincoln and, as hon. Members might know, it is one of the oldest constituencies in the country. The Romans quartered a legion in the city and Edward III presided over a Parliament in our cathedral. The cathedral, which is one of the glories of English architecture, dominates the city and a large swathe of Lincolnshire. It is still as impressive today as when it stood as the tallest building in the world for 238 years—the only building in the UK ever to have held that title. If my Government ever feel the need, I am sure that Lincoln will be willing again to host a meeting of Parliament or of the Cabinet at a date of their choosing.
Although I am not an historian, I can safely reveal to hon. Members that the historical evidence for Parliaments before 1295 is quite patchy. Lincoln and York head the list of towns summoned to send Members in 1265 and, with the recent splitting of the city of York into two seats, it would seem that Worcester and Exeter appear alongside Lincoln in having a possible claim to being the oldest continuously existing borough constituencies.
Lincoln has so much more to commend it as a destination and as a place of history and worship than its two equally ancient constituencies. The cathedral is stunning and has proved a welcome sight and landmark for many travellers over the centuries and for our brave airmen in Bomber Command during the second world war. Lincoln is also home to one of only three existing original copies of the Magna Carta, the foundation of British, and therefore world, democracy. With our new Government’s plans for a great repeal Bill, we can see the relevance that the Magna Carta still has today, nearly 800 years after it was signed.
The city’s MPs have included the redoubtable Dick Taverne, who continues to sit in the other House, and the right hon. Member for Derby South (Margaret Beckett), originally Miss Margaret Jackson in Lincoln, eventually Mrs Beckett. More recently, I am honoured to follow in the footsteps of the last Conservative Member for Lincoln, Sir Kenneth Carlisle, who served happily between 1979 and 1997 and for whom there is a mutual, deep affection for and from the city of Lincoln and its people. My direct predecessor was Gillian Merron, who worked hard for constituents and was incredibly photogenic, appearing in our currently daily paper with regularity—something that I fear I will not be able to emulate, not least because many of my friends say I have the perfect face for radio.
The people of Lincoln and Lincolnshire are proud to be yellow-bellies—a hark back to the original Lincolnshire “Poachers” Regiment, which is now part of the Royal Anglian Regiment, some of whom I met earlier today out in Westminster yard. They serve us well abroad and in many fields of conflict, and I know that the people of Lincoln are immensely proud of them and all the armed services associated with our city, which is linked with the RAF and the Grenadier Guards.
As well as the city, my constituency covers the lovely villages of Skellingthorpe, Bracebridge Heath and Waddington, where the RAF is based. RAF Waddington is one of the busiest and most varied operational air bases in the United Kingdom, as well as one of the longest established. It has played an important role in the defence of the country and in supporting and servicing our armed forces. Soon, Waddington is due to become the home of the Red Arrows, who are another well-loved and appreciated aspect of Lincoln life as we are often treated to their practice sessions in the skies above our city.
Despite its wealth of attractions both historical and current, Lincoln has poor transport links that have worsened over recent years. There is now, unfortunately, only a post-election promise of one direct rail link to London and there are inadequate connections to other places. The A46 is soon to be dualled from Nottingham to Newark and the knock-on effect might be that the A46 single carriageway and roundabouts that plague our western, and only, bypass might cope even less well than they do now. The only other route is through the centre of our city, using the single carriageway A15 or negotiating our High street with its famous level crossing.
I am not aware of any other city in our country that is being held to ransom by Network Rail, which is currently threatening the city with the closure of that level crossing for up to 40 minutes in the hour throughout the day to allow freight trains that are of no benefit to Lincoln to pass through. Lincoln needs investment in its transport system that will provide a vital benefit to the long-term prosperity of both the city and the whole county, such as the east-west link road that is currently proposed. On all these transport issues, the Secretary of State for Transport and his Ministers can expect continued representations from me and my fellow Lincolnshire MPs, I am sure.
Many experiences, people and types of employment have shaped my life so far, and I am a great believer in being the owner of one’s destiny. If individuals feel that the world owes them a living, it does not, but if they are willing to believe in their own self-determination, there are no limits to what they can do. Many individuals from both sides of the House are testament to that philosophy. I now have the opportunity and ability to help to make decisions that affect our nation and to question and challenge them properly in the House, with, I hope, the important addition of compassion. It is a privilege to have that opportunity, in tandem with serving the kind and generous people of Lincoln, who did me such a great service in electing me to represent them in this traditional and great place. Doing my best for our city will be a major preoccupation of mine for as long or as short a time as the people of Lincoln allow me the privilege of representing them in this House.
Mr Redwood
Let me start by saying a few words about my new hon. Friend the Member for Lincoln (Karl MᶜCartney). I am sure that the House will join me in praising him for his speech and in wishing him every success now that he has joined us here. It is good to hear someone with a radio face with a passionate voice for his constituency. If he continues that, I am sure that his constituents will be well served. It was great to be reminded of the hugely important Lincoln cathedral, which many of us have visited and admired, and of the fact that Parliaments were once more peripatetic. In those days, there was probably less security and fewer people in the baggage train, so it was probably cheaper to take Parliament around the country than it would be today. I fear that he might have quite a long wait before the next Parliament at Lincoln.
We are here to debate tax avoidance and evasion. I listened carefully to the hon. Member for Hayes and Harlington (John McDonnell), but I think that the Committee is pursuing a will-o’-the-wisp if it seriously believes that there is £120 billion of tax evasion and avoidance generally, and that there is substantial tax evasion and avoidance in particular on corporation tax, which we are debating, that we can tackle and get the money in from. Every hon. Member would like to think that there is an easy way out of the financial crisis. If there were a great pot of money representing tax dodging that we could identify and bring into the Treasury, it would have been done by now. It is not a matter of party dispute. If there are tax evaders out there whom we know about, they need to be brought to book—we all agree with that. Labour spent 13 years trying to do it, but the hon. Gentleman does not think that it did it well enough, and is now urging the coalition Government to do it. The coalition Government will pursue it in similar ways, with similar intensity, to the outgoing Labour Government. I fear that they will be no more successful than the previous Government at finding that £120 billion pot of gold because, in all honesty, I do not think that it exists in the form that hon. Members wish that it did.
Let us take evasion—the more serious case. I am sure that everyone in the House agrees that if someone is deliberately evading tax, it is a criminal offence. The House has said that it is a serious offence, and made it a criminal offence, or series of criminal offences, and we wish to see those people pursued and prosecuted. In the case of corporation tax, for example, if a company deliberately misreports its income, and says that it receives less income than it earned—one way of misleading the tax authorities over corporation tax—the book should be straightened, the record corrected, and they should be prosecuted. If the company deliberately overstates its costs to try to suppress its profits—the other way in which people could evade corporation tax, if they were seeking to do so—that, too, should be something that the authorities can identify on investigation, leading to a correction of the accounts. False accounting would be involved, as well as the criminal offence of tax evasion, and there are methods of tackling it. The state has a range of powers, introduced by Governments of all persuasions, to allow company investigation, including second-guessing the audit, and going in if it is thought that crooked directors are misrepresenting their costs or revenues, and the auditors have missed it. I wish my right hon. and hon. Friends the Ministers in the Treasury every success in trying to capture genuine crooks, because we do not need them in our community, and we need to flush them out.
There is another kind of failure to pay the amount of tax that the corporation tax authorities think is correct which, in some people’s language, could be evasion. A company may report honestly its revenues and costs, but comes to a different conclusion from the Revenue about what the taxable profit should be, given its income stream and costs. It attempts to understand the complexity of the law—it may well have its own tax advisers and auditors in support, because any medium or large company does not do this in isolation; the directors want the comfort of knowing that they have serious tax experts behind them, because of the complications of the law—and it makes its case to the Revenue, which disagrees with them. I do not think that that should be treated as a severe criminal offence leading to the imprisonment of the directors. What should usually happen—and what tends to happen—is a fierce exchange of views between the Revenue, which is trying for one view of the tax, and the company and its tax advisers with a different view. Eventually, agreement is reached. If it is thought to be a bad case, the Revenue has the power to impose financial penalties as well as to secure the tax that it thinks that it is owed.
Clive Efford (Eltham) (Lab)
I am interested in the right hon. Gentleman’s train of thought, but will he clarify something? Is he saying that there is no such thing as avoidance of corporation tax, or is he saying that anything that comes about is just the result of a misunderstanding?
Mr Redwood
Has the hon. Gentleman been in the Chamber while I have been talking? The first part of my speech was about bad cases of evasion in which a company has deliberately misrepresented its financial condition. Like him, I think that those cases should be taken seriously, and prosecution should result. I am going on to the second set of cases, in which evasion is thought to have taken place according to the Revenue, but when we look at what is going on there is a genuine disagreement between one group of tax experts, lawyers and company advisers and another lot advising the Revenue, which sometimes needs to consult counsel on these complicated matters to try to reach a conclusion. Such cases are often sorted out slightly more amicably, and rightly so, because the companies concerned were obviously not trying to do down the Revenue but to pay the minimum amount of tax to comply with the law, as most sensible people try to do, and there was a disagreement that had to be sorted out sensibly. That might result in financial penalties or in an agreement not to have financial penalties, but usually the Revenue has a certain amount of strength in having its way.
That is evasion, and then there is avoidance, which is much more problematic. I am sure that billions-worth of avoidance is going on all the time, because it is a perfectly legal approach; one man’s avoidance is another man’s sensible tax planning. That is why I asked the hon. Member for Hayes and Harlington for an example relating to personal income tax, which is easier for people listening in to this debate to understand. Many small savers switch from tax-paying savings to tax-free savings, which is avoidance of tax, is it not? They realise that they can do better by having a tax-exempt savings product; surely we should not condemn that, because it is about someone trying to get the most for their money. Indeed, that is something that the Government positively encourage. They encourage tax avoidance because they say, “We have the unique power to provide tax-exempt products for savings, and we want you to buy ours rather than the taxed private sector product.”
Stephen Timms (East Ham) (Lab)
My hon. Friend the Member for Eltham (Clive Efford) asked a telling question, and I am not sure what the right hon. Gentleman’s answer is. The question is this: does he deprecate any tax avoidance, or is he saying that as long as it is strictly in compliance with the law, anything goes? As he knows, there have been some very ingenious, and indeed expensive, schemes used by companies to avoid paying tax, clearly contrary to the spirit of the law but arguably in compliance with the letter of the law. Does he not deprecate that kind of activity?
Mr Redwood
I do not want to get drawn into the moral issue of deprecating or not deprecating: what I am interested in is the efficiency of revenue collection and the clarity of the law for the people having to meet it. It is the job of this House to have a clear tax law that people have to follow, and we often have these debates to try to carry out that task. Sometimes tax law is so complicated, or people outside this House are so ingenious, that there are ways round it that I might disagree with and the right hon. Gentleman will often disagree with, and that is when we come back to legislate again. We say, “We haven’t done our job well enough. People are avoiding tax more easily than we would like them to be able to, and so we’re going to add another complication”—or sometimes even a simplification or clarification—“to the tax law to try to capture that.” That is the job of this House. The shadow spokesman and I will sometimes agree that an avoidance scheme goes too far and we need to legislate to stop it; on other occasions, we will disagree. I will say, “That’s perfectly rational tax planning—don’t be such a party pooper”, he will say, “I don’t like people getting away with that kind of thing”, and we will have our disagreements.
Mr Love
Given the thrust of the right hon. Gentleman’s remarks, does he agree with my hon. Friend the Member for Hayes and Harlington (John McDonnell) that cutting the number of HMRC employees by 10,000 might not assist in the process that he is outlining of ensuring that those who take part in avoidance are brought to book?
Mr Redwood
It would clearly be a false economy to cut back on the number of staff needed to tackle serious cases of tax evasion; I do not think anybody wants to do that, and I certainly would not recommend it to Front Benchers. It would also be wrong, however, to exempt Revenue and Customs from pressure to improve efficiency and to do more with less at a time of enormous strictures on public spending. I hope that there will be ways to accommodate the hon. Gentleman’s wish for us still to have Revenue and Customs pursuing tax evasion and our coming back to legislate on tax avoidance that it thinks is going too far, as we have under past Conservative and Labour Governments, and that that will be done efficiently and effectively in the way that we wish to see.
John McDonnell
To follow up on the question of my right hon. Friend the Member for East Ham (Stephen Timms), are there any measures that the right hon. Gentleman would consider tax avoidance that should be brought within the purview of Her Majesty’s Revenue and Customs, such as the large-scale offshoring mechanisms that corporations use to avoid tax? All that the amendment asks is for a report to be made about the measures that the Government will take on such issues.
Mr Redwood
I do not necessarily disagree about the need for us to consider another report on tax avoidance and evasion, but I am trying to set some of the parameters for that report and the framework of the debate. This is an opportunity to discuss why the matter is difficult, and why past Governments have not lived up to the hon. Gentleman’s expectations. I have no problem with having a report, although I do not want to link it to the particular corporation tax rate in clause 1, as his amendment would.
John McDonnell
I am grateful for that response. Successive Governments have pragmatically examined the latest tax avoidance mechanisms and then sought to work through them systematically to address them. The amendment is intended simply to bring forward a report on those mechanisms so that the House can have more oversight of that process.
Mr Redwood
As the hon. Gentleman knows, I am all in favour of more oversight by this House, and the more informed a debate we can have about this and other issues the better. Public debate in Britain has been stifled in recent years for all sorts of political reasons that we need not go into. It is better if we can bring such debates out into the open, but we need collectively to think through what avoidance is and what evasion is. If we do not know that, we cannot hope to guess its scale or optimise our measures for dealing with the features of it that we do not like. I am trying to deal with avoidance, on which I believe there is more scope for disagreement than on evasion, which we are all against.
I return to the point that some people’s avoidance is a bad practice and other people’s is common sense. Let us take another example of a matter on which the Government encourage avoidance. I gave one from personal tax, but we ought to be concentrating on corporation tax. The previous Labour Government were keen to encourage avoidance of corporation tax because they wanted companies to invest—a perfectly worthy aim. They said to companies, “If you invest more than you otherwise would do, that is an allowance against your corporation tax so that you will be able to avoid some tax in order to invest more.” One debate that the Committee will have is whether this Government are cracking down too much on investment avoidance by removing some of that allowance and giving everybody the benefit of a lower rate. I hope that Opposition Members will see that they are not as pure as they think they are on avoidance, and that there are certain types of avoidance that they see as a very good thing. It is a well-known feature of many tax structures to encourage avoidance in order to encourage good works or change conduct.
Mark Tami (Alyn and Deeside) (Lab)
The right hon. Gentleman talks about avoidance all the time, but is it not about the Government giving companies incentives to invest, rather than allowing them to avoid tax?
Mr Redwood
The hon. Gentleman has made my point beautifully. I have just said that one man’s avoidance is another man’s tax incentive—that is exactly the point that I am trying to make. There are good types of avoidance and bad types. Sometimes all the parties in the House agree that a certain type of avoidance is bad, and then it is in our own gift, because we are the legislature, to table business on any day to stop that tax avoidance in its tracks by changing legislation explicitly and clearly to send a signal. At other times we come together to legislate in favour of tax avoidance, because there are things that we wish to encourage. As he rightly says, sometimes the best thing to do is to give people a lower tax bill to encourage such procedures. That is surely encouragement of tax avoidance of a benign kind and a perfectly reasonable thing to do.
Mr Redwood
The hon. Gentleman shakes his head, but what else is it? Why are people investing more than they otherwise would have done? Because they are allowed to avoid tax and pay less tax than they otherwise would.
Stephen Timms
The right hon. Gentleman is uncharacteristically abusing the English language. To say that something that is explicitly provided for in the law is tax avoidance is not what most people mean by the term.
Mr Redwood
Fine—that is a very good linguistic point, and if the right hon. Gentleman wishes to define tax avoidance more narrowly as actions that we all disagree with, we can do that and it makes the debate much simpler. However, he has to understand that there are a series of grey areas, and it is not a black-and-white matter. There is not a set of actions that everybody agrees are tax avoidance and another set that everybody agrees are perfectly reasonable incentives or sensible ways of paying less tax.
Let us get on to the more difficult corporation tax cases, having dealt with the investment one—everybody in the House thinks that investment is a good thing and that corporations should therefore pay less tax one way or another, either through the rate of tax or through explicit relief.
Clive Efford
I pay tribute to the hon. Member for Lincoln (Karl MᶜCartney), who made his maiden speech. Many of us remember his predecessor with great fondness, and we certainly notice the difference in appearance to which he referred. She was a popular Member here, as I suspect that she was in her constituency. I am sure that the hon. Gentleman will do an able job in his time as Member of Parliament for Lincoln.
The thrust of the argument of my hon. Friend the Member for Hayes and Harlington (John McDonnell) is that the House should be able to scrutinise the Government’s actions on enforcement of corporation tax to avert some of the severe and harsh cuts elsewhere in public expenditure. The Red Book refers to the need to reduce all sorts of evasion. Indeed, paragraph 1.96 mentions the Government’s measures on corporation tax, which a later group of amendments tackles, and states the need to alter the rate of corporation tax to reduce the avoidance of payment. A practice has been created of people avoiding other forms of tax and paying capital gains tax at a lower rate to minimise the amount that they pay in tax. I therefore agree with the thrust of the point that the right hon. Member for Wokingham (Mr Redwood) made that there are times when we need to tweak the tax system to close down loopholes. In that sense, the tax system has historically been like turning a thermostat up and down. We introduce one set of regulations, that area overheats, the thermostat is turned down, another section of the tax system responds and people move in that direction to avoid paying tax.
With amendment 11, my hon. Friend is trying to ensure that the House can hold the Government to account for what they do to fulfil what they say in the Red Book, and thereby ensure that the Government maximise the amount of corporation tax that is paid.
Kwasi Kwarteng (Spelthorne) (Con)
Will the hon. Gentleman clarify his basic position? Does he believe that in principle corporations ought to pay more tax than they are paying already?
Clive Efford
The point, on which I believe we are all in agreement, is that everyone should pay the tax that they are due to pay. Amendment 11 proposes not that corporation tax should be raised or reduced, but that it should be paid, that the Government ought to take action to ensure that companies that are liable to pay it do so, and that the House should have the role of providing a check and balance to ensure that the Government are carrying out that function.
Clive Efford
I could not agree more. If I were to start listing some of the harsher items in the Budget, such as the £1.9 billion that the Government are trying to take out of housing benefit or the overall £11 billion from the welfare budget, I would risk incurring your wrath, Mr Amess. I would also risk that if I were to point out some of the actions of the previous Government in relation to the medical tests that disability living allowance claimants were forced to go through. The coalition Government, supported by the Liberal Democrats, tell us that things will become even harsher for DLA claimants, so our discussion of minimising avoidance of corporation tax is absolutely relevant.
Stewart Hosie
May I ask the hon. Gentleman to put a number on that? What is his estimate of the value of lost revenue yield as a consequence of the 12,000 Revenue staff lost under the previous Labour Government?
Clive Efford
The hon. Gentleman makes a point that I could repeat. Cutbacks in Her Majesty’s Revenue and Customs staff make more distant the target of maximising the amount of tax taken. He may have joined me on the odd occasion when I voted against the previous Government, so we have been on the same side of such arguments from time to time. Some of us are sinners turned saints, and even as a loyal Labour Back Bencher, I might agree with elements of the criticisms of the previous Government.
We have been given instruction in tautology on the question of avoidance and evasion, but we are quite clear that we are talking about people whose actions are not within the rules. We need to ensure that action is taken so that they pay their fair share, because clearly, the increase in taxation—the VAT increase and other measures—and the cuts will hit the poorest in our communities first. That is why it is absolutely essential that we have discussions such as the one instigated by my hon. Friend the Member for Hayes and Harlington.
Mr George Mudie (Leeds East) (Lab)
Does my hon. Friend agree that it would be a shame to let this debate go by without mentioning the activities of Barclays bank, and particularly its capital section? The head reputedly earned £90 million a year. We should consider that amount of money, because that group was set up to find ways for companies to avoid paying corporation tax, or indeed any tax.
Clive Efford
My hon. Friend’s intervention needs no comment from me, other than to say that it is an excellent example of the sort of practices that we need to bear down on. We pay a plethora of accountants and financial advisers to advise on how to invest our money wisely, and that is a legitimate area of activity. It is right that people may order their finances within the rules to maximise their income, but if that becomes exploitation or unfair in terms of what people are contributing, we have to act. That is where the amendments that we have tabled on capital gains tax, which we will discuss later, come in.
The hon. Member for Dundee East (Stewart Hosie) mentioned the cut in tax staff, and if we are going to see substantial cuts in staff, it will make it even more difficult for HMRC staff to perform their task on whatever tax they are pursuing, be it corporation tax or any other.
The right hon. Member for Wokingham seemed to dismiss the issue of tax evasion, suggesting that we could pursue evaders until the cows came home, but they would never pay the tax so we would not be able to close the deficit by pursuing them. He then went on to talk about the difference between evasion and avoidance, rather than focusing on what we can do—as the people who scrutinise legislation—to ensure that the Government are delivering on their words in the Budget.
Mr Redwood
I wish to correct the record. I made it very clear that if a company were evading tax, we should throw the book at them and get the money back.
Clive Efford
My point is that that was the sum total of the right hon. Gentleman’s contribution on that subject. He then elaborated on other issues. The point is that the thrust of the amendment is evasion—people working the system in a way that breaches the rules and means that they do not make the contributions that they should make. Those are the people we should bear down on. In my intervention in his speech, he accepted that there was such avoidance, and that those people should be dealt with. It is how we scrutinise that that we are discussing now. It is the function of this House to hold the Government to account, and the amendment asks for a report to Parliament on what exactly the Government are doing.
I congratulate my hon. Friend the Member for Hayes and Harlington on his amendment, and I look forward to hearing what the Government have to say in response.
Gavin Williamson (South Staffordshire) (Con)
I shall try to be brief, as I was always told that brevity is a virtue. I am sure that many hon. Members will be brief in all their contributions this evening.
I pay tribute to my hon. Friend the Member for Lincoln (Karl MᶜCartney), who painted such a stirring picture of the city of Lincoln that most hon. Members will be hotfooting it there at the weekend if their constituency duties allow.
I listened with great interest to the hon. Member for Hayes and Harlington (John McDonnell), especially when he said that in his 13 years as a Member of Parliament taxation had never been simplified. I suggest that that is because of the 13 years of Labour Government during his time in Parliament; that is why the taxation system has got so complicated. To reduce tax avoidance we need to ensure that we have a simple and plain tax system. It might be a difficult concept to accept, but the less tax we have to raise, the less chance there is of having tax avoidance. It is beautifully simple, but beautifully true.
Stewart Hosie
The case for a simple tax regime is well made. Had the Government abandoned capital allowances and the annual investment allowance, that would have been simpler, but instead they just reduced and changed them. Can the hon. Gentleman explain how that simplifies the tax code in the way that he has described, rather than otherwise?
Gavin Williamson
I am obviously far below the pay grade of my hon. Friends on the Front Bench, but I am sure that they have great plans to make the tax system much fairer and more equal, right across the board.
One important thing that my hon. Friends have done is reduce corporation tax, which will help so many businesses. Most importantly, they have helped small businesses—it is often small businesses that have had the most difficult time over the past few years—which is something that I warmly welcome.
Gavin Williamson
The hon. Gentleman makes an interesting point, although more people becoming incorporated as limited companies will reduce the amount of tax avoidance from which people could perhaps benefit as sole traders.
Stephen Timms
I join others in congratulating the hon. Member for Lincoln (Karl MᶜCartney) on his maiden speech. He launched some important claims on behalf of his constituents. I was interested in the case that he made for reintroducing indexation and taper relief on capital gains tax. I suspect that these debates will gain a new currency, given the increase in the rate of capital gains tax that the Bill introduces. I also welcome the evidence of independent thinking that he showed the Committee today, and I appreciate, as many will, his generous remarks about Gillian Merron, who was certainly a very popular Member of the House, as well as a popular feature in the local press in the hon. Gentleman’s constituency.
I am grateful to my hon. Friend the Member for Hayes and Harlington (John McDonnell) for raising this issue. He has done us a service by raising some important points. I do not agree with his criticism of the previous Government in that respect, as I shall explain, but it is right that we should have this debate in this part of our consideration of the Bill.
I enjoyed listening to what the hon. Member for South Staffordshire (Gavin Williamson) said a moment ago. What he was saying, I think, was that he was expecting the new Government to simplify the tax system. Well, maybe, although I do not think that there is much simplification in the Bill. In fact, there is a major new complication, as we will see when we come to clause 2. For the first time ever, the rate of capital gains tax is being changed in the middle of a year. That is a significant new complexity that the Bill introduces. Although I am touched by his faith, I suspect that he might find himself somewhat disappointed as time goes on.
My hon. Friend the Member for Hayes and Harlington was right to pay tribute to the work of Richard Murphy and the tax justice campaign. I want to pay particular tribute to Richard Murphy for developing, and first arguing for, the idea of country-by-country reporting. We are debating the avoidance, and indeed evasion, of corporation tax, and of course, that is a matter not only for the UK but for developing countries on a large scale as well. Richard Murphy was the first person to argue that companies should report, on a country-by-country basis, the profits that they make in each country and the tax that they pay in each country, so that everyone can see if there is a mismatch between the two.
The previous Government supported that call, and I am pleased that the OECD is taking the matter up. I think that we are now going to see some progress on that front, thanks to Richard’s efforts. I note from his blog that he has been on the receiving end of some unwarranted online harassment recently on account of his work. I certainly wish him well in what he is doing. However, I am not entirely persuaded by his criticism, or that of my hon. Friend the Member for Hayes and Harlington, of the work of HMRC on the tax gap. As my hon. Friend rightly mentioned, however, it is inevitable that any estimates in this area will be uncertain because no one knows precisely what is being hidden from the tax authorities.
Narrowing the tax gap was an important priority for the previous Government, and I was grateful for the comments made by the hon. Member for Southport (Dr Pugh) and by the Minister in the debate on tax avoidance that was held in Westminster Hall on 14 June. In that debate, my hon. Friend the Member for Wallasey (Ms Eagle) set out the key elements of the progress that the previous Government had made on tackling the problem of avoidance. One of the initiatives that we took was to propose a voluntary code of practice for the banks, and I hope that the Minister will be able to tell us more about this when he winds up the debate. My hon. Friend the Member for Leeds East (Mr Mudie) mentioned one of the banks a few moments ago. The idea was that banks would sign up to the code of practice and, in doing so, would agree to stick not only to the law on the payment of taxes but to the spirit of the law as well.
Having listened to the arguments put forward by the right hon. Member for Wokingham (Mr Redwood), I imagine that he would be opposed to that initiative, because he would feel that it should simply be a matter of asking, “Are you or are you not complying with the letter of the law?” and that, if a problem arose, the Government should legislate to close the loophole. The problem with that approach is that we can get into an arms race, as we have certainly done on many occasions, in which the Government and Parliament agree on changes to the law and everyone knows perfectly well what they mean, but the banks then commission ingenious accountants to find ways round the spirit of the law, even though the letter of the law is being complied with. If we were to stick with the approach for which the right hon. Gentleman is arguing, Parliament would then have to close the loophole, perhaps a year later, and the circle would continue to go round. He made an interesting case, but we have to find a way of breaking that vicious circle, because huge amounts of money are being spent by taxpayers and by HMRC, and, in the end, nobody benefits.
Mr Redwood
The right hon. Gentleman is quite right to say that there can be an arms race, but would he also acknowledge that, while quite a lot of companies accept that they need to pay a fair whack of tax, there are many judgments involved? Those companies seek advice on that judgment, but they do not always get the same advice as HMRC. It is not that they are all trying to cheat the taxpayer; these are complicated matters and a view needs to be taken on cost overhead allocation, transfer prices and so on. Judgments are reached and the Revenue disagrees, but these are judgment matters, and this subject is not easy to handle.
Stephen Timms
The right hon. Gentleman is absolutely right about that. I entirely accept that that often happens, but I hope that he will accept that there are also people who commission very highly paid accountants to find ways of getting round the law. Everyone involved in that practice knows perfectly well that they are going against the spirit of what Parliament intended, and that is the kind of damaging avoidance that we need to bear down on.
Kwasi Kwarteng
Clearly, we have laws, but people are also going to try to pay the minimum amount of tax that they can. That is an entirely rational thing for them to do. It is our job to frame the laws as simply as possible, so that there are no loopholes. As my hon. Friend the Member for South Staffordshire (Gavin Williamson) pointed out, because there is so much more complication in our tax system, there are far more opportunities for loopholes. Surely the way to tackle the problem is to simplify the tax code, rather than pursuing people through the law courts or making the code even more complicated.
Stephen Timms
I am happy to subscribe to the view that the tax code should be as simple as possible, and I look forward to the new Government introducing measures along those lines. Simplicity is certainly a virtue, but, as I have said, those who are pressing for such measures might find that they have a rather longer wait than they would have liked. Let me also make it clear, in agreeing with my hon. Friend the Member for Hayes and Harlington, that there is absolutely nothing wrong with tax planning or with people ordering their affairs in a sensible way from a tax point of view.
Mr Mudie
I thank the Minister for giving way. I am sorry, I should have said “the shadow Minister”—old habits die hard. Does he recall that it was reported last year that the majority of the top 100 companies paid no tax whatever? That was not a matter of the tax system being complicated; it was a simple matter of their going to enormous lengths—working with the worst culprit, Barclays bank—to devise systems and work through offshore companies to avoid paying any tax. Do not Members on the Government Benches get angry that ordinary people work hard and pay their taxes while multinationals and other large companies go to extreme lengths to pay no tax whatever?
Stephen Timms
My hon. Friend is absolutely right. There are some flagrant examples of that, not least in the banking sector. Indeed, some of those examples were very well documented in the excellent series in The Guardian earlier this year. I would particularly welcome an update from the Minister on the progress of the voluntary code of practice for the banks, which could be an effective way of tackling the problem that he is dealing with.
Andrew George
Of course we all agree that we should seek the holy grail of a more simplified tax system, but what assessment did the right hon. Gentleman make of the announcement of 12,000 job cuts in HMRC, which we have discussed, and particularly of the breaking up of the compliance teams that were scrutinising the very areas of tax avoidance and tax evasion that we are now debating?
Stephen Timms
HMRC, for which I was responsible, has a very difficult task on its hands. I was persuaded, and remain convinced, of the case for HMRC being able to discharge its functions a good deal more efficiently in the future, thanks to the use of new systems and to a reorganisation into larger groups. In the past, HMRC was characterised by lots of offices with not very many people working in them. It is now clear that that was not very efficient or effective, and I think that the reorganisation will help. There is no escaping the fact that it has a tough job to do, but I think that it is setting about it in the right way.
The financial crisis since 2008 has led to a big shift in the approach to tax evasion and tax avoidance. Following the crisis, the previous Government made certain that the UK was at the forefront of the drive for change. Internationally, there was recognition that a lack of transparency in the international financial system had presented previously unrecognised but nevertheless significant systemic threats to the global financial architecture, that those threats had to be dealt with and that progress had to be made quickly. In the forum of the G20 and in the aftermath of the credit crunch, good progress was made, but that momentum needs to be maintained. I hope that the Minister will set out for us today how he sees it being maintained.
Gavin Williamson
In 1997, we had the 11th lowest rate of corporation tax, whereas in 2010 we have only the 23rd lowest. Does the right hon. Gentleman believe that that might have some impact on corporation tax evasion?
Stephen Timms
I believe that it is important, as the previous Government made clear was their continuing intention, to have the lowest rate of corporation tax in the G7. That is why we reduced corporation tax when we were in government, and when we come to debate the rate, as we will in a few minutes’ time, I will press the Minister to reiterate on behalf of the present Government the commitment that was made and indeed fulfilled by the previous Government—to have a competitive corporation tax regime.
Gavin Williamson
When global companies are looking across the globe to where they should locate their headquarters, is the right hon. Gentleman not concerned that we slipped so far down the rankings under a Labour Government?
Stephen Timms
No, we were successful in maintaining a competitive business tax system in the UK. It is true, of course, that if a company goes to Ireland, it will pay a much lower rate of corporation than it would in the UK, but that rate of corporation tax in Ireland is lower than in any G7 country. Our commitment was to keep the UK’s corporation tax rate the lowest in the G7, and that is what we successfully did. It was important that we did so.
There is debate about whether the £40 billion figure is correct. I believe that HMRC did a serious and careful analysis. I also think there should be more discussion with people such as Richard Murphy. I believe his figure for the tax gap on corporation tax was about £12 billion—not vastly more than the £9 billion or so in the HMRC figure. Richard Murphy also makes the point that there is uncertainty—perhaps more uncertainty—about that figure than some of the others that he estimates. Continuing discussion between people such as the tax justice campaign and HMRC is important so that we make these figures as accurate as possible. I very much hope that the Minister will confirm that it is his intention regularly to update the analysis that has been published, to be frank and robust in publication and to discuss the issues with the tax justice campaign, which takes a different view, and the TUC, which has also taken a close interest. Ultimately, it is in everyone’s interest to have the best possible information available. I hope that the Minister will reassure us on that.
Matthew Hancock (West Suffolk) (Con)
The right hon. Gentleman has just admitted that since 1997, in respect of avoidance or evasion of corporation tax, the tax gap was reduced by only £3 billion. Does he not agree, then, that it is wrong to go around the country telling people that the entire deficit could be dealt with if we just got to grips with this one issue? It is, of course, important to get to grips with it, but it will not on its own resolve the deficit. Is it not wrong to tell people that it could?
Stephen Timms
I am sorry if I misled the hon. Gentleman into thinking that the figure was reduced by only £3 billion as result of the previous Government’s efforts. I did not say that at all. I would be happy to go through in more detail the efforts of the previous Government on this issue, but the crucial initiative was the disclosure regime, which we introduced in 2004 to great howls of protest, yet it has undoubtedly saved many billions in tax that would otherwise not have been collected. The total figure is certainly a great deal more than £3 billion. As to whether addressing this problem could be the sole solution to the problem of the deficit, however, I agree that it could not.
Stewart Hosie
The shadow Minister makes a point about the success of the disclosure scheme. It has been successful, but does he now regret not implementing a pre-commencement validation system with the Revenue before such avoidance schemes were put in place rather than a post-commencement disclosure, when the money has to be clawed back through retrospective legislation? Is it not better to avoid any avoidance happening in the first place?
Stephen Timms
The hon. Gentleman, who knows a lot about these matters, is right that this is one of the subjects that will have to be considered in looking at a general anti-avoidance rule. The problem, I think, is HMRC having to respond quickly to potentially huge numbers of pre-clearance requests of that kind, which would be a massive additional burden. If I were in the Minister’s shoes, before going down that road, I would press very hard for some cast-iron assurances on the part of HMRC that those clearances could be provided quickly. The problem is that a lot of new bureaucracy would be required.
Stewart Hosie
I understand the argument and I have heard it before—last year, in fact. I welcome what the shadow Minister is saying, but given the concept of promoters or introducers of these schemes—effectively a clear register of people who might engage in this kind of activity—might it not now be easier than it would have been even two or three years ago?
Stephen Timms
I think it would still be difficult, complex and cumbersome. A judgment will have to be made about whether it is the right thing to do—effectively, the benefit of reducing avoidance would have to be worth the additional complexity. I am sure that this debate is still to come.
The Exchequer Secretary to the Treasury (Mr David Gauke)
Before responding to amendment 11, I would like to thank my hon. Friend the Member for Lincoln (Karl MᶜCartney) for making his maiden speech earlier. He is rightly proud to represent that fine constituency, and I am sure that his constituency will be rightly proud of him. I hope he represents his constituency for many years to come. I will deal with the issues he raised about capital gains tax—as already noted, he shows great independence of mind on this point—when I respond to a later grouping of amendments.
I am very pleased to see the right hon. Member for East Ham (Stephen Timms) back at the Dispatch Box. It is good to see him returned here and I hope he is returning to good health. He is certainly a formidable person to face on the other side of the Dispatch Box, as he has great expertise and experience in this particular subject. He was a highly popular and effective Minister, performing the same role as I now perform. His are big shoes to fill and I am sure that there will be plenty of disagreements in the months ahead, but it is none the less a great pleasure to see the right hon. Gentleman back, well and in good form.
Amendment 11 seeks the publication of a report assessing corporation tax avoidance and evasion and setting out measures to ensure the payment of tax before the reduction in the main rate of corporation tax can be applied. The Government are committed to a competitive corporation tax rate, which will show that the UK is open for business and encourage growth. The amendment is narrowly focused on the role of evasion and avoidance, so I shall explain later and in more detail our reasons for the more general changes proposed.
Terminology was a large part of the debate on the matter. As we have heard, tax evasion occurs when someone acts against the law. Tax avoidance involves compliance with the letter but not the spirit of the law, and it is right that the Government seek to minimise that. Tax planning is a case of acting in both the spirit and the letter of the law. There is a distinction, although there will be occasions when the line is a little blurred.
The Government are committed to tackling robustly avoidance and evasion, which undermine the effectiveness of the tax system, distort competition and increase the burden of taxation on those who do comply with the spirit and letter of the law. The emergency Budget clearly sets out the Government’s strategic approach to reducing tax avoidance and evasion. As a number of my hon. Friends have pointed out, some matters relate to how we make tax law, and to ensuring that tax law has as much clarity as possible. At the time of the Budget, we produced a well-received publication setting out a more deliberative and consultative way to make tax law.
There is also a strong case for a more simplified tax code. Too many allowances and reliefs and too much complication within the tax system provide opportunity for tax avoidance, which we seek to address. We will address long-standing avoidance risks, and I have announced an informal consultation on the introduction of a general anti-avoidance rule. I appreciate that there are arguments on both sides, some of which we heard from the right hon. Member for East Ham. We will ensure that we make changes in the law in a way that prevents increasing complexity and reduces the need for frequent legislative revisions. We will also ensure that we build in sustainable defences against avoidance opportunities when undertaking policy reform. The Government have already closed specific loopholes to prevent the avoidance of corporation tax, and clauses 8 and 9 protect about £200 million of tax revenues per year.
The Government fully support the type of transparency for which the hon. Member for Hayes and Harlington (John McDonnell) calls in his amendment. As others have pointed out, that form of transparency already exists. The right hon. Member for East Ham pointed out that HMRC has published an assessment of corporation tax avoidance and evasion, although it deals with not just corporation tax but tax across the board. In December 2009, HMRC published the document, “Measuring Tax Gaps 2009”, which estimated the overall tax gaps across HMRC’s regimes for the first time. Alongside that statistical release, HMRC also published estimates of the tax gap by behaviour, including avoidance and evasion, as well as the actions being taken to reduce the gap. As we have heard, HMRC’s estimate for the tax gap as a whole is £40 billion, and the definition includes evasion and avoidance, debt and legal interpretation—as my right hon. Friend the Member for Wokingham (Mr Redwood) pointed out, there are sometimes disputes between two parties, both acting in good faith.
Mr Redwood
My hon. Friend reinforces my point: avoidance covers a variety of different things. In this case, it seems to cover conduct that a Government are trying to encourage, as well as conduct that a Government are trying to repress or stop. That is why the House needs a little more humility instead of rushing into saying, “There’s all this tax being avoided.” Some of it is being avoided for reasons that the previous Government approved of.
Mr Gauke
I am grateful to my right hon. Friend, who brings me to my next point.
The Government see the distinction between tax avoidance and tax planning, but those lines can be blurred, and sometimes use of the terminology is not as accurate as it might be. For example, I quote the “Missing Billions” report, produced for the TUC, which, after setting out a series of numbers leading towards the estimate for corporation tax avoidance, states:
“Much may be due to legitimate tax planning, but by no means all is. Some, undoubtedly, is due to tax avoidance.”
That seems to me to suggest a slight blurring of the lines. Again, I am sure that I will be corrected in Mr Murphy’s blog if I am wrong, but there does appear to be some confusion.
I am not suggesting that tax avoidance and tax evasion do not matter. The £40 billion figure is significant. However, it is also true that we cannot pretend that if we just address this problem, the deficit will go away. Although it is always tempting for a new Minister in a new Government to attack everything that happened before, I must point out—not purely out of fondness for my predecessor, the right hon. Member for East Ham—that, in international terms, £40 billion is not too bad as a percentage of tax revenue raised.
HMRC does not do particularly badly. Indeed, it tends to lead the field in this respect. Nor has it deteriorated during a period in which it has incurred substantial job losses, as a number of Members have pointed out. I believe that it employed 97,000 people in 2005, and the most recent figure is 69,000. It is a question of deploying resources as effectively and efficiently as possible.
None the less, to the extent that it is possible to go further in reducing evasion and avoidance, the Government are keen to do so, and I have set out some of the ways in which we intend to do so. I can tell the hon. Member for Hayes and Harlington that we already assess the amount of tax lost through avoidance and evasion, and that we are committed to reduce those losses as much as possible. We will also continue to publish the tax gap figures as frequently as possible, to provide a focus for HMRC and to ensure that our debate is well informed.
I hope that what I have said gives some reassurance to the hon. Member for Hayes and Harlington. Let me also remind the shadow Minister that HMRC introduced a banking code of practice in 2009, and HMRC’s annual report will provide anonymised statistics on the number of banks that have adopted it. We believe that the code encourages banks not to enter into, or be party to, avoidance arrangements, but we will of course continue to monitor and review its operation.
John McDonnell
I am grateful for the Minister’s assurance that information on the tax gap will continue to be published, but my amendment also deals with when it will be published, and asks for further information to be given on the measures that will be taken to tackle the problem.
Mr Gauke
The hon. Gentleman’s points have been noted. Today’s debate is the second on this matter in which I have taken part in my present post—the first was in Westminster Hall—and I am well aware that it is of considerable concern to Members on both sides of the House. It has also featured heavily in Treasury questions, which will take place again tomorrow. Who knows? There may be a question on this very subject then.
The hon. Gentleman is right to hold Ministers and HMRC to account in regard to how we seek to reduce the tax gap. The Government are taking the matter seriously, and, in the spirit of transparency in which we operate, we will provide as much information as we can so that our debate is as well informed as possible. In the light of that assurance, I hope the hon. Gentleman will accept that the amendment is not necessary and will withdraw it.
John McDonnell
I think that the debate has been helpful to Members on both sides of the Committee. An attempt has been made to get out of the trenches, and to engage in a wide-ranging discussion of how we can proceed in a pragmatic way. I believe that this will become one of the key issues that people will expect us to address as the economic crisis continues. If they see public expenditure cut so that their local schools are not refurbished, and if they see a tax on welfare benefits, they will expect us at least to maximise the revenue from the tax that people and organisations should be paying. Justice and fairness in the taxation system will become critically important to more and more people.
Some of the arguments that we have heard today have been very helpful, and at times they have been entertaining. I am fascinated by the concept that reducing taxation reduces evasion and avoidance: that is almost an argument for no taxation at all, although it may not gain much purchase in the House. We all accept the arguments about simplicity, but the problem with simplicity is that it makes loopholes possible, and we then need complexity to tackle the loopholes. It is a circular problem. However, it is a joint venture for us to try to ensure that the legislation that we draft is appropriately simple.
Kwasi Kwarteng
What was said was that simplicity aided the avoidance of loopholes, and that complexity led to more loopholes. The hon. Gentleman has just contradicted that.
John McDonnell
I was talking about what had been experienced in the past, but we can all sign up to the pious statement that we will achieve as much simplicity as possible. I merely say on the basis of practical experience in the House that, unfortunately, when we have sought simplicity, people have argued for further complexity to tackle the loopholes. However, we will all aim for simplicity, and the onus is on us to try to draft legislation in a way that achieves it.
I welcomed the Minister’s statement about the continuation of, and consultation on, the commitment to the anti-avoidance rule, but I hoped that at some stage a future report from Government would enable us to engage in a wider debate on how we could install in legislation the duty to comply more simply and effectively. As my right hon. Friend the Member for East Ham (Stephen Timms) pointed out, the issue that arises time and again is the ingenious use of devices to avoid the spirit of the law. In other contexts, we draft legislation in such a way that when a device appears it can be seen to be a device, which is patently against the spirit of the legislation and whose effect can therefore be outlawed. I also welcomed the wider debate on the anti-avoidance principle to be installed in legislation.
This has been a helpful debate. I leave the Minister to the savagery of Richard Murphy’s blog: I am sure that Mr Murphy will respond to each of the points that he raised. Let me make this point, however: whether the tax gap is £40 billion or £120 billion, when people out there are experiencing cuts in public services and reductions in their pensions and are having to work for longer, they will expect us to collect those taxes. The subtle distinctions between evasion and avoidance will be lost on them. They will expect the House of Commons to produce legislation ensuring that HMRC is sufficiently staffed and sufficiently resourced to bring in the tax, and to deal with the significant part of the deficit that we have identified in the past few weeks.
On the basis of the assurances that we have had from both Front Benches of co-operative working on this issue, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move amendment 21, page 1, line 6, at end add—
‘(2) The main rate of corporation tax for financial year 2011 will remain at 28 per cent. on the profits of banking institutions as defined by section 2 of the Banking Act 2009.’.
The Temporary Chair (Mr David Amess)
With this it will be convenient to discuss the following:
Amendment 34, page 1, line 6, at end add—
‘(2) Prior to this rate taking effect, the Chancellor will place in the Library of the House of Commons an assessment of the impact of this clause on the banking sector.’.
Amendment 50, page 1, line 6, at end add—
‘(2) This section shall not come into force until the Treasury has laid before the House of Commons as assessment of the impact of this section on—
(a) the banking sector, and
(b) all other sectors to which corporation tax applies.’.
Chris Leslie
My amendment is quite simple. It does not seek to alter the rate of corporation tax suggested in the Budget, except in one respect: it should not apply to banks and banking institutions. Surely few issues can highlight the unfairness and injustice of the Government’s Budget more effectively than the suggestion that, of all the sets of institutions that should benefit from more advantageous tax arrangements, the banks should be given such a windfall at such a time.
I was prompted to table the amendment by a flurry of reports that appeared immediately after the Budget statement, suggesting that the banks would be net beneficiaries. Deutsche Bank analysts were reported as saying that the Budget was a “good outcome for banks”, and John-Paul Crutchley, an analyst at UBS, expected that Lloyds and HSBC would benefit by 2012 as a result of, particularly, the cut in corporation tax.
We must look at this measure in the context of the other Budget provisions. While the Finance Bill is, I suppose, substantial to a degree, it addresses only one short set of Budget measures that presumably will be brought before the House in different Bills at different times in the coming year, and it is a shame in a way that we will not get a chance to address this corporation tax measure in that wider context. I do not think any Members are opposed in principle to the banking levy that the Chancellor announced, although many might question whether it is tough and stringent enough.
Mr Kevan Jones
Does my hon. Friend agree that this cut will be unfair to small businesses in that while the major banks that got us into the financial mess two years ago will benefit from it, many small and medium-sized businesses will have to pay for it through the cut in the annual investment allowance from 2012?
Chris Leslie
Indeed, I think there is a set of unfairness issues that affect not only public services and our constituents, but business to business. Many small businesses will be incredulous at this giveaway to the banks, which are having their corporation tax cut. HSBC’s own banking analysts agreed that they would be better off. One of them was quoted in the media as saying:
“We’d expect most domestically-orientated banks, for example Lloyds, to be better off after four years than they were pre-Budget.”
Analysts at Redburn Partners said that Lloyds in particular would see a 3% rise in its earnings per share by 2012, especially as corporation tax is planned to be reduced to 24% over time. The measures in this Bill make only a 1% change in that tax from 28% to 27%, but as the years pass the banks’ gains clearly will accrue and become even greater.
It was no coincidence that the share prices of some of our leading banks leapt after the Budget statement, even though, paradoxically, it included a banking levy that they supposedly feared. Lloyds shares gained 2.7% the morning after the Budget, and others were similarly jumping for joy. The Daily Mail—a journal of great repute—reported that a city insider was privately very happy, saying that
“some banks will have a feeling of glee at the way this has worked out. But none would be stupid enough to say anything openly.”
It will be for the Minister to defend this measure of course, and I look forward to hearing him explain why, of all institutions, the banks deserve this windfall at this time.
The interplay between the banking levy and the impact of the corporation tax cuts must be at the heart of our considerations this afternoon, and I am glad that my Front-Bench colleague my right hon. Friend the Member for East Ham (Stephen Timms) and the hon. Member for St Ives (Andrew George) have tabled amendments that also seek to probe that issue. My amendment would have the effect of not passing on the corporation tax cut, and theirs’ would insist that at the very least the Treasury conduct a review of these matters.
My concern remains that the banking levy was set at far too low a rate—starting at 0.04% and rising to the heady heights of 0.07%. I gather that might even be about half the level at which the Americans set their banking levy. The notion that this was all done internationally at the same level is absolutely not the case. For some bizarre reason, the Chancellor really held back. He made great play of this levy in the Budget statement because he knows the general public are angry about the situation the banks have left in this country. They are furious that the banks were the source and cause of many of our national debt problems and the deficit we face today. I am glad that the Government say at page 26 of the Red Book that they will consult on the final details of the banking levy, and I urge the Minister to think carefully about how that levy will play in relation to the corporation tax reduction, because if the banks are gaining from that, it must be possible to ensure that they pay their fair share at some point .
Matthew Hancock
Does the hon. Gentleman regret his party’s position before the last election, which was that we should not have a banking levy unless everywhere else in the world signed up to it? Does he therefore applaud the current Government’s leadership in unilaterally putting forward a bank levy?
Chris Leslie
I may be wrong, but it is my recollection that a number of countries simultaneously came out with their banking levy arrangements, on the continent as well as America, and it was, of course, the natural point at which to introduce a banking levy. It is a matter of nuance whether we get a collection of large industrial countries to act simultaneously or we act on our own as a country, but I think it is necessary to have a banking levy that recoups all the payments that the banks took from our taxpayers.
Mr Kevan Jones
My hon. Friend refers to page 26 of the Red Book, which states at paragraph 1.63 that
“the Government will introduce a levy based on banks’ balance sheets from 1 January 2011, intended to encourage banks to move to less risky funding profiles.”
The paragraph concludes by saying:
“The levy will result in a rebalancing of the burden of taxation between banking and other sectors.”
Does my hon. Friend agree that that actually supports his amendment, in the sense that we should not take decisions on the banks’ corporation tax rates before this levy is introduced?
Chris Leslie
I could not agree more. It would not be in order to stray too far from the topic of corporation tax, but it is important that we see this change in context. It appears that the Chancellor press-released the fact that he was taking, in some brave measure, an amount of money from the banks through the banking levy, but failed to publicise that he was also giving that back with the other hand through the reduction in the corporation tax rate.
We are talking about significant and serious amounts of money, and the Minister ought not to be so careless with this revenue as it is needed to repair our deficit and to protect our public services. I am very surprised that the Treasury did not take action to plug this loss of revenue, but chose instead to apply the reduction in corporation tax across the board.
We must not forget that the banks have already benefited from an enormous amount of largesse from the taxpayer more widely. The Royal Bank of Scotland and Lloyds Banking Group had £76 billion of their shares bought by the taxpayer. The Bank of England had to be indemnified against losses incurred in providing more than £200 billion of liquidity support. There have been guarantees of up to £250 billion of wholesale borrowing by the banks to strengthen liquidity. Also, £40 billion of loans and other funds were made to Bradford & Bingley and the Financial Services Compensation Scheme. There was insurance cover of more than £280 billion for bank assets as well. These changes were not unnecessary at the time; they were absolutely vital as a way of ensuring that our banking system—our credit system—did not collapse entirely.
Had the coalition parties been in power at that time they would have had to fulfil exactly those same commitments, assurances and undertakings to make sure that our banking system did not collapse. That is why it infuriates so many members of the public to hear Members on the Government Benches claiming that that was a partisan cause or that our spending such a large share of our national income on public services is the real cause of our deficit, when in fact responsibility lies squarely at the feet of our banking sector.
Mr Love
May I correct something my hon. Friend has said? Most of the measures the previous Government introduced to safeguard the financial system were in fact opposed at the time by the Conservative party, although it appears to have changed its mind. I also want to ask about the public concerns about the widespread reports from banking spokespersons in respect of this supposed levy. They are suggesting that there will be an opportunity during the consultation to weaken the legislation and reduce the amount of tax they pay. Does my hon. Friend deprecate such projects, and will he try to ensure that the Government stand firm against any such thing?
Chris Leslie
That is entirely so. Those with significant financial wherewithal—the corporate advisers, the consultants, the accountants—are always exceptionally adept at lobbying Ministers and making their points in their detailed ways, often with the general public entirely unaware that such measures are being put in place to their advantage. Clearly, the banks have been very aggressive in lobbying for these changes. It appears they may well have been successful in watering down the banking levy, while at the same time gaining benefit from this corporation tax change.
The Minister may argue, “Ah well, some of our banks made very significant losses in previous financial years, and because of the complexities of our corporation tax law, companies have certain rights to recoup some of those losses from the corporation tax they paid previously.” In my view, the banks should also be excluded from making such claims—or at least, their ability to do so should be lessened. I was unable to frame my amendment in that way—that takes a certain level of drafting—but we must ensure that the Treasury does not allow the exceptionally clever and highly paid advisers whom the banks can employ to find their way round the provisions and take even more money from the taxpayer.
Mr Kevan Jones
Reference has already been made to Barclays, whose full-year profits increased, I understand, by 92% in 2009 to stand at some £11.6 billion. Does my hon. Friend agree that Barclays will also gain from what is now proposed?
Chris Leslie
That is especially true over the longer term, and, as I was saying, although clause 1 refers only to the financial year 2011-12, the Government clearly intend to go even further even faster.
There may well be a case for saying that all companies need to be treated the same and that it would be wrong to discriminate against a particular class, and the Minister may argue that there are other sets of corporations—large oil companies, the privatised utilities and so on—that the public would frown on if they regained a corporation tax benefit, for example. In my view, the public are getting wise to the cause of the reduction in public spending, some of which, naturally, is driven by Conservative party ideology. However, the reductions that are driven by the existence of the deficit are largely the result of the costs incurred in bailing out the banks and the subsequent recession. Because of the lack of credit available in the wider economy, we had fewer tax receipts. In fact, the real story of the deficit is not that we are spending so much on public services, but that tax receipts are considerably lower.
Ian Lucas (Wrexham) (Lab)
Is my hon. Friend as confused as I am by the Government’s trumpeted aim of rebalancing the economy, while at the same time they introduce a corporation tax cut such as this, which favours companies across the board—from retail to banking—but not manufacturing? In fact, the capital allowances scheme actually penalises manufacturing companies. Does not the generality of the Government’s approach contradict their own headlines?
Chris Leslie
Indeed. This is a very perplexing set of Budget measures and if we have the chance to debate clause 1 stand part, there are a number of other questions we might want to probe the Minister on. For instance, why, inexplicably, are the reductions in the “small profits rate” of corporation tax not in the Bill? It seems that the Government are very adept at putting at the head of the queue the large institutions that will bleat and shout the loudest. It is incredible to me that the Government are giving priority to those institutions, which should be more contrite and should contribute a fair share. It is the concept of a fair share that eludes both the banks and the Government.
Andrea Leadsom (South Northamptonshire) (Con)
Is the hon. Gentleman confusing a healthy banking sector that can contribute to the regeneration of a healthy economy with the issue of banks paying bonuses? I do not see what reducing the headline rate of tax that banks pay, which inevitably leads to healthier balance sheets and greater ability to lend to companies and is good for our economy, has to do with what I think he is talking about, which is the banks’ payments to themselves. I see those two issues as being very different. Perhaps he can explain.
Chris Leslie
I am grateful to the hon. Lady who, I am sure, would have wanted to declare an interest had she been in her previous guise. I understand that she was previously employed in the banking industry, although I may be wrong and I do not want to disparage her in any way. However, it is important to know.
Chris Leslie
I just wanted to place the hon. Lady’s comments in their particular context.
It is certainly true that the general public have a distaste for the excessive bonuses and remuneration of those in the banking industry, but such remuneration would not be possible were it not for the high profit rates that the banks were able to post and report on so many occasions. We are indeed all shareholders in many ways—either directly, or indirectly through our pension funds or as taxpayers—and Members on both sides of the House will hope that, over time, the banks will be returned to some level of normalcy. However, necessarily, they must not, as institutions, evade—or avoid; I want to use the correct parlance—paying their fair share.
Mr Kevan Jones
It is not just the general public who feel that way. On 20 April 2010, the now Deputy Prime Minister—I think he and his party are still one and the same—called bankers “reckless and greedy”, saying that they have been allowed to hold a gun to our heads.
Chris Leslie
My hon. Friend is right. Before the general election, there was a lot of tough talk and rhetoric from both Conservatives and Liberal Democrats. Indeed, The Sun—a journal of great repute—said on 20 March that the then Leader of the Opposition
“singled out the banking industry as one example of ‘vested interests’ he is determined to confront and who he accuses Prime Minister Gordon Brown of failing to stand up to. ‘We had the biggest bank bail-out in the world. We can’t just carry on as if nothing happened’”.
I am afraid we may well be carrying on as if nothing had happened, especially if the banking levy is offset by this giveaway in corporation tax.
Chris Leslie
I would not want to set the hare running across the City of London that the long arm of the law is necessarily about to grab them on the shoulder, but I understand the frustration and anger of the British public more widely, and all politicians in this House should be angry. While it is fun and games for the Conservatives and Liberal Democrats constantly to say, “Ah well, it was the Labour party that left us in this predicament”, they know very well that the root cause was the greed and excess of the banking sector, which ought to pay its fair share.
Andrea Leadsom
The banking sector is far from being given a free ride by this Government. We are absolutely not going to allow it to get away with past transgressions—far from it. In fact, it is this Government who are going to restore banking supervision and lender-of-last-resort powers to the Bank of England. The tripartite system that Labour put in place, and which led to some of the failings of the banking system, was a key mistake. This Government are not going to ignore those issues. We also have a commission to look at competition, which is key, because we have to re-establish fair competition in our banking system and get rid of the tendency towards ever larger and more consolidated banks. I agree, in part, with the hon. Gentleman, in that we have to take the banking system seriously, we have to improve it and we absolutely have to make it more competitive. However, I do not agree that we should consider a differential rate of tax, as that is simply uncompetitive.
Chris Leslie
The hon. Lady makes her case. We can all, in hindsight, say that regulatory improvements should clearly have been made. The British Government could claim that work should have been done to ensure that that was the case in America, in every country in Europe and all the around the world. It is absolutely true to say that the whole worldwide banking system ought to have been more closely regulated, but that was the first time I have heard a Conservative Member defend the reduction in the corporation tax rate—that is the specific measure that we are discussing. There may be a need to debate the regulatory changes that should apply to the financial services industry—I look forward to those proposals being made—but I still do not understand her argument about anti-competitiveness. It is important to hear why the Government believe that the banks deserve this particular cut.
Mr Kevan Jones
The hon. Member for South Northamptonshire (Andrea Leadsom) has just said that we should not have a differential rate of tax, but may I again cite paragraph 1.63 on page 26 of the Red Book, which comments on the introduction of the banking levy? Its final sentence says:
“The levy will result in a rebalancing of the burden of taxation between banking and other sectors.”
Is that not exactly what we are going to see here?
Chris Leslie
Quite, and this is important. We could send a signal from this House that we, as politicians and representatives of the general public, believe that that particular industry has to pay back the cost it is has left upon the shoulders of the general public. Is it not always the case that the general public—the ordinary working people—have to dig us out of the hole created by those affluent and comfortable individuals who work in the banking system?
Clive Efford
I am grateful to my hon. Friend, because his probing is uncovering who is winning the arguments on the Government Benches. The Liberal Democrats went into the election calling for a 10% levy on banks, but the outcome is that what has been raised in the levy has more than been compensated for by the corporation tax cuts. We are seeing who is winning the arguments on the Government Benches on making the banks pay their fair share.
Chris Leslie
That is the case, and we have seen the glee with which the banking industry reacted after the Budget to this puny banking levy of less than 0.1% on the banks’ profit and asset base.
Chris Heaton-Harris (Daventry) (Con)
A few moments ago, you were talking about the banking industry that had received the “largesse” of the taxpayer, but your amendment deals with the whole banking industry, which includes those banks that did not come to the Exchequer asking for a bail-out. How do you differentiate between the two? Or are you quite happy just to nail the whole thing?
The Temporary Chair (Mr David Amess)
Order. It is “the hon. Gentleman”, not “you”.
Chris Leslie
The hon. Gentleman makes a fair point. I have tried to define “banking institutions” by referring to the Banking Act 2009. I believe that I would thus exclude the building societies and other more mutual, co-operative institutions that I would not regard as being as culpable as the plc-based financial institutions. Irrespective of whether a particular bank received a direct sum from the taxpayer, all those banking institutions benefited from the implicit and implied safety net that the taxpayer provided. Were it not for that underwritten implicit guarantee, banks such as Barclays and others would have been in significant trouble. They may not have taken the handout themselves, but had the markets not felt that the Government of the day were prepared to act were they so requested or had it been necessary to do so, all those banking institutions would have been in an entirely different position.
Ian Lucas
I commend my hon. Friend’s response, because he has just said exactly what I was going to say about the fact that the whole sector, including those organisations that did not receive direct investment from government, benefited from the decisive action taken by the then Labour Government, which, I repeat, was vociferously opposed by the Conservative party.
Chris Leslie
That is absolutely the case, and it perhaps betrays the enlightenment of Government Members on this particular issue. Each and every one of them who votes against my amendment, or even against the other amendments on the Order Paper, will need to go back to their constituents tonight and explain why they feel that the banking institutions deserve this handout. This is an incredibly important point and it is very useful to have the chance to debate it.
Mr Edward Timpson (Crewe and Nantwich) (Con)
I have been considering the hon. Gentleman’s amendment carefully and listening to what he has had to say. What I really need to hear from him is whether he has assessed its impact on the competitiveness of banking institutions in this country and on this country’s competitiveness in terms of attracting banking institutions to the UK to do their business? Without such an assessment it is difficult to know whether his amendment is going to do what I hope it would do.
Chris Leslie
I am delighted that that hon. Gentleman is thinking about supporting the amendment. That is incredibly important and a good step forward. I genuinely welcome his support this evening, because this could be a close-run thing. I have made an assessment, as far as I can as a humble Back Bencher. My assessment is that there are hundreds of millions of pounds at stake here that the banks could be gaining. However, I also support the amendments grouped together under this clause. We need the Treasury to undertake an urgent assessment. If the Minister says that he accepts the principle of my amendment but that he wants to do more work on it to get the details right, I would, like him, be happy to consider my position on pressing this amendment.
Matthew Hancock
Does the hon. Gentleman have any evidence to suggest that the reduction in corporation tax on banks would offset the £2.5 billion to be raised by the bank levy?
Chris Leslie
Yes I do, and at the outset of my comments, I quoted a series of highly professional and well-respected analysts from across the City of London. They were saying that this was a “good outcome”, that there would be “a feeling of glee” about the Budget measures, and that they expected
“most domestically-orientated banks…to be better off after four years”.
It is important to remember that the £2.5 billion supposedly gained from the banking levy is obtained only as it progresses to years four or five. At the outset, it generates an exceptionally small amount of revenue—I believe the figure is less than £1 billion.
Matthew Hancock
Can the hon. Gentleman supply any evidence that the corporation tax cut is larger than the £2.5 billion to be raised by the bank levy, because none of the things that he read out was evidence of that?
Chris Leslie
If some analysts, who on the secondary evidence before me are saying publicly that they believe that the corporation tax—
Chris Leslie
If they are saying that the corporation tax cashback, as my hon. Friend says, will offset the levy, perhaps by less than the banking levy or perhaps by more, then I think this would be wrong. It sounds as though the hon. Member for West Suffolk (Matthew Hancock) is defending the cashback arrangement that he wants to implement—[Interruption.] The hon. Gentleman says he is in favour of cutting the corporation tax rate for the banks. Government Members will vote that way. I am incredulous about that.
Chris Leslie
Indeed. I cannot keep track of the turns and U-turns, with so many permutations, that the Government go through or of the chamaeleon-like arrangements of some hon. Members. There are honourable ladies and gentlemen in all parties—even in the parties opposite—and I appeal to them to consider the amendments carefully. These are incredibly important suggestions. I have not yet heard a case in the interventions—except, perhaps, for the competitiveness argument, which I shall discuss in a moment—for why there should be a corporation tax windfall, this boon for our large banks. Perhaps I shall hear one from the hon. Lady.
Andrea Leadsom
I want to clarify. It is to all our benefit to have a healthy financial services sector. Obviously, all parties agreed, when we had the financial crisis, that we simply could not afford to see our banking system go into meltdown. There is no doubt that that is precisely what would have happened. Nevertheless, through the banking levy the Government are seeking to make the banks compensate the taxpayer for the undoubted support that they received. If there were a reduction in corporation tax alone with no offsetting bank levy, of course the Opposition could say that the banks were getting a free ride. However, the existence of a bank levy means that the banks are paying compensation to taxpayers for their largesse while at the same time ensuring that we retain a highly competitive financial services sector that can encourage and help our economy to recover.
Chris Leslie
I am interested in the hon. Lady’s arguments. She is saying that it would be wrong for the banks to receive a corporation tax cut—that is an important concession—but that it is all right because they are paying the banking levy. As I reckon it, that puts them right back to the standstill that they were at in the first place. In other words, they would not be paying any more and there would be no reparations, as I see it, for the public at large. They would simply be standing still. It beggars belief that the Government, having talked tough before the election, are now going to give a free ride to the banks and offset some of the costs of the banking levy.
The hon. Lady mentioned earlier that there is, of course, the Government’s independent commission on banking. I understand that the Secretary of State for Business, Innovation and Skills is a promoter of it and I would be interested to hear his views on whether we should give a corporation tax cut to the banks. He has gone from saint to axeman in a matter of weeks, but it is the impact on public services that we are worried about most of all.
As I was saying, it is the unfairness of this measure that strikes home most of all. People who are in a comfortable position are lecturing the world about the cuts to our public services that are needed. What really sticks in the craw is the statement, “We are all in it together”, which hon. Members will have heard. Well, that is not the case for the banks. They are not in it with the rest of us.
It reminds me a little of the polite and well-spoken cat-burglar who sneaks in to one’s home as a thief in the night and tries to purloin all sorts of goods and chattels but, when caught red-handed, explains, “No, I’m not stealing from you. I’m just rearranging the furniture and decluttering the house.” It is a grab of the worst possible kind—a grab on the public services on which the poorest in our community rely. The revenue from this measure and from reducing the corporation tax on the banks is needed by our vital public services. I hope that the Treasury will take the amendment seriously. The banks have not earned the right to this windfall. They do not deserve it and I commend the amendment to the Committee.
Vernon Coaker (Gedling) (Lab)
On a point of order, Mr Amess. Has the Secretary of State for Education given you any indication that he wishes to come to the Chamber to explain some of the errors that have already come to light in his fifth list? Additionally, during questions this afternoon, the Secretary of State claimed that one individual had received more than £1 million in consultancy fees. The Department for Education has now admitted that that was £1.35 million of consultancy fees paid to KPMG as a whole over three years. Do you not think that the Secretary of State should be coming to this Chamber and have you had any word from him that he wishes to do so?
The Temporary Chair
I have listened very carefully to what the hon. Gentleman has said, but I am afraid that the point of order is of no relevance to the Committee stage of the Finance Bill.
Andrew George
I want to speak in support of amendment 50, which is tabled in my name and those of my colleagues. I congratulate the hon. Member for Nottingham East (Chris Leslie) on the manner in which he proposed his amendment. The broad thrust of the case that he seeks to probe and possibly to press to a vote later on—we do not know—is, I think, worthy of being probed. The House should obtain a great deal more information on the issue before we make a decision.
I have asked a large number of parliamentary questions on the subject and, more particularly, on the banking levy and the basis on which assessments have been made to set that proposed levy at the level at which it will be set. It is rather frustrating for many of us who wish to engage in the debate on corporation tax and to cross-reference it with the banking levy that both measures are not contained in the Bill. I understand, of course, that there will be a consultation on the banking levy before its implementation in January, and I am sure that the Minister will say that they could not both be contained in the Bill because it was proposed that the arrangements would be undertaken in such a manner. However, leaving aside the politics of the issue, the broad thrust of the argument, on which I understood that all parties were agreed, is that when we came to set the first Budget after the general election, those who dropped this country in it and caused the public finances to be in such a serious state would do most to help us to get out of it and to help to restore our public finances. We should be looking to those sectors that are most culpable to make the greatest contribution.
The Chancellor of the Exchequer was absolutely right to conclude that what we should seek to achieve in the Budget is that those who can afford it most should contribute most, with the vulnerable protected. Although I do not want to return to a Second Reading-type debate and to relate this measure to all the other measures and to the public spending re-profiling or cuts that are due in the autumn, on which we are to get more detail, that is the context in which this issue has to be considered.
Amendment 50 is remarkably similar to amendment 34, tabled by the right hon. Member for East Ham (Stephen Timms). I tabled amendment 50 because we need to probe and fully understand the likely impact of the banking levy and the corporation tax cut on the banking sector. We need a better assessment of that. It was interesting that the hon. Member for Nottingham East, in response to proper and reasonable questions about the relationship between the impact of the bank levy, as opposed to that of the corporation tax cut, on the banking sector was unable to give a quantifiable answer. That is because the Treasury do not provide one. In the responses to the questions that I have asked on the issue, that relationship has not been clear. That is why it would be better for us to say honestly that if we are properly going to come to a measured conclusion, it would be far better to have the best possible estimates of the likely impact of both measures beforehand, so that we can measure one against the other and make a proper, balanced and reasonable assessment of the impact at the end of the process.
I do not wish to delve into the party politics of what people said and did not say prior to the election, although that adds to the excitement and interest in this Chamber, but the Business Secretary, my right hon. Friend the Member for Twickenham (Vince Cable), was right in predicting a lot of what needed to happen and in encouraging the then Government to take the action that they ultimately took on Northern Rock and in relation to other interventions. The hon. Gentleman was wrong to place the Conservatives and Liberal Democrats together in the previous Parliament as taking the same line on the issue. As a candidate in the last general election, I was particularly keen that we went into it seeking to ensure that the banking sector made a significant contribution to restoring the public finances. I was looking forward to that, and I was very pleased to see the banking levy in the Budget, along with a large number of other measures, such as raising personal allowance and the pension guarantee; the Liberal Democrats were pleased to see those. The hon. Gentleman is right, however, that one thing that came out the day after the Budget was the sense that the banking sector was breathing a sigh of relief.
Clive Efford
I apologise to the hon. Gentleman in advance for going back to what was said during the general election, but it is important in this context. The Liberal Democrats said that they were in favour of a banking levy, as he has just said, but they went further and said that it would be in addition to corporation tax. What we are debating is corporation tax that compensates the banks for the levy, cancelling it out. How can he possibly defend that position?
Andrew George
I am a free-ranging Liberal Democrat Back Bencher and I am quite clear that I want to probe this issue. I tabled my amendment because I want to ensure that we have the facts before we make what I hope will be a balanced decision on this important issue. If the hon. Gentleman does not mind, I will sidestep the tribal arguments.
Geraint Davies (Swansea West) (Lab/Co-op)
The hon. Gentleman will be aware that there is a banking levy in the United States. Does he agree that if the banking levy in Britain is offset by the corporation tax reduction, our marketplace will reward bad bankers and encourage them to migrate here? At a time when the rhetoric is about creating a non-financial economy and building new strengths into the economy, we will be encouraging bad practice by rewarding bankers during the horrendous aftermath of what we have all had to witness, the costs of which are being paid by people across the country.
Andrew George
The hon. Gentleman’s point is, in a way, a development of an argument that was made earlier, when he was not here, regarding the contrast between the proposed level of the banking levy in the UK and that in the US. That potential osmosis of banking activity and investment may or may not happen. The hon. Member for South Northamptonshire (Andrea Leadsom) argued that having differential rates of corporation tax would be anti-competitive, but, at the same time, Members on the Government Benches are arguing for differential rates in the sense that the banking levy differentiates between the banking sector and all other sectors. One of the purposes of my amendment is to probe the issue further.
Ian Lucas
I commend the hon. Gentleman on tabling the amendment, but will he clarify the reference to
“all other sectors to which corporation tax applies”?
Does he think it would be helpful if that assessment took into account, for example, the effect of the reduction in capital allowances when making judgments about whether that is a wise course to take?
Andrew George
I am not sure that I am qualified to advise, but I am sure that the hon. Gentleman is right. If the Treasury could be encouraged to adopt this approach, I hope that it would at least ensure that it was sufficiently free-ranging to deal with any of the consequential behavioural activities that might arise as a result of such proposals.
Mr Kevan Jones
Although we are rewarding the banking sector, the proposals on annual investment allowances, which are cut in the Budget from £100,000 to £25,000, will directly affect many small and medium-sized businesses. Surely it is wrong that we are rewarding the people who got us into this mess in the first place, but penalising small businesses, which are getting a double whammy, because they are penalised by the lack of lending from the very institutions that we are rewarding.
Andrew George
Opposition spokesmen and the Treasury Ministers will have heard that intervention, which further embellishes the point that the hon. Gentleman wishes to make. I have no further comments to add, and I look forward to the Minister’s response.
Mr Kevan Jones
It is a pleasure to follow the hon. Member for St Ives (Andrew George), who has become a rather lonely figure on the Government Benches. Last week, he was the only Liberal Democrat who was not defending the indefensible, for which I pay him credit. At least he is prepared to come to the Chamber and argue against the measures in the Budget that will affect his very poor community in Cornwall, unlike some of his colleagues, who make comments in the press, but are absent from debates on the Finance Bill. I hope that on at least one or two occasions he will join us in the Lobby to stop the effects of the measure on his constituents and mine, although I know that he feels uncomfortable about voting against the coalition.
In 2008, in the run-up to the general election, bashing the bankers was something that everyone wanted to do. It is strange that we now have a Finance Bill that will reward them. There has been a change in the past few months from the stance that the Deputy Prime Minister adopted on 20 April, when he described bankers as “reckless and greedy” and holding
“a gun to the head”
of the country.
I support the amendment tabled by my hon. Friend the Member for Nottingham East (Chris Leslie) and by my right hon. Friend the Member for East Ham (Stephen Timms), and the amendment tabled by the hon. Member for St Ives. I wish to deal with the effect on other sectors, which that amendment raises. We have discussed the banking sector a great deal, but it is important to look at other sectors, too. There has been a feeding frenzy, which suggested more or less that the previous Government got things wrong, and that we should be penalising the banking sector. That view was reinforced by the Prime Minister himself who, when he was in opposition, said on Channel 4 in December 2008 that
“more senior bankers should be sent to prison.”
On another occasion, he should that they should do voluntary work rather than earn large bonuses in the City. The Conservative party went very quiet at the election, possibly because, as the Deputy Prime Minister said—and I agree with him—it is
“completely in hock to the City”.
We have seen that position defended tonight.
A number of banks have clearly made huge profits. Barclays, as has been mentioned, had a 92% increase in profits in 2009, and stand at £11.6 billion. The Royal Bank of Scotland—remember that?—paid its investment bankers £1.3 billion in bonuses, despite making just £1 billion in profit. Lloyds has made a profit of up to £1 billion. The proposals in the Finance Bill to reduce corporation tax rewards the banks for the mess they got us into, and do not acknowledge the fact that the individuals in question have been carrying on regardless, even though, as several hon. Members have said, the people who have suffered will have their services cut. The members of the public who are the victims are somehow to blame for the financial mess that we are in.
I do not understand how—well, I can, because they are called Conservatives—in the lead-up to the election, people can speak tough words against the banking sector, but one of the first things they do is to reduce corporation tax and reward the individuals who got us into the mess in the first place. Those same Conservatives—this was raised by my hon. Friend the Member for Nottingham East—opposed all the measures that we took not only to ensure that the banking sector did not collapse but to protect the British economy.
Chris Leslie
My hon. Friend is making an extremely strong case for the amendments. Is it not the case that the Government absolutely have to try their best to pin the deficit on the Labour party, rather than, correctly, on the banking sector? If they took the latter course of action, they would have to increase the banking levy and would not make these changes to corporation tax. They are clearly not prepared to see justice done to those truly responsible for the situation we are in.
Mr Jones
That is true. The Government’s drive to reduce public spending has very little to do with reducing the deficit. It is more an ideological move to reduce the size of the state. Unfortunately, like a boa constrictor, they have wrapped themselves round the Liberal Democrats, and will slowly squeeze the life out of them in the coming weeks, months and years. That is dawning on the hon. Member for St Ives, who does not want to be the mouse that gets squeezed at the end of the day. Let us hope that he will escape the clutches of the boa constrictor, which is slowly strangling the lifeblood from the modern Liberal Democrat party. I should not be too sympathetic to the Liberal Democrats, however, because I have spent a lifetime opposing them both in local government and nationally, so their demise might not be an unwelcome consequence of that strategy.
My hon. Friend the Member for Nottingham East has tabled an amendment that suggests that there should be a 28% tax on the profits of the banking industry, as defined by section 2 of the Banking Act 2009. The reason for that is supported very well in the Red Book. Paragraph 1.63 on page 26, which is entitled “Bank levy” says that
“the Government will introduce a levy based on banks’ balance sheets from 1 January 2011, intended to encourage the banks to move to less risky funding profiles. The Government believes that the banks should make a fair contribution in respect of the potential risks they pose to the UK financial system and wider economy. Final details of the levy will be published later this year, following consultation. The levy will result in a rebalancing of the burden of taxation between banking and other sectors.”
We have seen a very strange Finance Bill this year, with a very short preamble to be followed later by major changes. If we are going to have a major change which, in the Government’s own words, is going to rebalance
“the burden of taxation between banking and other sectors”,
I cannot understand why they are allowing the reduction in corporation tax for this year to apply to the banking sector. To me, it would seem right to wait for whatever the banking levy comes up with. That fits in very well with what my hon. Friend the Member for Nottingham East is proposing.
Matthew Hancock
I thank the hon. Gentleman for inviting me to intervene. He has just admitted something that the hon. Member for Nottingham East (Chris Leslie) could not deny, but did not admit. After this Budget, because of the banking levy, the banks will be paying more tax relative to other sectors of the economy, and that is stated on page 26 of the Red Book. I am very grateful for that important admission.
Mr Jones
No, I am sorry, we do not admit that. I am not sure what point the hon. Gentleman is trying to make or whether when he went into the general election in May, he had on his election leaflets, “Yes, we will be tough on banks for the rhetoric in the lead-up to the election, but if we get into power we will do a con trick where we take the money with one hand and gave it back with the other.” If, as the hon. Member for St Ives said, we do not know what the figures are, that makes it worse. We are asking the public to take severe cuts in public services and higher taxation, while at the same time the people who are still being paid high bonuses will get money back. That was reflected in a comment made earlier about the increase in bank share prices that took place once the Budget had been announced.
Clive Efford
To correct the hon. Member for West Suffolk (Matthew Hancock), it is just not true to say that the banks are going to pay more. Deutsche Bank has said:
“Taking 2% off the 2012 tax rate for the five banks listed in the UK would increase profit by £1.16bn, that is it should almost offset all of the banks tax. Overall a good outcome for the banks.”
Similarly, HSBC said:
“We’d expect most domestically-orientated banks, for example Lloyds, to be better off after four years than they were pre-budget”.
Mr Jones
I am grateful for my hon. Friend’s intervention, which completely blows a hole in the myth that this coalition Government are somehow being tough with the banking sector. Not for the first time, we are seeing rhetoric overtaking reality. The spin and presentation that is the hallmark of the Prime Minister is clearly catching up with him now he is in power and able to help his friends in the financial sector.
This policy also has an effect in terms of the banking sector itself, because the banks that are being rewarded are the ones that got us into the mess in the first place. Most people will rightly be horrified by that prospect.
Ian Lucas
Does my hon. Friend agree that what makes it even worse is the fact that the banks are still not lending? We all have examples in our constituencies of businesses that have good business cases but are not securing the lending from these banks that are making massive profits.
Mr Jones
That is a good point. We have heard about banking codes and other ways of forcing the banks into lending, but many small and medium-sized enterprises will be paying for this. They are facing a double whammy, because they are paying for it not only through the reduction in investment allowances but, as my hon. Friend rightly says, through not getting access to the lifeblood of working capital that they need.
That brings me to what the hon. Member for St Ives said about other sectors. Amendment 50 says:
“This section shall not come into force until the Treasury has laid before the House of Commons an assessment of the impact of this section on—
(a) the banking sector, and
(b) all other sectors to which corporation tax applies.”
That makes an important point about how this cut in corporation tax is being paid for—that is, through the reduction of the annual investment allowances, which from 2010 will fall from £100,000 to £25,000. That will affect a lot of SMEs in the manufacturing sector. One need only look at some of the comments that were made on Budget day. The Engineering Employers Federation, representing manufacturers, said:
“Reducing the corporation tax rate over time was in principle the right course of action. But financing it, in part, by cuts to investment allowances will be a heavy price to pay, especially for smaller companies. It might be a positive signal for large companies, but not for their suppliers.”
That reflects a key point made in the amendment—the need to look at the effects on other sectors of the economy and how they are paying for this.
Even members of the coalition are feeling some concern about the corporation tax plans. The Secretary of State for Business, Innovation and Skills signalled a recognition that they could hinder the interests of British industry when he said in the Financial Times on 14 May:
“The one thing I would want to make sure is that the productive parts of the British economy are helped and not hindered by corporation tax changes…I will certainly make an input to the debate defending the interests of British industry and making sure there are proper incentives to invest.”
We are now seeing this time and again in policy areas. The Liberal Democrats can protest all they wish, but they are being overruled on every single occasion, and this is clearly another example of that happening.
The Institute for Fiscal Studies and the EEF have both criticised the Government for reducing investment and capital allowances. The IFS’s post-Budget briefing on business and capital taxes dated 23 June said:
“Biggest benefits go to low-investment, high-profit firms—banks and supermarkets rather than manufacturers”.
The Budget talked about rejigging the economy away from the public sector and the banking sector into manufacturing, but this will not assist the manufacturing sector in any way at all. One can add to that the pressures that are resulting locally from the abolition of the regional development agencies and the nonsense that is going on with the freezing of grants for business investment. For example, Geka Manufacturing in my constituency, which vitally needs such a grant to secure 130 jobs in Stanley, has had it frozen by the Government. Local manufacturing SMEs are not only being hit by the corporation tax changes in the Budget but affected by the winding up of the RDAs in terms of the small business support that is vital for their investment decisions.
If we are to consider the effect on other sectors, as the hon. Member for St Ives suggested, we need to ensure that that includes not only SMEs but the manufacturing sector. If the Red Book is to be believed, I do not understand how the levy will result in a rebalancing of the burden of taxation between banking and other sectors. Clearly the SME sector will pay dearly, and that is in addition to some of the other matters that will affect it.
The cuts in capital allowances will prevent many SMEs from investing in vital equipment. That is no way to grow the economy in the way that the Government are suggesting. Despite the rhetoric that we heard before the election about bashing the bankers—[Interruption.] I say to my hon. Friend the Member for Glasgow East (Margaret Curran), who looks at me in horror, that I said “Bashing the bankers”. Instead, the Government are going to give back to banks the money that they will take from the levy. As my hon. Friend the Member for Nottingham East pointed out, it would have been right to wait for the results of the 1 January review, whenever they come, before introducing the decrease for the banks.
I ask hon. Members to support the amendment, which makes sense. Once the public recognise what the Con-Dem Government are doing, they will be disappointed that the Government are basically letting the banks off scot-free.
Sajid Javid
I shall keep my contribution brief. I congratulate my hon. Friend the Member for Lincoln (Karl MᶜCartney) on making a very good maiden speech, and I draw hon. Members’ attention to my entry in the declaration of Members’ interests.
Chris Leslie
There is not a Register of Members’ Financial Interests currently published, so for the benefit of the debate could the hon. Gentleman inform the House what that interest is?
Sajid Javid
Yes, I am a shareholder in a bank. [Hon. Members: “Which one?”] It is called Deutsche Bank.
Sajid Javid
That is not relevant. The hon. Gentleman can read the entry in the declaration of interests.
If we are to address the amendments properly and consider the changes to corporation tax that the Government have proposed not just for banks but for all companies, we cannot get away from the serious mess that the economy is in. As Members have heard on a number of occasions, as an inheritance from the previous Government, the Government are borrowing some £3 billion a week and our budget deficit is £155 billion, which is 12% of GDP—the highest in all G7 countries and the highest in Europe.
To address the issue, we need to consider how to restore growth to the economy and start paying back our debt. That will not just be through the changes in the Budget, such as raising extra taxes and cutting spending, but through restoring growth in our economy. That is at the heart of the changes to taxation, especially corporation tax, put forward in the Budget. The gradual reduction of corporation tax from 28 to 24% is all about giving business people and entrepreneurs incentives once again to take the risks that are always involved in starting and running businesses. It is such growth that will rejuvenate our economy and create the employment that we need to push up GDP and help us repay the debt that we have inherited.
Mr Kevan Jones
I know that the hon. Gentleman is a banker, and therefore possibly a bit detached from the SME sector and others, but how can cutting the investment allowances of SMEs and rewarding bankers with cuts in corporation tax make sense as a way to generate and grow new businesses?
Sajid Javid
I am not detached from small business, because my father was a small business man, I grew up in a small business and I know what it takes to make a small business grow. As well as hard work, it takes low taxes, less regulation and a desire for Government to get out of the way of business people. That is what this Government are desperately trying to restore after 13 years of the opposite.
Stephen Timms
Was the hon. Gentleman surprised that the Office for Budget Responsibility reduced its estimate of future growth in the British economy following the Budget?
Sajid Javid
That is a misleading question, and it does not go to the heart of the matter. It is a nice try, but the right hon. Gentleman will really have to try harder than that.
To return to banks and how to get our economy going, as well as restoring incentives we need to get banks lending again. That was the only vaguely accurate or factual point that I could pick up from the speech of the hon. Member for North Durham (Mr Jones). If we are to do that, we need to understand why they are not lending at the moment, and the major reason is a lack of capital for British banks. Banks across the world face the same problem. As a Government, we need to work out a way to restore the capital positions of banks so that they are willing to take the risks that are a necessary part of making lending decisions.
There are only three ways for banks to try to raise capital. The first is through the free capital markets, but today those markets are effectively closed to virtually all banks. Prior to the financial crisis, there were many instruments that banks could use to try to raise capital, including types of subordinated debt, hybrid equity instruments, tier 1 and 2 securities and common equity. Not only are those markets closed to banks today, but if Opposition Members have watched carefully what has happened in the financial markets over the past three or four months, they will know that banks cannot even raise senior debt effectively, let alone capital. Banks throughout Europe—especially those on the continent, but British banks included—are in many cases unable to raise that type of debt, let alone equity. The capital markets as an avenue to raise capital are closed.
The second option is for the Government themselves to give capital to banks. After the £70 billion-odd injection made by the previous Government, I do not believe that any Member of any party is advocating the Government injecting more capital into the banking system.
There is one final way left, which is to allow banks to hold on to some of their profits, if they are in a position to generate profits. No matter what Opposition Members would like to think, unless we create the conditions inside a bank that make it want to lend, there is no way to force it to do so.
Stewart Hosie
Technically, those are the three ways in which capital can be raised. Is the hon. Gentleman making a case, then, to oppose the Government’s bank levy, which would keep an extra £2 billion in the banks and perhaps allow an extra £40 billion of lending?
Sajid Javid
No, not at all. We have to separate the two issues. The levy is about working towards a way of taking something back from the banks to build an insurance-type system, so that if things such as happened during the financial crisis happen again, the Government will have a mechanism to withdraw some capital from the banks. However, if we are to cut corporation tax on all companies, it would be madness to leave out the banks. They need to be allowed to build capital, not just for the sake of getting them lending again by putting them in a comfortable enough position to make that decision, but because of the impact on their competitiveness.
Whether we like it or not, our financial sector is a huge part of our economy, and it is much bigger as a percentage of GDP than that of many of our international competitors, even after the financial crisis. It accounts for thousands of jobs up and down the country, not just in the City but probably in each and every constituency. If we are to restore some health to our financial sector, it makes no sense to make it uncompetitive when compared with other sectors in our economy and with other countries. The banking and financing sector is one of the most mobile of all our economic sectors. If we have differentiated tax rates for one sector of the economy compared with others, that will only make matters worse. I therefore oppose the amendments.
Stephen Timms
I am grateful to the Exchequer Secretary for his kind remarks on my return to the Dispatch Box. He, along with many Members of all parties, was good enough to write to me after I was attacked and injured. I greatly appreciated all the messages of good will that I received, and I would like to put on record my thanks to all those from across the House who got in touch; I think that those messages have accelerated my recovery. I am grateful to the Exchequer Secretary for his words.
My hon. Friend the Member for Nottingham East (Chris Leslie), in an excellent speech when moving the amendment, raised some important points. I was also encouraged by the comments of the hon. Member for St Ives (Andrew George). I am pleased that he described himself as free ranging, and I hope that his freedom of ranging includes joining us in the Lobby. I am particularly keen to have the opportunity to vote on amendment 34.
The Chancellor told us in his Budget speech that he was being tough on the banks. Listening to some Conservative Members’ speeches, I wonder whether they heard that part of his speech. He explained rightly:
“The failures of the banks imposed a huge cost on the rest of society, so I believe that it is fair and right that in future banks should make a more appropriate contribution, reflecting the many risks that they generate.”
At that stage, it could well be that the Chancellor’s words were consistent with the comment in the Red Book, to which the hon. Member for West Suffolk (Matthew Hancock) drew our attention. It states:
“The levy will result in a rebalancing of the burden of taxation between banking and other sectors.”
Who knows to what a “rebalancing of the burden” amounts? It could mean something pathetic and small. However, the Chancellor went further in his Budget speech. He said that the introduction of the bank levy would entail
“a greater contribution from the banking sector—one that far outweighs any benefit that it will receive from the lower tax rates that I have just announced.” —[Official Report, 22 June 2010; Vol. 512, c. 175.]
The Chancellor told the House that the cost of levy to the banks would “far outweigh” any benefit that the banking sector received. Listening to the speeches of the hon. Member for West Suffolk and the hon. Member for Bromsgrove (Sajid Javid), I do not think that they heard that part of the Chancellor’s speech.
My hon. Friends the Members for Nottingham East and for North Durham (Mr Jones) queried whether the levy, in so far as we know about it—the hon. Member for St Ives told us something about it—would fulfil the Chancellor’s words and far outweigh any benefits that the banks receive from the reduction of corporation tax. It is odd, as my hon. Friend the Member for Nottingham East pointed out, that for all the appearance of toughness in the Chancellor’s speech, bank shares actually went up after his announcement.
Matthew Hancock
The right hon. Gentleman may have misheard my earlier comment. Can he be surprised about the Chancellor’s comments when page 101 of the Red Book states that the bank levy raises £2.5 billion and the corporation tax cut in 2013-14 will cost £700 million? It is therefore no surprise that the bank levy raises more than the cut in corporation tax to the banks. That is precisely the point that I made earlier.
Stephen Timms
I am not sure about the figure of £700 million. I hope that the hon. Gentleman is not telling us that the reduction in corporation tax will decrease that tax take by £700 million. That is incorrect—perhaps he was citing a partial figure. However, that is why we need a report. I would genuinely like to know the impact specifically on the banking sector of a four percentage point reduction—it was not long ago that the banks accounted for a quarter of all the corporation tax receipts that the Exchequer collected—compared with the £2 billion cost of the levy.
Andrew George
The Red Book costings on page 19, in table 3 refer to the yield from the bank levy across fiscal years. In 2011-12, the figure is £1.15 billion, and in 2012-13, it is £2.32 billion. It is important to clarify that for the record.
Stephen Timms
I am grateful for that clarification. However, my hon. Friend the Member for Nottingham East described the background, pointing out the rather surprising fact that, after the tough talk, banking shares rose. He cited some of the analysts and mentioned the note from BNP Paribas, entitled
“UK Bank Levy: Bark Worse Than Its Bite?”
The note explained the reasons for that. It states:
“As things turned out for all the pre-election vitriol aimed at the UK banking system, the impact of today’s measures appears materially lighter than expected.”
The ratings agency Fitch said the levy would have “no impact” on the ratings of any UK bank. FT.com reported ideas being developed by the Swiss bank, UBS, to reduce the impact of the levy through some careful so-called “balance sheet management.” My hon. Friend the Member for North Durham pointed out that the banking levy is supposed to be based on bank balance sheets, so I suppose that it is no surprise that organisations such as UBS are thinking about what they can do to manage to balance sheets in such a way as to reduce the impact of the levy. That takes us back to our earlier debate on avoidance and evasion, and why legislation often turns out to be more complex than people originally intend: it has to address such behaviour.
My hon. Friend the Member for Nottingham East also rightly made the point that several banking analysts were quoted after the Budget as saying that the cut in corporation tax from 28% to 24% would “negate” the impact of the levy on bank profitability. We need to know the truth of the matter, and that is why the amendment calls for a report. It is certain that the amount payable under the levy will be offset—at least in part and possibly wholly—for banks making a profit by the reduction in corporation tax in the next few years. It is entirely plausible for the amount due under the levy to be more than offset for some banks—possibly for all banks—by the reduction in corporation tax under the clause, together with reductions over the next few years.
The Chancellor said in his Budget speech that the contribution under the new levy would “far outweigh” the benefit from corporation tax reduction, but to put it kindly, it is by no means clear that that will be the case. I would not favour a different, higher rate of corporation tax for the banks. That would raise several difficulties, but given that the Chancellor has made clear his view that the banks should make a larger contribution in the light of what has happened, that the increase in the tax they bear should “far” outweigh the reductions they enjoy—of which the clause outlines the first—I hope that the Exchequer Secretary will agree that a report along the lines suggested in the amendment, and in the strikingly similar amendment that the hon. Member for St Ives tabled, would be a valuable contribution to transparency and to understanding the impact of the Budget measures. I also hope that the Minister sets out as much information as possible to illuminate the impact of the corporation tax cut on the banks in comparison with the bank levy.
The nub of the issue is this: can the Minister substantiate the Chancellor’s claim that the impact of the bank levy will “far outweigh” the impact of lower corporation tax? If the Minister is unable to accept amendment 34, I should like to press it to a Division.
Matthew Hancock
I shall keep this contribution extremely brief, given the hour. I was surprised by some of the arguments made by Opposition Members. I am not all that surprised that the right hon. Member for East Ham (Stephen Timms), the shadow Minister, does not support amendment 21, which was moved by the hon. Member for Nottingham East (Chris Leslie), not least because before the election he said we would need any bank levy to be globally agreed. Indeed, the current shadow Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), said:
“Countries can’t go it alone. It is very important that we do this internationally”.
Conservatives and Liberal Democrats campaigned during the election for a unilateral bank levy, no matter what happened in the rest of the world, so it is not surprising that we do not listen to Opposition Members who argue that they are now in favour of one. They have performed a U-turn in an extremely short time.
Another point I want to make is that the shadow Minister said that his party’s policy is that corporation tax should be the lowest in the G7, but Italy’s corporation tax is now 27.5% and Canada’s is set to be reduced to 27.2%, which means that Labour’s policy is to reduce corporation tax, including on the banks, as he just confirmed, without the bank levy. A bank levy would more than offset the corporation tax reductions, so Labour Members are in all sorts of a tumble on this.
Everybody will note the difference between the Government, who argued before the election that we needed a unilateral bank levy and who are delivering it within seven weeks, and Labour Members, who argued that we should not have a bank levy, before performing a U-turn within 10 weeks.
Mr Gauke
Amendments 21, 34 and 50 relate to the impact of the corporation tax cuts on the banking sector. Amendment 21 would leave the
“main rate of corporation tax for financial year 2011…at 28%”
for
“banking institutions”, disapplying the 1% decrease, and amendments 34 and 50 ask for an assessment of the impact of the rate reduction on banks.
The proposals are helpful. Understandably, there is a frustration with the banking sector and a desire that it pay a fair share. The Government share that belief. We think that banks should make a fair contribution in respect of the risk that they pose for the UK financial system, which we have seen in the past few years. That is exactly why we announced in the Budget the introduction of a bank levy from 1 January 2011. Tomorrow, my hon. Friend the Financial Secretary to the Treasury will announce a public consultation with a view to implementing the levy on that date, and the measure will be included in next year’s Finance Bill.
The levy is a surgical approach, intended to encourage banks to move to less risky funding profiles, and a contribution reflective of economic risk. A tax based simply on profits, such as corporation tax, is not related to risk and will not create the behavioural effect that we believe the banking levy will achieve.
The overall impact on banks of the proposed reduction in corporation tax depends on a number of factors, and I will provide some details in a moment. None the less, I should like to put it on record that it is entirely right that hon. Members ask such questions. My hon. Friend the Member for St Ives (Andrew George) made a thoughtful and probing speech, and I was also interested to hear the comments of the right hon. Member for East Ham (Stephen Timms). However, I wondered, given his concern about the impact on the banking sector, precisely which angle he was coming from. Those who remember the debate prior to the general election will recall, for example, the remarks of the then Chancellor, the right hon. Member for Edinburgh South West (Mr Darling) who, in an interview on “The Andrew Marr Show” on 21 March, argued against proposals for a unilateral bank levy, saying that he thought it could work only if there were international agreement, as my hon. Friend the Member for West Suffolk (Matthew Hancock) said.
Of the Conservatives’ policy of introducing a unilateral bank levy, which was also a policy of the Liberal Democrats, the then Chancellor said that we were taking a hell of a risk, given that the banking industry employs more than 1 million people in this country. He seemed to be somewhat concerned that we were going to far and too hard. I do not know whether the shadow Minister is worried because the proposals are too tough on the banks, or because they are not tough enough.
Chris Leslie
I thank the Minister at least for that recognition, but I wonder whether he could take some time to justify the fact that the proposed banking levy is so low in relation to, for example, the American arrangement. Does he understand the incredulity and frustration that banks should be given this cashback bonus in the form of the corporation tax cut at this particular time? I want to hear him justify that.
Mr Gauke
Let me turn to the heart of this matter, because we have had quite a lengthy debate on it. We have heard concerns that the corporation tax would cancel out the effect of the bank levy or offset it, and that there would be a cashback bonus, to use the hon. Gentleman’s phrase. The shadow Minister asked whether the banking levy will “far outweigh” the benefit to banks of the cut in corporation tax. Perhaps the easiest thing I can do in response—there is much more one could say about corporation tax, and I will in future debates—is to refer to my answer to the right hon. Member for Holborn and St Pancras (Frank Dobson), who asked the
“Chancellor of the Exchequer what estimate he has made of the revenue from the financial services sector to be foregone by the Exchequer as a result of the proposed reduction in corporation tax in each financial year to 2015-16.”—[Official Report, 1 July 2010; Vol. 512, c. 610W.]
We have the numbers only until 2014-15, and I should point out that the financial services sector is somewhat broader than just banks. It includes insurance, pension funds and auxiliary financial services, so the numbers refer to the corporation tax cost not only for banks, but for other financial services. However, I will compare those with the bank levy yield. For 2011-12, the corporation tax costs will be £0.1 billion, whereas the bank levy yield will be £1.15 billion; for 2012-13, corporation tax costs will be £0.2 billion, compared with a bank levy yield of £2.32 billion; for 2013-14, corporation tax costs will be £0.3 billion, compared with a £2.5 billion additional yield from the bank levy; and for 2014-15, the corporation tax costs will be £0.4 billion, compared with a bank levy yield of £2.4 billion. Even in this last year, where the differential is at its narrowest, we can see that it has not been cancelled out or offset. There is no cashback, and the banks are not quids in as a consequence.
The test that the shadow Minister gave was whether the bank levy yield far outweighs the benefit of the corporation tax change, and the answer is clearly yes. Given that the proposal for a differential corporation tax rate in amendment No. 21 is not supported by the Front Benchers of the party to which the hon. for Nottingham East (Chris Leslie) belongs, I urge him to withdraw it.
Chris Leslie
The Minister is saying that £400 million is a small amount to be given in cashback to the banks in this corporation tax giveaway, but that sum could offset the necessity to scrap the health in pregnancy grant. It could offset the need to reduce the maternity allowance to just the first child. Those are important for users of public services, and he surely understands that.
Mr Gauke
Our aim was to rebalance the tax system. We are requiring the banking sector to pay at least £2 billion more in tax as a consequence of these proposals. That is not a minor matter. Other sectors, including manufacturing, will benefit from the reduction in corporation tax, but the banks will not benefit because we are introducing the bank levy. I urge the hon. Gentleman to withdraw amendment No. 21, given that his Front Benchers recognise the difficulties of a separate corporation tax rate for banks. I believe that I have satisfied the tests set out by the right hon. Member for East Ham, because the bank levy yield far outweighs the benefits of the corporation tax for banks.
I hope that I have satisfied my hon. Friend the Member for St Ives—
Andrew George
The corollary to the corporation tax cut is the banking levy, but although I respect the information that my hon. Friend has given in his reply so far, he has not yet addressed himself to the criteria for the setting of the banking levy and why it has been set at the proposed level—[Interruption.]
The Temporary Chair (Mr Benton)
Order. The background noise is a little high. Will Members please keep it down?
Mr Gauke
Beginning tomorrow, we will consult on the bank levy. The intention is to find a means of discouraging risk, and that is why the targeted approach of the bank levy is appropriate. It will raise additional revenue, and it is right to do so. We think that we have the balance right in raising additional revenue while enabling banks to lend more, and we are also taking steps to encourage that further.
In conclusion, I think that I have satisfied the concerns underlying the amendments and I hope that the amendment will not be pressed to a Division.
Chris Leslie
Having heard what the Minister had to say, I am not convinced that he makes a case for giving away £400 million to the banks, especially as Members on the other side of the House constantly ask us where the money would come from and how we would reduce the deficit. That sum would offset the need to abolish the health in pregnancy grant. It would offset the need to reduce to the CPI the indexation of housing benefit. It would offset the need to scrap the maternity allowance for second children, and so on. I hope that my hon. Friends will remember the £400 million giveaway to the banks in this corporation tax reduction.
I recognise that the consensus in the debate is that it is important to test the right amendment this evening. I therefore wish to withdraw my amendment, but I hope that one of the amendments that would require the Treasury to justify and assess the impact of the corporation tax change on the banks will be tested. That is the least we should be doing.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: 34, in page 1, line 6, at end add—
‘(2) Prior to this rate taking effect, the Chancellor will place in the Library of the House of Commons an assessment of the impact of this clause on the banking sector.’.—(Stephen Timms.)
Stephen Timms
I beg to move amendment 49, page 1, line 6, at end add—
‘(2) In section 2(2)(a) of the Finance Act 2010, after “companies”, add “not meeting the condition in (c) below”.
(3) At the end of section 2 of the Finance Act 2010 add—
“(c) 26 per cent. on profits of companies whose taxable profits will be increased by more than 1 per cent. as a result of changes in investment allowances.”.’.
It is a puzzling feature of the Budget that, on the one hand, the Chancellor is gambling on a big increase in investment, and basing his Budget arithmetic on the belief that investment will grow in each of the next three years at a rate that has been achieved in only one year in the last 40. That is an heroic assumption about investment growth, and if it proves to be untrue, the Budget gamble will fail. At the same time as banking on that huge increase in investment, he has announced that he will drastically cut the incentives for investment. The rates of capital allowances will be reduced from 20% to 18%, and the annual investment allowance will be cut by three quarters, from £100,000 to just £25,000. It is hard to see how the forecast growth in investment can be reconciled with such a big cut in investment allowances. The Budget was billed as Britain being open for business, yet it will clearly reduce the prospects for growth, as the Office for Business Responsibility confirmed in its two projections, before and after the Budget. Indeed, the International Monetary Fund, in its projections last week, also downgraded its growth forecast for the UK economy as a result of the Budget.
We have here a collision of conflicting objectives, which we highlight in the amendment. We propose a lower rate of corporation tax for companies that lose out from the reduction of allowances above a certain threshold. The Institute for Fiscal Studies pointed out before the election that the losers as a result of the Conservatives’ approach would be those making big investments and earning modest profits, notably
“in the manufacturing and transport sectors”,
and that the gainers would typically be in the financial sector.
We do not yet know what the legislation on allowances will say. The Chancellor said in his Budget speech that the change in the rate of capital allowances and the lower annual investment allowance would not take effect until 2012. Will the Minister confirm that the coalition Government are planning no reduction at all in investment allowances in the current financial year? Will the changes announced by the Chancellor in the Budget be in the Finance Bill later this year or will they be delayed until next year’s Finance Bill? I hope that the Minister will also comment on the principles underlying our amendment. How can it make sense to reduce so drastically the incentives for investment in a period in which the Budget depends so heavily on an unprecedentedly large and sustained increase in investment?
Mr Gauke
As I have already explained, the Chancellor or the Exchequer set out a business tax package in the Budget that included rate cuts and reductions in allowances that are good for business and growth overall. Amendment 49 proposes that clause 1 be amended to reduce the main rate of corporation tax to 26% for those companies whose tax bill will increase by more than 1% as a result of the reduction in investment allowances. That is a somewhat complex mechanism, but it provides an opportunity to raise the matter of capital allowances.
As part of a package to improve the UK’s competitiveness, it was announced that from April 2012 there would be reductions in the rates of writing-down allowances for plant and machinery and a reduction in the annual investment allowance. The Government will reduce the main rate of corporation tax to 26% that year—2012—and by that reduction, alongside changes to allowances, we will achieve the results that the amendment seeks. Furthermore, by not implementing the changes to allowances for two years, but reducing corporation tax rates next year, we are giving companies a full year to benefit from the reductions in rates, alongside current levels of allowances. Further reductions in the main rate of corporation tax follow in later years and capital allowances remain broadly in line with average rates of economic depreciation. To answer the shadow Minister’s questions, no changes are made to the so-called investment allowances in this Finance Bill and none is planned for the next financial year.
Barry Gardiner (Brent North) (Lab)
Why does the Minister believe that, if the Budget begins to work and we see businesses begin to pull the country out of recession, that is the right time for the Government to take away the incentive for further investment in business growth? That seems paradoxical to us all and to damage the very prospects of the recovery that he claims he wants to aid.
Mr Gauke
As I said a moment ago, the changes to capital allowances will take effect from 2012, and we believe that there is a substantial benefit for the UK economy in reducing the corporation tax rate. Indeed, it is a direction of travel that our predecessors followed when they reduced the rate from 30% to 28%, but we do not think that that went far enough. The point was raised in earlier debates that the UK has lost its competitive advantage in having a relatively low rate of corporation tax, as a number of other countries have cut their corporation tax rates much further than we have over the last 13 years. We believe that the lower rate sends a very clear signal that Britain is open for business and it is a demonstration of the direction of travel in which we are going. Assessment of the impact of Budget measures on investment over the next few years suggests an increase in investment of £13 billion.
The Budget thus provides a set of proposals and a set of reforms to corporation tax that will encourage further investment. As I say, it is a sign that Britain is open for business and a sign to investors and businesses throughout the world that the UK is a good place in which to do business. We believe that the package as a whole is well balanced and that it will aid a private sector recovery, partly funded through reforms to capital allowances and partly through the bank levy, as we debated earlier. Legislation is not required for the changes in capital allowances in this Finance Bill or indeed in next year’s, but we have set out a clear sense of direction that has been welcomed by business groups as a whole. We therefore urge the shadow Minister not to press the rather complicated amendment 49. It will not make any difference, because we will legislate to this effect in any event—without the complicated mechanism in the amendment. I urge him to withdraw it.
Stephen Timms
I am disappointed by that response. I am disappointed that my hon. Friend the Member for Brent North (Barry Gardiner) did not get an answer to the telling point that he put to the Minister. There is a real issue about how this large increase in investment is supposed to be achieved at exactly the time that incentives for investment are being reduced. Nevertheless, I shall not press the amendment to the vote. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Stephen Timms
We have had useful and important debates about the amendments to clause 1, but some important points remain to be discussed. I have no wish to oppose the clause, and I will not encourage my hon Friends to vote against it. However, we need to ask some significant questions, in particular about why the clause does not contain items that we might have expected.
Small companies will face a worrying and uncertain time over the next few months, and we would all sign up to the proposition that they are the lifeblood of the UK economy, yet the Bill does nothing to help them. The Budget did not do much either, but at least it included the 1 percentage point reduction in corporation tax. Inexplicably, that measure has been omitted from the Bill. Will the Minister tell us why? What was the basis for selecting the measures in the Bill? Is the Bill’s purpose simply to ensure that the increase in VAT is legislated for before Liberal Democrat Members have the opportunity over the summer to learn what their constituents think about it, or perhaps before their party conference has a chance to express a view in September? Were the other measures included just to make up the numbers and pad out the Bill? Alternatively, is there another criterion—urgency, presumably—for what is included in or omitted from the Bill? If so, why was it urgent to legislate for the large companies rate but not the small companies rate? The more we look at the Bill, the more it appears to be a rag-bag of measures to give an impression of substance, when in reality it is all about railroading the VAT increase through Parliament before the Liberal Democrats wake up.
Businesses of all sizes face a worrying time. As the National Institute of Economic and Social Research pointed out last Thursday,
“Fiscal consolidation, both in the UK and the euro area, will restrict growth”.
The IMF’s startling post-Budget growth downgrade for the UK last week made the same point. The Daily Telegraph expressed it bluntly on Friday, “UK austerity drive threatens to snuff out recovery, IMF warns”, and went on to summarise the IMF message thus:
“Britain’s fledgling recovery may be nipped in the bud by the savage cuts”.
A lot of other evidence points in the same direction. Last Monday, the monthly report on business confidence showed that, far from the Budget placing an “Open for business” sign above Great Britain plc as the Chancellor had hoped, business confidence suffered the biggest one-month fall ever recorded in June, the month in which the Budget announcements were made. With confidence on a sharp downward trajectory, the truth is that the Chancellor is taking an enormous and unwarranted risk with the UK economic recovery.
Our case is clear: in taking such an enormous and unjustified risk with the recovery, the Budget judgment was wrong. Businesses and their employees, as well as those who work in the public sector, will pay the price. As was mentioned earlier, small manufacturing firms will be hit particularly hard by the Budget, as the Engineering Employers Federation pointed out in its Budget response, to which my hon. Friend the Member for North Durham (Mr Jones) referred. The EEF said:
“Reducing the corporation tax rate over time was in principle the right course of action. But financing it, in part, by cuts to investment allowances will be a heavy price to pay, especially for smaller companies.”
It might be a positive signal for large companies, but not for their suppliers.
Stewart Hosie
I am listening carefully to the right hon. Gentleman’s comments, and I rise to seek the following clarification. Am I right that it was in fact the previous Government who—sensibly—allowed unused tax assets to pay, at least in part, for the asset protection scheme to protect all of us against non-performing and toxic assets?
Stephen Timms
Indeed, and I am certainly not arguing against the long-established mechanism allowing tax losses to be used in that way. I am simply querying, just as a matter of fact, whether that is the reason why this Bill only makes one of the four promised year’s reductions in corporation tax. I have certainly not come across any other suggestions as to why the Bill is doing that in that way. People who have deferred tax liabilities—as opposed to the banks having deferred tax credits—would benefit from early enactment of the lower rate. Typically, that is people such as manufacturers. If that is the reason, this is, sadly, another case of helping out the banks at the expense of manufacturers.
Surely the Institute of Chartered Accountants in England and Wales is right to say that
“to provide better certainty for businesses”
there should be legislation
“as soon as possible for the proposed reductions in the main rate of corporation tax”.
When will the Government legislate for the remaining reductions? Will they do so in the Finance Bill that we have been promised in the autumn? Are we really going to have to wait for four years of Finance Bills to complete these reductions, as the Chief Secretary suggested, or can we look forward to legislation in the Finance Bill No. 3 of 2010? If certainty for business is the aim, it surely must be done this year at least.
When do the Government intend to introduce their changes to the rate of capital allowances and the annual investment allowance? I listened carefully to what the Minister said about that and perhaps I missed the point but I did not quite grasp which piece of legislation he envisaged those changes being made in. Will they be in the further Finance Bill in the autumn or will they await next year’s Bill? By that time, I suppose we might have some further data on the actual change in business investment in the next 12 months and how that compares with the change on which the Chancellor is pinning his Budget arithmetic.
There is something else about which the Bill is silent but on which we might have expected some change: the differential compared with the main rate of corporation tax inside the North sea ring fence. The ring fence for North sea operations rightly prevents taxable profits from oil and gas extraction in the UK and the UK continental shelf from being reduced by losses from other activities or by excessive interest payments. The ring-fenced corporation tax rate was the same as the main corporation tax rate, until the previous Government reduced the main rate from 30% to 28% from 1 April 2008; we left the ring-fenced rate at 30%. Now that the main rate has been announced as falling to 24%, do the Government intend to leave the ring-fenced rate at 30% throughout the next four years, thus trebling the differential from two to six percentage points or is a reduction to the ring-fenced rate being considered, perhaps along with some other changes to the fiscal regime for oil and gas extraction?
Let me finish by asking one further question. As I reminded the House, it was the previous Government’s explicit aim that corporation tax in the UK should be the lowest among the G7 economies, and we succeeded in achieving that aim. That is one of the reasons why the UK has been so successful over the past decade in attracting so much overseas investment into our economy. Do the present Government intend to ensure that we continue to have the lowest rate of corporation tax in the G7? Will that commitment be maintained?
As I explained at the outset of my remarks, it is not my aim to oppose this clause, but I hope that the Minister will provide some explanation for the omissions I have highlighted, and in particular give an account of why the remaining reductions in the rate of corporation tax have been delayed, and say when the legislation for them will be introduced.
Chris Leslie
I am grateful, Mr Benton, that you have seen fit to allow a stand part debate on this important clause, especially at a time when every measure in the Finance Bill and the Budget as enacted needs sufficient scrutiny to ensure that the general public can have confidence in the fact that any revenue forgone is forgone for a good purpose. At a time when our public services are threatened and look set to be cut so significantly, it is very important that, if this country is to give away potential yield through changes such as the corporation tax, this is done for the right reasons.
It is important to note that we want a healthy economy and for our companies, by and large, to be profitable and doing well. I do not, of course, want to revisit in too much detail our debate on the banking sector, but I point out that it is necessary to have an environment in which our companies can be competitive on a global scale, and to ensure that they can succeed. While we want companies to be profitable, we also want them to reinvest a lot of those profits, so that they can improve the capital stock, improve the ingenuity and enterprising innovation that goes on within such companies, and have a longer-term profitability trajectory. It is for those reasons that I am perplexed by the drastic reduction in capital allowances, to just £25,000. Manufacturing companies—the institutions that produce the actual goods we can sell and export abroad—may well be disadvantaged relative to other sectors of the economy.
Barry Gardiner
Is my hon. Friend aware of the predicated growth, contained in the Government’s figures, of the private sector generation of income into the Treasury over the next five years, and does he believe that that is compatible with the reduction in capital allowances that has been announced? In particular, would he care to comment on the timing of that reduction at precisely the moment when—if the Chancellor’s figures were to work out—the economy would be about to see the largest part of its expansion?
Chris Leslie
I am very disturbed that the Chancellor’s measures are coming at a time when our manufacturing industries are potentially just finding their feet and beginning to think about turning the corner out of the recession. Taking away some of those crucial allowances will not only affect those niche companies, which will, in turn, be the producers of the tool manufacturing equipment and the entrepreneurs whose work is so necessary and has perhaps been funded and supported by those allowances, but will, in a general context, potentially reduce the competitiveness of that particular sector of the economy.
It is a more general matter of debate whether some sectors of the economy benefit more than others from the corporation tax change. As I have said in previous debates, I am not sure whether my constituents would feel that the oil companies, the utilities and the banking sector should also have the gains from this corporation tax reduction. As I said in our debate some time ago, I am not convinced that now is the time to be giving away a £400 million windfall to the banking sector in this corporation tax cut.
Jon Trickett (Hemsworth) (Lab)
I am listening carefully to my hon. Friend’s argument. Has not the largest single factor in this recession been, in effect, a private sector investment strike? I am talking about the fact that £6 out of every £10 of the fall in gross domestic product is attributable to a single factor, which is that the private sector some time ago decided not to invest. There are all sorts of reasons why that should be, one of which is the failure of the banks to provide the capitalisation to allow those companies to invest—that touches precisely on the point that he was just making. Given that level of inactivity in investment, are we not facing both an increasingly inefficient private sector and, as has been said, the cuts in the allowances, which will make things worse?
Chris Leslie
Indeed that is the case. I know that my hon. Friend has done a great deal of work on some of the analysis of these points. There are arguments to be made for reducing corporation tax to boost competitiveness, but clearly that is a way of encouraging profit-taking and, in turn, the removal of money from companies in the form of dividends. That, of course, benefits us all in some ways, because we are all members of pension funds and so on. However, if it is indeed the Government’s particular choice at this point in time, as we are coming out of a recession, to try to encourage companies to focus on their long-term profitability, might it not be a better strategy, in some respects, to retain some of those capital allowances to ensure that we can fix our banks such that they are able to supply much-needed credit to small companies, in particular, and to the wider industries across the board?
Barry Gardiner
My hon. Friend rightly talks about the need for companies to pay dividends and the benefits of that for all of us in society, in particular pension fund holders. Does he appreciate that the portfolio of shares that our pension funds all hold can also increase in value by incentivising companies to reinvest in themselves? That happens by the increase in value of the company through the increased investment that it has made in itself. Is that not a more efficient way of doing things than paying out dividends, which may simply go into private pockets for consumption?
Chris Leslie
That is a moot point and I would not go to the wall to argue against reducing corporation tax in this way. All I am suggesting is that there are other strategies that I do not feel that the Government have properly explored. We ought to be focused on growth and on how business can contribute to it. Let us not forget that we have such a deficit situation in this country not because of so-called excessive public service consumption but because tax receipts have been so depressed. That has partly been caused by the credit crunch and the lack of credit available, which provoked the private sector investment strike that has been mentioned by my hon. Friend the Member for Hemsworth (Jon Trickett).
Stewart Hosie
When the hon. Gentleman and his hon. Friend talk about a private sector investment strike, I wonder whether it might not be because there has been negative growth in unused sterling credit facilities for the past 27 months. Businesses, large and small, have simply been unable to get the cash.
Chris Leslie
Indeed. There are liquidity problems across the economy and they remain. There are rumours in the air about the return of quantitative easing and that we might be entering into double-dip recession territory. All these things prove that the so-called independent Office for Budget Responsibility’s downgrading of growth predictions as a result of the measures in the Budget suggests that the Government had a choice in their hands to steer the economy in a particular direction and that they have chosen not the pro-growth path that the Liberal Democrats and the Labour party advocated before the election but, because of the damascene conversion of the Secretary of State for Business, Innovation and Skills the day after the general election, the anti-growth path. They will take a whole chunk of money out of the economy by cutting public services so steeply and so massively in such a short space of time.
Andrew Bridgen (North West Leicestershire) (Con)
Does the hon. Gentleman not appreciate that there is no money for the private sector from the banks because of the legacy of the last Labour Government? The Government are borrowing £3 billion a week—there is no money left for the private sector.
Chris Leslie
I do not agree that the private sector is crowded out in that way. I do not think that there is quite the evidence to suggest that. However, I am not sure that the hon. Gentleman, had he been in government during the crisis that the credit crunch provoked, would have done anything massively different to underpin and insure some of the banks against their losses at that time, purchasing shares in various banking institutions in order to keep the banking system going. I understand the partisan nature of his point, but all parties would have had to create that safety net for the banks at that time. I do not want to dwell on these matters, because time is limited and it is important to make my speech as brief as I can.
I want to ask the Minister specific questions about the absence of the small profits rate cut from the Bill, a matter on which I tabled an amendment. It is important to know why on earth it is not included. Typically, large corporations with their multi-million pound profits are at the front of the queue as far as this Government are concerned, but the real engine of growth in this economy is small firms. When I asked the Federation of Small Businesses about this, Stephen Alambritis, the head of public affairs, said that he was surprised at the signal sent to small businesses by the way in which the Bill is framed. He told me:
“It is important that small business is recognised in discussions about the Finance Bill. There should be a reduction in the tax rate for small business as there is for larger companies. There seems to be some discrimination from the coalition government, in that they are favouring large companies at the expense of small business”.
The Minister might say, “Of course they will get their cut,” but can we really trust the Government to deliver that if they are not putting such a measure in the Bill, particularly if they are not putting in the future years of the main rate cut, too?
A number of questions on this clause are exceptionally important. I obviously do not want to talk for too long, so I shall let the Minister respond.
Mr Gauke
In the Budget, my right hon. Friend the Chancellor announced a programme of measures aimed at improving the competitiveness of the UK economy, including four annual 1% reductions in the main rate of corporation tax, down to 24% in 2014, and a reduction in the small profits rate to 20% from April 2011, in contrast to the previous Government’s plan to increase it to 22%. That will reduce the tax rate for some 850,000 companies. The Budget also included, from April 2012, a reduction in the capital allowances main rate from 20% to 18%, a reduction in the special rate from 10% to 8% and a reduction in the annual investment allowance to £25,000. Despite that, investment allowances will permit more than 95% of businesses to offset completely their annual plant and machinery expenditure. As I said in our debate on amendment 49, by delaying these changes to allowances for two years but reducing the corporation tax rate next year, we are giving companies a year’s advantage.
We have been asked why we are legislating for the 1p cut in the main rate this year. This is the usual convention as the corporation tax main rate is usually set a year at a time. The right hon. Member for East Ham (Stephen Timms) is right to say that there was an exception in 1984, when four years were done together, but the usual convention is to do these things a year at a time. A distinction has been made between the mainstream rate and the small profits rate. The right hon. Gentleman, who was a distinguished Treasury Minister for several years, may have forgotten that payers of the corporation tax main rate are within the quarterly instalments payment regime and so require advance notice of the rate, as they might be making payments of corporation tax liability before 1 April of the relevant year in which profits fall in the next financial year. Payers of corporation tax at the small profits rate do not require advance notice, as they have until nine months after the end of the accountancy period to pay their tax.
Both main and small profits corporation tax rates have traditionally been set in this manner, and what we are doing is consistent with the usual approach. The right hon. Gentleman asked about deferred tax assets, but they are not the reason why we are doing this; we are simply following the usual convention.
Opposition Members have asked whether business can have faith in what this Government do, but they should give us some time and they will see exactly what we will do: we will follow through on these promises. No great concerns about this issue have been raised with us. On deferred tax assets, when I was in opposition, I received representations not from a bank but from a major manufacturer who made the point that the right hon. Gentleman has made, but that is not what has driven our thinking regarding the timing in this area.
Stephen Timms
The Minister says that it is normal practice to do what the Bill does, but as far as I know, there has been only one occasion since this tax was introduced when a series of reductions was announced, and those reductions were all legislated for in the 1984 legislation. I am not sure what precedent he is referring to that suggests that the way things are being this time is the normal way, as that is not the case.
Mr Gauke
The usual approach has been that the Finance Bill sets the small companies rate in-year, just as it sets the rate for income tax; the preceding year sets out the large companies rate. The right hon. Gentleman is right that there is a precedent for doing it another way, but we do not believe that business has any concerns that we will fail to follow through on our promises. There is an argument for doing it the other way, but we are pursuing the approach that has been adopted for a number of years.
Why cut corporation tax? As I have explained in debates on amendments to the clause, this package of measures takes real strides towards restoring the UK’s tax competitiveness, and will support economic growth in this country. It does so in a sustainable way that provides business with a clear direction on our long-term aims—a 1% cut every year for four years clearly demonstrates our position in making the UK open for business. No other legislative changes are proposed in the Finance Bill, although the small profits rate of corporation tax will reduce from 1 April 2011 from 21% to 20%, instead of rising to 22%, as the previous Government intended. I find it somewhat strange that those who were proposing to raise that tax are now outraged that we are not legislating to reduce it, or are calling for us to reduce it even further.
Stephen Timms
Will the hon. Gentleman comment on my question about whether it is an explicit aim of the Government that the UK rate of corporation tax should continue to be the lowest in the G7?
Mr Gauke
Of course, our proposals go beyond that. The explicit aim of this Government is to have the best corporate tax environment within the G20. That is considerably more ambitious, and we think that it will help to lead to the UK developing a stronger private sector that will lead us to recovery. The Bill and the clause represent a step in the right direction that will benefit the UK economy very strongly.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2 ordered to stand part of the Bill.
Schedule 1
Rates of capital gains tax
Stephen Timms
I beg to move amendment 30, page 6, leave out lines 13 to 16 and insert—
‘(3) The rate of capital gains tax in respect of gains accruing in a tax year to—
(a) the trustees of a settlement is 28%, and
(b) The personal representatives of a deceased person is 18% for the first £10,000 of gains and 28% thereafter.’.
The Government have decided to raise the rate of capital gains tax for people paying higher rate income tax. We are not going to object to that; indeed, we are interested to know why a higher rate has not been adopted. The rate will be left at 18% for people paying basic rate tax, but the higher rate of 28% will apply to all trusts. Some people with low incomes have their interests represented by trusts, and there is a case that it would be unfair for them to pay the higher rate. However, it has been agreed that the rate of income tax on discretionary trusts will be 50%, so I accept that it is logical to apply the higher rate of capital gains tax to them as well, although I have no doubt that that this is a question to which the House will want to return in future debates.
Amendment 30 applies to one specific situation that has been drawn to our attention by the Low Incomes Tax Reform Group—that is, the position of so-called estates in course of administration, to which the Bill as drafted would apply, in every case, a capital gains tax rate of 28%. In the case of the majority of estates of people who have died and who paid basic rate income tax prior to their death, those people, had they still been alive, would have been entitled to realise at least some capital gains at the lower rate of 18%. The Bill, however, applies a rate of 28% to any taxable gain.
The most common problem that the Low Incomes Tax Reform Group had in mind was a case in which a house increases in value between the point of the owner’s death and the point at which it is sold. Under the Bill as drafted, the whole of any such gain would be taxed at 28%, even if there was no other income or capital gain accruing to the estate at all.
I acknowledge that this is a relatively straightforward problem to identify but rather more difficult to solve. The amendment suggests that to remedy pragmatically what could, as I hope I have set out, otherwise be unfair, the first £10,000 of gains in a year should always be charged at 18%, rather than 28%, with gains above £10,000 being charged at 28%. I accept that that is not an ideal solution, because wealthy estates would benefit as well as the estates of people with low incomes. If the Exchequer Secretary has a better solution, I would be interested and eager to hear it, but I hope that he will recognise that there is a potential unfairness in relation to the estates of people with low incomes that realise capital gains after the individual’s death, typically when the estate includes a property.
If the Exchequer Secretary feels unable to accept the amendment, will he agree to reflect on the matter and consider whether it might be possible to address what would certainly be an unfairness in some cases in the next Finance Bill later in the year?
Mr Gauke
The amendment would set the capital gains tax rate at 18% for personal representatives of the deceased for the first £10,000 of gains, while retaining the 28% rate for gains above that level and for trustees. I am grateful to the shadow Minister for the explanation of the thinking behind it. As he said, the matter was raised by the Low Incomes Tax Reform Group. The Institute of Chartered Accountants in England and Wales made a similar point, stating that it would be appropriate to tax the personal representatives of a deceased person in the same way as basic rate taxpayers because it is a completely different situation to that of a trust.
We believe that the treatment of personal representatives in the Bill is appropriate. The amendment would add complexity and could give rise to unfair results or avoidance opportunities. The function of personal representatives is very similar to that of trustees. They have a duty to realise the assets of the deceased person on behalf of the heirs or legatees, and it should be their primary objective to complete their duties as quickly as possible so that the assets of the estate are distributed to those people without undue delay.
The amendment could provide an incentive for personal representatives to hold on to an asset while it appreciated, so that they could sell the asset and pay tax at 18% on the gain, rather than passing the asset directly on to an heir or legatee with a potential liability of 28%. There is no reason to give that sort of incentive to increase the value of a legatee’s inheritance by reducing the capital gains tax due.
I appreciate the manner in which the shadow Minister raised the matter and identified the problem. Quite fairly, he was somewhat tentative about the potential solution set out in the amendment, which I appreciate was of a probing nature. As I understand it, it is possible for personal representatives to pass assets to the heirs, so they could pay at 18% on the gains if appropriate. I will reflect further on the right hon. Gentleman’s points, but as I believe he recognises, amendment 30 has its weaknesses. It could give rise to avoidance opportunities and some unfair results, and consequently I urge him to withdraw it. However, I am grateful for his comments on the amendment.
Stephen Timms
I am happy not to force a vote, and I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Stephen Timms
I beg to move amendment 31, page 6, line 16, leave out ‘28%’ and insert ‘25%’.
The First Deputy Chairman of Ways and Means (Mr Nigel Evans)
With this it will be convenient to discuss the following: amendment 32, page 6, line 20, leave out ‘28%’ and insert ‘25%’.
Amendment 33, page 6, line 25, leave out ‘28%’ and insert ‘25%’.
Amendment 10, page 9, line 29, at end insert—
‘, provided that the Chancellor of the Exchequer has laid before the House of Commons a report on the implications of aligning rates of capital gains tax with rates of income tax.’.
Schedule 1 stand part.
Stephen Timms
The amendments are probing amendments. We are keen to understand the thinking that led to the figure of 28% as the rate of capital gains tax. We will not vote against the Government’s proposal or for the lower figure proposed in the three amendments.
I noted that some of my hon. Friends, including some who are in the Chamber, tabled an amendment calling for a higher rate at 40%. I understand why, in accordance with convention, it was not selected for debate. However, I am puzzled that no Liberal Democrat Members put their names to that amendment because it appears to reflect the proposal in their manifesto.
The Liberal Democrat manifesto, which is always an interesting read, sets out, under the slogan, “Change that Works for You”, a series of tax-raising measures, including,
“taxing capital gains at the same rate as income, so that all the money you make is taxed in the same way.”
The document, “Liberal Democrat Tax Plans”, went into more detail. It states:
“We propose to tax capital as income in order to remove this anomaly.”
That presumably means applying a 50% rate to those on the highest income, as well as a 40% rate to those on the higher rate tax. The Liberal Democrat document claims that that would raise £3.2 billion a year. It also argues for reducing the annual tax exempt allowance from the current figure of just over £10,000 to £2,000, thereby raising a further £0.9 billion a year. That is more than £4 billion a year—a significant contribution to avoiding the unfair VAT rise, which is at the heart of the Budget and against which the Liberal Democrats campaigned. If more than £4 billion had been raised in that way, one percentage point of the 2.5% VAT rise could have been avoided.
Some of the thinking in the Liberal Democrat documents survived in the coalition agreement, which states:
“We will seek ways of taxing non-business capital gains at rates similar or close to those applied to income.”
The Liberal Democrats were therefore successful in at least getting the idea into the coalition agreement, but they signally failed to get it into the Bill. The Chancellor in his Budget speech flatly rejected the suggestion of reducing the annual exempt allowance. He said he would leave it at £10,000 and, far from reducing it to £2,000, would continue to uprate it in line with inflation in future.
I am encouraged to see the hon. Member for St Ives (Andrew George) in his place, together with some of his hon. Friends. He has tabled an amendment, about which he will speak shortly, and he may seek to pursue the ideas in the Liberal Democrat manifesto. It would be interesting to know whether Liberal Democrats really supported those proposals when they campaigned on them. Have they been persuaded by their coalition partners that they were naive or unrealistic, or that the proposals were damaging? Have most Liberal Democrats just given up, smothered in the embrace of their new partners and no longer capable of defending the policies on which they were elected?
I am very much looking forward to what the hon. Member for St Ives has to say on that. He has already described himself as a free-ranging Back Bencher, although he was not quite free enough to range into the Aye Lobby with the Opposition earlier this evening. I am keen to hear from him and perhaps from other Liberal Democrats, who appeared to have such distinctive views on capital gains tax during the election campaign but who have since seemingly abandoned them, choosing instead to support what is traditionally the Conservatives’ favourite tax-raising device, namely an increase in VAT.
We also need an explanation from the Minister, because, as I said, the coalition agreement states:
“We will seek ways of taxing non-business capital gains at rates similar or close to those applied to income”.
It is a bit hard to see how 28% can be described as
“similar or close to”
40%, let alone to 50%, and I hope the Minister can offer some explanation for the adoption of 28%, which seems to be at variance with the agreement. Perhaps he could shed some light on how vigorously—behind the scenes within the Government—Liberal Democrat members of the coalition fought for the position that they succeeded in negotiating into the agreement. Alternatively, is the truth that having got that into the agreement, they simply gave up, vacated the field and meekly accepted 28% as the best that the Conservatives were going to offer them? It would be of great interest to many of us if the Minister could shed light on those discussions.
Why was the figure of 28% chosen? It somewhat narrows the differential between tax on income and tax on capital gains, but it does not narrow it any further than the position before the introduction of the 50p rate, and nowhere near abolishes it. Indeed, increasing the rate by just 10 percentage points means that somebody on the 50p rate of income tax has exactly the same incentive to convert their income into capital gains as when they paid tax at 40p in the pound. For those people—the highest earners—there has been no reduction in the incentive, but as I understand it, reducing the incentive was the whole reason for the change.
There was one hint in the Chancellor’s Budget speech on the reason for choosing 28%. He said:
“I asked the Treasury to examine what would have happened if we had increased the rate much further beyond 28%, and its dynamic analysis showed that that would have resulted in smaller total revenues.”—[Official Report, 22 June 2010; Vol. 512, c. 178.]
I would be grateful if the Minister could confirm whether the Government’s view is that 28% is close to the revenue-maximising rate. Is 28% the rate at which proceeds from capital gains tax are maximised? Is he willing to place in the Library the “dynamic analysis” to which the Chancellor referred that shows how proceeds would decline if the rate were set at higher than 28%, more in keeping with the proposal in the Liberal Democrats’ manifesto?
The Red Book tells us that that change will generate £725 million next year. That is certainly a handy and significant sum, but it is only about one sixth of the amount that the Liberal Democrats wanted to raise from increasing capital gains tax. Can the Minister tell us how much of that £725 million will be raised in capital gains tax, and how much of it will raised in income tax that would otherwise have been avoided by switching to capital gains?
Paul Uppal (Wolverhampton South West) (Con)
I pay tribute to the right hon. Gentleman. It is good to see him in Committee. As a new Member, I was appalled by the dreadful event that afflicted him and it is good to see him in good health and good temper.
From my experience of the working of capital gains tax, and from speaking to constituents, it is a tax that is at the discretion of the individual investor. If prudent investors accrued a capital sum over a period of time, under the old system of indexation they would hold it for a long time and then realise the gains, often paying a minimal amount of capital gains tax. He will remember the 1970s, when CGT was very high and private investors would often ask “Why materialise this asset and pay the tax?” The 28% rate strikes a fair deal, and those of us on the Conservative Benches who come from a real business background understand and appreciate that a deal has to be struck with private investors and business.
Stephen Timms
I am grateful to the hon. Gentleman for his kind remarks, and to the Minister for his generous remarks earlier.
Of course taxpayers have opportunities, for example, to defer payment of capital gains tax and I shall come to such instances in a moment. The hon. Gentleman suggests that 28% is a compromise, but the Chancellor suggested that it might be—or is at least close to—the rate at which revenue is maximised. The Treasury has carried out some dynamic analysis to illustrate that, and it would be welcome if it could be placed in the Library so that hon. Members can see it. We need to know more about the reasons for the choice of rate, and I hope that the Minister will be able to provide us and some of his Liberal Democrat partners with some much needed enlightenment.
I wish to press the Minister on two further aspects of the proposed change—the timing of the change and, on the change to entrepreneurs relief, the reason for the increase in its generosity and the change to the way the amount relieved will be calculated. First, on the timing point, the Minister will be very familiar with the arguments against changing tax rates mid-year. Indeed, when our positions were reversed, he used to rehearse regularly the arguments against the kinds of complexities caused by changing rates mid-year. Indeed, some of his hon. Friends said earlier that they were looking forward to the Government simplifying the tax system. This is their first Bill and they have introduced a new and unprecedented complexity. What is it that persuaded the Minister that this particular complication was worth introducing? I am told that there has never been a mid-year change of rate in CGT since it was introduced in the mid-1960s. Will he acknowledge that this should not be the norm—that sudden and unannounced lurches in tax rates, in the middle of a tax year, are damaging and undermine people’s confidence in the tax system? Can he assure us that the Government will do their utmost to avoid a repetition in future?
The Institute of Chartered Accountants in England and Wales says that there are likely to be a number of practical problems, in particular with changes to the supplementary pages for capital gains for the self-assessment tax return and for filing online. Are the Government aware of those problems, and is the Minister able to tell us how they will be addressed? ICAEW also makes the point that the transitional provisions for the current financial year are insufficient from a technical standpoint. Is it intended to make further transitional arrangements in the third Finance Bill of this year—the one to be brought forward in the autumn? Is the Minister able to confirm that these matters will be discussed with the experts of the CGT liaison group, ensuring through a collaborative approach that the final legislation later this year covers all the issues raised by a mid-year change?
John McDonnell
Following on from my right hon. Friend’s exposition, I want to speak briefly to amendment 10, which stands in my name. Amendment 10 simply calls for a report on the implications of aligning the rates of capital gains tax with those of income tax. I drafted amendments that were not in order, which calls into question the ability of Back Benchers to amend the Finance Bill and is perhaps something that can be discussed at a later date.
When capital gains tax was introduced in 1965, it was an attempt to get some equivalence between income tax and taxation on gains through capital investments. There has been reform since then. It is interesting that, under Conservative Chancellors, capital gains tax was aligned with income tax rates. Then, in the late 1990s, the Labour Government introduced the tapers and the link to the time that an asset was held. In 2007, there was further need for reform when it was discovered that executives of hedge funds were determining carried interest—their bonuses, that is—as part of their capital gains tax relief. As a result, they were effectively paying 10% tax on their income—less than their own cleaners. All parties in the House acknowledged that that was a scandal and recognised the need for reform.
It is accepted that there is an element of compromise between, on the one hand, an equitable tax relationship between income tax and capital gains tax, and, on the other, an arrangement that will support genuine entrepreneurs and business. There has always been an element of fudge, but there was a view that we would try to address the issue in this Finance Bill, whoever was in Government. The previous Government were considering capital gains tax reform, and that was widely supported by the Institute for Fiscal Studies and the Institute of Chartered Accountants. Indeed, Lord Lawson himself made statements about the need for a more equitable relationship between the two, in order to tackle tax avoidance. Such reform was also included in the Liberal Democrats’ manifesto. I do not want to bait the Lib Dems tonight. This is too important an issue for that, although it can be quite entertaining.
In an interview with Andrew Marr, the Prime Minister said:
“I think everyone recognises there is a problem. When you have a capital gains tax rate of 18% and a top rate of income tax at 50%, you’ll find people finding all sorts of ways to treat income as capital gains.”
He went on to say that the new Government would look at taking a different route to help what he described as the fairness agenda. The problem is exacerbated by the 50% increase. With income tax at 50%, even the 28% rate of capital gains tax proposed in the Bill will still leave a 22% differential to encourage further tax avoidance as people designate their income as capital gains.
My amendment simply asks for a report to be produced that will examine afresh the implications of the alignment between income tax and capital gains tax. I believe that we shall return to this issue in further Finance Bills, because I do not believe that this compromise will hold, or that it will be seen to be equitable or fair. I believe that tax avoidance will continue, certainly among the highest paid, who will re-determine their income as capital gains in order to pay the lower rate of 28%. I accept that an increase of 10% is significant, but it is not significant enough to implement the fairness agenda that the incoming Government have proposed.
Andrew George
It is a pleasure to follow the hon. Member for Hayes and Harlington (John McDonnell). I am pleased that, unlike the right hon. Member for East Ham (Stephen Timms), he chose not to bait the Liberal Democrats tonight. At this late hour, it would perhaps not be a good idea to respond to the rather combative approach taken by the right hon. Gentleman in his opening remarks. I shall merely point out that the Labour party, which claims to be the champion of the working poor, created a capital gains tax environment in which the cleaners of wealthy bankers were paying a higher marginal rate of tax than the bankers themselves. That is no doubt a cause of great embarrassment to the previous Government, so I do not think the Liberal Democrats need take any lectures from Labour Members on this issue.
Reducing the capital gains tax rate from 40% to 18% had many unintended consequences for communities across the country, including my own, which sucked in a lot more second home ownership. The more advantageous tax environment enabled more people to purchase second homes, and this made the housing environment, particularly for affordable homes, a great deal worse in many parts of the country. It is worth responding to the right hon. Gentleman: if he wishes to bait, we can certainly fight back. As for the questions he asked, most were directed at those on the Treasury Bench. The intention behind the starred amendments—I cannot refer to those standing in my name—was to probe the Government about the purpose of and background to the decision to set the capital gains tax rate at 28%.
The Exchequer Secretary has done an excellent job of responding to the issues raised this evening. I previously put questions to him—about his Department’s economic modelling to determine the level of capital gains tax; what research or impact assessments he undertook before deciding to roll forward with the capital gains tax proposals; and the Department’s estimates of the revenue accruing to the Exchequer from capital gains tax if the income tax rates for those with an income above the higher rate threshold were set at a range of different levels—which he answered on 7 July. Unfortunately, I was not given the requisite information to make an adequate assessment of the likely impact of this particular measure in contrast to the setting of capital gains tax at another threshold.
I put questions to my right hon. Friend the Business Secretary in the Budget debate—on 1 July, I believe, but I might have to check that. I asked him why the capital gains tax rate had been set at 28% and not a higher rate. The answer was that there is a law of diminishing returns. By the time that level is reached, the return to the Treasury would be significantly less, making it not worthwhile to take it beyond that particular level. Unfortunately, we do not have the statistical or factual basis on which to make that assessment.
Partly in response to the right hon. Member for East Ham, who commented on the Liberal Democrat manifesto commitments in the context of the level at which the threshold should be set, we have to address ourselves to the lack of evidence and information that the previous Government provided. The information on which many policy decisions were taken might well have been unreliable Treasury estimates at the time.
In conclusion, I urge the Exchequer Secretary to provide a little more information in response to my previous questions, which I think would help us all to understand rather better why the capital gains tax rate has been set at 28% and not at some other level. That would help to reassure us that it is not going to attract those who would have had to pay income tax at a much higher level if they had not simply transferred their assets into capital.
Mr Gauke
Clause 2 and schedule 1 introduce the changes to capital gains tax from 23 June 2010, as we have heard. The coalition agreement involved a commitment by the Government to align capital gains tax to levels similar or close to those applied to income, while providing generous exemptions for entrepreneurial business activity.
Within the Treasury team, we looked at various options as to how best to achieve that. The conclusion we reached, however, was that contained in the schedule. For individuals, the rate remains 18% when their income and gains for the tax year do not exceed their income tax basic rate band. Above that level, the rate is increased to 28%. Therefore, someone who is already paying income tax at the 40% or 50% rates will pay 28% on all their gains. As was mentioned in an earlier debate, the 28% rate applies to trustees and personal representatives, who will pay capital gains tax at that rate on all their gains. That ensures that trusts are not used to shelter personal gains from the higher rate of capital gains tax.
Mr Gauke
I believe that the overall effects for this period balance out, but I shall write to the right hon. Gentleman to confirm that.
The right hon. Gentleman asked about the self-assessment return and guidance notes to help people to work out their final liability. For the tax year 2010-11, HMRC has worked to automate more of the online self-assessment processes in order to help customers with the changes. The software will be available for customers to use from 6 April 2011. The improvements will be conveyed to third-party software developers at the usual time, enabling them to modify their products in good time. Full guidance will be available in the self-assessment notes on HMRC’s website and through its helplines.
Andrew George
May I return the Exchequer Secretary to the subject of the “composition of income” behavioural impact that he described earlier? He referred to the tax yield in forthcoming years. Is the tax yield for every reduction of one percentage point assumed as a continuing line beyond the 28%? What happens to the behavioural change after that?
Mr Gauke
The assumption is that there is an ongoing gain—that we will gain more in income tax as a consequence of the rise in the CGT rate.
The reason why there is no yield this year has suddenly dawned on me. We do not get the receipts for capital gains tax through self-assessment immediately; it is only in future that CGT will be paid through the self-assessment process.
Stephen Timms
The Minister has made the point, however, that most of the gain is in fact income tax, which surely would score in the coming year?
Mr Gauke
I think we will see more of that behavioural effect as time goes by, but I am not sure that that will come through immediately. In some cases, it will depend on when the additional income will be crystallised or realised. I think that is the explanation, but if I have anything to add I will write to the right hon. Gentleman.
Mr David Ward (Bradford East) (LD)
There is a time lag, which is why the receipts are not shown for this year. There is also a bringing forward of benefit because, as opposed to the lock-in, there is an advance disposal of the assets which would not otherwise have taken place. Also, of course, there will be a release of income tax, rather than a waiting for a capital tax and putting off the delay that would come from the capital gain.
Mr Gauke
I will write to my hon. Friend to explain further why there is no yield in the current year, but I am very grateful for his expertise in this matter.
Questions were also asked about serial entrepreneurs who cannot claim entrepreneur’s relief and defer gains under the enterprise investment scheme. People can now choose between claiming entrepreneur’s relief and paying capital gains tax at 10% or deferring a tax charge by reinvesting under the EIS and paying 18% or 28% when the postponed gain comes into charge. If they claim entrepreneur’s relief they can still invest in EIS companies. The CGT deferral relief will not be available, but income tax relief under the EIS could still be available if the conditions are met. Serial entrepreneurs who have used up their lifetime limit of entrepreneur’s relief will be able to claim the EIS deferral relief on gains above the limit. Allowing individuals to claim both entrepreneur’s relief and deferred gains will be highly complex and is inconsistent with the aim of simplifying the tax system.
The right hon. Member for East Ham also asked whether Her Majesty’s Revenue and Customs is planning any extra education about the changes for customers and their advisers. HMRC will talk to representative bodies about what extra guidance is required. It will see what practical help it can give to agents generally through the “working together” agent network, and it will look at working with the media and interest groups to raise awareness among individuals who may be affected by the changes.
This is a reform that protects the Exchequer while ensuring that those on lower incomes are protected and the recovery is safeguarded. We have acted in a way that is in the spirit of the coalition agreement. I do not think any Member on the Government Benches would want to raise taxes beyond a level that would maximise revenue—revenue that is, after all, used to fund a substantial increase in the income tax threshold, taking 880,000 people out of income tax. If we had raised the level further, or if we had raised it by less, we would not have been able to do so much in that particular area. Consequently, we believe that 28% is the right level. We do not intend to return to this matter, and I ask that schedule 1 be agreed.
Stephen Timms
I do not propose to press this to a vote. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
To report progress and ask leave to sit again.—(Mr Newmark.)
The Deputy Speaker resumed the Chair.
Progress reported; Committee to sit again tomorrow.
Business without Debate
Delegated Legislation
Committees
Mr Deputy Speaker (Mr Nigel Evans)
With the leave of the House, we will take motions 4 to 22 together.
Ordered,
Business, Innovation and Skills
That Luciana Berger, Mr Brian Binley, Jack Dromey, Rebecca Harris, Margot James, Nicky Morgan, Chi Onwurah, Rachel Reeves, Mr David Ward and Nadhim Zahawi be members of the Business, Innovation and Skills Committee.
Communities and Local Government
That Heidi Alexander, Bob Blackman, Clive Efford, George Freeman, Mike Freer, Stephen Gilbert, George Hollingbery, James Morris, Toby Perkins and Chris Williamson be members of the Communities and Local Government Committee.
Culture, Media and Sport
That Ms Louise Bagshawe, David Cairns, Dr Thérèse Coffey, Damian Collins, Philip Davies, Paul Farrelly, Alan Keen, Mr Adrian Sanders, Jim Sheridan and Mr Tom Watson be members of the Culture, Media and Sport Committee.
Defence
That Mr Julian Brazier, Mr Jeffrey M. Donaldson, John Glen, Mr David Hamilton, Mr Mike Hancock, Mr Adam Holloway, Mrs Madeleine Moon, Alison Seabeck, Bob Stewart, Ms Gisela Stuart and John Woodcock be members of the Defence Committee.
Education
That Conor Burns, Nic Dakin, Pat Glass, Damian Hinds, Liz Kendall, Charlotte Leslie, Ian Mearns, Tessa Munt, Lisa Nandy and Craig Whittaker be members of the Education Committee.
Energy and Climate Change
That Dan Byles, Gemma Doyle, Tom Greatrex, Dr Phillip Lee, Albert Owen, Christopher Pincher, John Robertson, Laura Sandys, Sir Robert Smith and Dr Alan Whitehead be members of the Energy and Climate Change Committee..
Environment, Food and Rural Affairs
That Nigel Adams, Mr David Anderson, Tom Blenkinsop, Thomas Docherty, Bill Esterson, George Eustice, Mrs Mary Glindon, Neil Parish, Dan Rogerson and Amber Rudd be members of the Environment, Food and Rural Affairs Committee.
Foreign Affairs
That Mr John Baron, Sir Menzies Campbell, Ann Clwyd, Mike Gapes, Emma Reynolds, Andrew Rosindell, Mr Frank Roy, Sir John Stanley, Rory Stewart and Mr Dave Watts be members of the Foreign Affairs Committee.
Health
That Rosie Cooper, Nadine Dorries, Andrew George, Fiona Mactaggart, Grahame M. Morris, Mr Virendra Sharma, Chris Skidmore, David Tredinnick, Valerie Vaz and Dr Sarah Wollaston be members of the Health Committee.
Home Affairs
That Nicola Blackwood, Mr Aidan Burley, Lorraine Fullbrook, Dr Julian Huppert, Steve McCabe, Mary Macleod, Alun Michael, Bridget Phillipson, Mark Reckless and Mr David Winnick be members of the Home Affairs Committee.
International Development
That Hugh Bayley, Mr Russell Brown, Richard Burden, Mr James Clappison, Richard Harrington, Pauline Latham, Jeremy Lefroy, Ann McKechin, Anas Sarwar and Chris White be members of the International Development Committee.
Justice
That Mr Robert Buckland, Chris Evans, Mrs Helen Grant, Mrs Siân C. James, Jessica Lee, Mr Elfyn Llwyd, Claire Perry, Yasmin Qureshi, Mrs Linda Riordan, Anna Soubry and Karl Turner be members of the Justice Committee.
Public Accounts
That Mr Richard Bacon, Stephen Barclay, Jackie Doyle-Price, Justine Greening, Matthew Hancock, Chris Heaton-Harris, Joseph Johnson, Eric Joyce, Mrs Anne McGuire, Austin Mitchell, Nick Smith, Ian Swales and James Wharton be members of the Committee of Public Accounts.
Public Administration
That Kevin Brennan, Nick de Bois, Michael Dugher, Charlie Elphicke, Paul Flynn, Robert Halfon, Greg Mulholland and Mr Charles Walker be members of the Select Committee on Public Administration.
Scottish Affairs
That Fiona Bruce, Cathy Jamieson, Jim McGovern, Mark Menzies, David Mowat, Fiona O’Donnell, Mr Alan Reid, Lindsay Roy, Julian Smith and Dr Eilidh Whiteford be members of the Scottish Affairs Committee.
Statutory Instruments (Joint Committee)
That Mr Robert Buckland, Michael Ellis, John Hemming, Mr Ian Liddell-Grainger, Mr George Mudie and Toby Perkins be members of the Select Committee appointed to join with a Committee of the Lords as the Joint Committee on Statutory Instruments.
Transport
That Angie Bray, Lilian Greenwood, Mr Tom Harris, Kelvin Hopkins, Kwasi Kwarteng, Mr John Leech, Paul Maynard, Angela Smith, Iain Stewart and Julian Sturdy be members of the Transport Committee.
Welsh Affairs
That Guto Bebb, Alun Cairns, Geraint Davies, Glyn Davies, Jonathan Edwards, Nia Griffith, Susan Elan Jones, Karen Lumley, Jessica Morden, Owen Smith and Mr Mark Williams be members of the Welsh Affairs Committee.
Work and Pensions
That Harriett Baldwin, Karen Bradley, Ms Karen Buck, Margaret Curran, Richard Graham, Kate Green, Mr Oliver Heald, Sajid Javid, Stephen Lloyd and Shabana Mahmood be members of the Work and Pensions Committee.—(Geoffrey Clifton-Brown, on behalf of the Committee of Selection.)
Treasury
Ordered,
That, notwithstanding the provisions of Standing Order No. 121(2) (Nomination of select committees), John Cryer, Michael Fallon, Mark Garnier, Stewart Hosie, Andrea Leadsom, Mr Andrew Love, John Mann, Mr George Mudie, Jesse Norman, David Rutley, John Thurso and Mr Chuka Umunna be members of the Treasury Committee.—(Mr Newmark.)
Science and Technology
Ordered,
That, notwithstanding the provisions of Standing Order No. 121(2) (Nomination of select committees), Gavin Barwell, Gregg McClymont, Stephen Metcalfe, David Morris, Stephen Mosley, Pamela Nash, Jonathan Reynolds, Alok Sharma, Graham Stringer and Roger Williams be members of the Science and Technology Committee. —(Mr Newmark.)
Business of the House
NHS (Cornwall)
(14 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sarah Newton (Truro and Falmouth) (Con)
I am delighted to have this opportunity of welcoming the publication today of the coalition Government’s health White Paper, “Liberating the NHS”. It received a warm welcome in Cornwall this evening during the evening news on the BBC, with support from patient groups and GPs. I believe that making the NHS more accountable to patients and freeing staff from excessive bureaucracy and top-down control will drive up quality of care and outcomes for patients. I also welcome the measured pace of change and the Government’s desire to engage in a wide range of consultations to get the detail of the proposals working for the benefit of patients.
This evening, I would like to describe the current situation and direction of travel of the NHS in Cornwall, and to raise one important aspect outlined in “Liberating the NHS” today: assuring the continued improvement in quality of care in Cornwall. In addition to the ambulance service, we have three organisations that commission or provide care for people in Cornwall: the Royal Cornwall Hospitals NHS Trust, the Cornwall Partnership NHS Foundation Trust, and the Cornwall and Isles of Scilly primary care trust. There have been significant problems with some aspects of the quality of care provided by those organisations, but over the past three to four years improvements have been made. Significant challenges remain, and it is essential that momentum be maintained in the further improvement from ratings of “adequate” and “fair” to “good”, and then sustained at that level.
The Royal Cornwall Hospitals NHS Trust annual health check ratings demonstrate some steady improvement. Areas that needed work were governance, financial management, infection control and elderly care. The quality of service was rated “weak”, and remained weak until 2008-09. However, more recently the trust has demonstrated overall improvement through the interim core standards declaration in October 2009. The trust was registered under the Health and Social Care Act 2008 in April 2010 without conditions and with only minor concerns. The overall annual health check ratings of the Cornwall Partnership NHS Foundation Trust demonstrate improvement in performance, particularly since the high-profile investigation of services for people with a learning disability. In 2005-06, the trust’s quality of service was rated weak, improving to good in 2007-08, and that improvement was sustained into 2008-09. Its quality of financial management similarly improved. The trust was registered without conditions under the 2008 Act in April 2010, and achieved foundation status on 1 March 2010.
The Cornwall and Isles of Scilly PCT has also seen some improvement in performance. In 2006-07, its quality of commissioning was rated fair, improving to good in 2007-08 and then returning to fair in 2008-09, and its quality of financial management is improving to good. The trust was also registered without condition, however this was with a moderate level of concern.
Also of relevance to all three Cornwall NHS trusts is the report on the inspection of safeguarding and looked-after children’s services published by Ofsted on 23 October 2009. Out of 16 outcomes, Cornwall council was awarded only one score of “good”—there were six of “adequate” and nine of “inadequate”. Although most issues for action are for the local authority, there were also issues for the health community to address, which involve all three NHS trusts to a greater or lesser degree. Action plans are in place, and oversight and scrutiny of the health element is provided by the South West Strategic Health Authority. It is performance-managing progress on delivery of the action plan weekly and bi-monthly, alongside an improvement board, which has been established.
At such an important time, when Cornwall’s NHS trusts are working hard to improve the quality of care, which they need to deliver for Cornwall, it is essential that momentum is not lost. The regulation of the quality of care is vital to patient confidence. The ability of patients and clinicians to access information about the quality of services provided, as well as their being able to feed in information to the inspection and regulation regime, is very important. With the abolition of many centrally imposed targets and more devolved target setting and commissioning, the regulation and inspection of the quality of commissioning will need to adapt to this new environment. Many local factors are important to health outcomes in Cornwall, such as access to services, and those will be able to be taken into consideration. There is also an opportunity to invite the greater involvement of patient and clinical experience of services into the regulation and inspection regime.
The information provided to patients must embrace all that goes on to make up quality, including access, waiting times, cleanliness, infection rates, quality of clinical care, results for patients, access to same-sex accommodation and single rooms, cancelled operations, emergency readmissions, discharge arrangements, numbers of complaints, patient experience and patient-reported outcomes. Most of those data already exist, but they are difficult to access for many people. An open attitude to acknowledging and acting upon criticism is also needed to drive up the quality of care. If we had an open information culture, the scandalous failings that took place in Maidstone and Tunbridge Wells and then at Stafford hospital would not have gone unchallenged.
I am concerned by the number of clinicians in the NHS in Cornwall who tell me that when they challenge their manager and try to improve a service for patients they are told, “Nothing can be done”, “There’s no point saying anything as nothing will change” and, “Don’t ask, don’t tell, don’t complain”. At Mid Staffs there was clearly a sense among some of the professionals, and indeed the public, that the hospital had problems, but that was just the way things were done. That is just not good enough. We should never allow that sort of thing to happen again.
Andrew George (St Ives) (LD)
My hon. Friend is making a good point, particularly about whistleblowers in the NHS. It is vital that they are treated seriously and not threatened or bullied as a result of their whistleblowing.
Within the coalition agreement, to return to the role of patients and the local community, there was a commitment to a strong voice for patients locally through directly elected individuals on the boards of local primary care trusts, with the other members being representatives from the local authorities. However, those PCTs will be abolished. Does my hon. Friend agree that in Cornwall we need to ensure that there is some democratic accountability and community representation in the overview, scrutiny and management of the local NHS?
Sarah Newton
I thank my hon. Friend for that comment and I am sure that when the Minister replies he will describe some of the proposals in the White Paper to give local authorities and representatives far greater involvement in the overview and scrutiny of health services.
Instead of whistleblowing being seen as going outside the organisation, we should see such challenges as integral to safety and improvement within the organisation. In April 2009, John Watkinson was dismissed from his role as chief executive of the Royal Cornwall Hospitals NHS Trust. He took his case to an employment tribunal, which has published its judgment that he was unfairly dismissed. In the opinion of the tribunal, he was unfairly dismissed because he made a “protected disclosure” covered by the Public Interest Disclosure Act 1998. The disclosure was linked to the reconfiguration of upper gastro-intestinal services in Cornwall. The tribunal also found that the trust acted as it did as a result of pressure from the South West strategic health authority. Verita, a specialist company that conducts independent investigations, reviews and inquiries, has been commissioned to undertake a review and will report later this year. With a different culture in the NHS, this difficult situation might well have been avoided.
In the same way, instead of seeing complaints as a burden, distraction or something to be dealt with outside mainstream service provision, we must see them as integral to the improvement of the service that we provide. Learning from our mistakes, listening to complaints, comparing what we do, evaluating our performance and constantly seeking to improve quality are the features of the best performing organisations in every sector, and they can be already found in the best performing NHS trusts.
Listening to patients—asking, reporting and learning from patient experience—will be of great importance in designing and improving services, including achieving greater efficiency. However, the NHS too often asks insufficiently penetrating questions, insufficiently frequently, of too few patients. The NHS patient survey, which asks whether patients are satisfied with the care they received, is too much like asking patients if they are grateful.
I have read with interest the section in the White Paper entitled, “Autonomy, accountability and democratic legitimacy”. It sets out the outline of the proposed registration, evaluation and inspection regime. The Care Quality Commission process is new and generally thought to have made a good start in Cornwall, and I am pleased to see that it has an extended role in regulating quality of care.
Given the important stage that the NHS trusts have reached in Cornwall, assistance from those aiding the improvements that have already been identified in action plans needs to continue. As a result, I want to understand what plans the Minister has to develop the regulation and inspection of care providers and commissioners to ensure that standards of health care and the confidence of clinicians and patients in that care are improved. What is the time frame for migrating from the current regime to the new one and who will be involved in the consultation process for the creation of the new regime?
The Minister of State, Department of Health (Mr Simon Burns)
May I say, Mr Deputy Speaker, what a particular pleasure it is to have you in the Chair this evening for this important and interesting debate on the NHS in Cornwall? I pay tribute to my hon. Friend the Member for Truro and Falmouth (Sarah Newton) for securing her first Adjournment debate on this subject, which is important not only to her constituents but to the constituents of all other hon. Members and hon. Friends from Cornwall. I know from an earlier debate in Westminster Hall with my colleague the hon. Member for St Ives (Andrew George) that he has long-term concerns about funding for the NHS in Cornwall.
The comments of my hon. Friend the Member for Truro and Falmouth about my right hon. Friend the Secretary of State’s announcement on the White Paper, “Liberating the NHS”, and the way it has found approval in her county are replicated throughout the country. That is, as she rightly said, because of the freedoms and liberation that the Government are giving to the NHS, not only in Cornwall but throughout England, so that we do not have an NHS that is distorted by targets and in which clinical decisions are taken not on clinical grounds but to meet deadlines. We will not have politicians and civil servants in Whitehall seeking to micro-manage the NHS throughout the country.
Next to reducing the deficit, the NHS is the Government’s top priority. That is why we have decided that, despite the dire state of the public finances, the sick should not have to foot the bill for years of living beyond our means. We will increase NHS spending in real terms for each year of this Parliament. As today’s White Paper sets out, that money will be accompanied by a radical shift of power away from the centre and down to the front line. For the first time, NHS staff will have the responsibility and the resources to improve outcomes for patients, free from the shackles of central Government, and patients will be given more power over their care and treatment than ever before.
The White Paper shows that the NHS can become a truly world-class service that is easy to access, that treats people as individuals and that offers care that is safe and of the highest quality. We have published a revised operating framework for the NHS as a first step in delivering those priorities. The framework is putting in place a zero-tolerance approach to infections, setting out how we can move from process targets to evidence-based measures of quality, developing payments for performance geared to results and moving towards a service that empowers clinicians and makes them more accountable for achieving the best outcomes for their patients.
The NHS in Cornwall has made important strides in the past 12 months and I pay tribute to NHS staff across the whole county, who are already improving the care given to my hon. Friend’s constituents. For example, in 2008-09, the Care Quality Commission’s annual health check gave the Royal Cornwall Hospitals NHS trust a “weak” designation for quality of services, but with the hard work and dedication of staff, it obtained registration without conditions with the CQC for 2010-11. On 1 March, the Cornwall Partnership NHS trust became Cornwall’s first foundation trust. It has consistently achieved good ratings from regulators and I know that its services are well regarded by patients and commissioners.
The PCT is working hard to move services closer to home for patients, with several services being brought back into the county, including those on surgery to widen blocked or narrowed coronary arteries, breast reconstruction, treatment for wet, age-related macular degeneration and services for weight management. In the past two years, the PCT has moved care closer to home for more than 19,000 people and it is committed to moving a further 10% of services out of district general hospitals and into the community. It will also work with the local authority to improve patient transport services in order to improve access for the constituents of my hon. Friend and of other hon. Members who are present.
The NHS in Cornwall is involved in some innovative pilot schemes. The whole systems demonstrator pilot is enabling more than 1,000 people to be cared for while remaining independent and in their own homes. That is the biggest pilot of its kind in the UK. The Newquay integrated care pilot is changing the way that people with dementia are cared for. A new purpose-built health centre has just opened in Truro alongside the two existing GP practices. It provides a wide range of services, including family planning, podiatry, physiotherapy, speech and language therapy and social care. The scheme is the result of collaboration between local GPs, members of the public, the local council and other stakeholders.
My hon. Friend mentioned the situation at the Royal Cornwall Hospitals NHS Trust. Although it received a “weak” designation in 2008-09, the CQC annual health check showed that significant improvements have enabled it to obtain registration without conditions with the CQC for 2010-11. After an independent review of management and governance, and recommendations reported in 2009, the strategic health authority carried out a six-month review of the trust’s progress, followed by monthly follow-ups until the end of the last financial year.
At that point, the trust was able to confirm that it had achieved all the recommendations. The PCT and the SHA are arranging a formal meeting with the Royal Cornwall Hospitals NHS Trust further to review the trust’s performance against the recommendations. At its board meeting on the 30 June, the trust agreed the updated chairman’s progress review action plan, which continues to be monitored through the trust’s monthly chairman’s meeting. Progress reports have been shared with the PCT, and clear progress is being made.
My colleague the hon. Member for St Ives (Andrew George) discussed the election of members to PCT boards—a proposal which, as he now knows, is somewhat past its sell-by date. As a result of discussions with the coalition, we have determined the right way forward. In addition to abolishing strategic health authorities—that was in his manifesto—the whole reform package in the White Paper on PCTs and the transfer of commissioning to GP practices makes his proposal redundant. The idea of locally elected PCT members will therefore not be pursued.
Andrew George
I am grateful to the Minister for his response. As he says, things have moved on in a few weeks on the commitment directly to elect PCT boards, but a vacuum has been left, and not just in Cornwall, because we must make sure that finances are adequate for future need and because the local community cannot be represented through the GP commissioning boards. It needs a role in the shaping of services.
Mr Burns
I am extremely grateful to my hon. colleague. As he reads the White Paper in conjunction with other documents that will flow from it in the next few weeks, he will come to understand that all the pieces are in place to deal with the concerns that he has expressed. We as a Government are committed to providing a strong local voice for patients through democratic participation. As he and my hon. Friends will appreciate, the nub of the White Paper announced today for Cornwall and for the rest of England is about putting patients at the heart of our reforms, so that their desires and health care needs drive the reformed NHS. No longer will the NHS be told from the top what has to be done throughout our local communities, both in Cornwall and elsewhere. It will be driven by a bottom-up, rather than a top-down, process. To meet that objective, PCT commissioning functions will be phased out and transferred to the NHS commissioning board.
My hon. Friend the Member for Truro and Falmouth asked about the time scale for these reforms. The time scale for phasing is between now and 2013. We propose to replace PCTs with an enhanced role for elected councillors and local authorities to boost local democratic engagement in the NHS. Given the way in which the whole system is to be held accountable, they will increase their responsibilities from their existing role in the public health sphere.
I now turn to my hon. Friend’s point about information. If we are going to create a national health service that is driven by patients, for patients, they must have the information that qualifies them to make the decisions and the choices that are all part of our vision for a patient-led NHS. I can give her this commitment: information across the whole of the health sector will be made available to all patients and members of the public so that they will be able to access it and then make a judgment based on their health requirements as to their choices of consultants and hospitals. That informed decision making can be provided only by enhanced information for those people. I can assure her that that information will be made available so that they can make those decisions and choices.
My hon. Friend mentioned whistleblowing. As she will know, my right hon. Friend the Secretary of State is a strong supporter of holding the NHS to account when it fails or could do better to ensure that we have the finest health service that does not concentrate on processes, as it has for too long, but is driven by outcomes, which is the important thing that matters the most to our constituents. My right hon. Friend has already stated that he is going to strengthen and protect the position of whistleblowers, to use the old-fashioned phrase—I am not convinced it is the best one, but it is certainly the most obvious—so that people who see things that are wrong or things being done that should not be done have the protection and the confidence to be able to draw them to the attention of the authorities so that we can right the wrongs and make the improvements without those individuals fearing for their jobs, future careers and commitment to the NHS. I hope that my hon. Friend is reassured by that.
My hon. Friend mentioned the inspection and regulation regime and the Care Quality Commission. Let me tell her, although she will certainly know the basic principles, that the role of the CQC as the regulator of all health care providers will be strengthened by a clear focus on essential levels of safety and quality. All providers of regulated health care and adult social care will be registered against essential levels of safety and quality, and the CQC has the power to take action against providers that do not meet these standards. The CQC will carry out targeted inspections of providers against the essential standards.
As my hon. Friend will be aware from the White Paper, GP consortiums will commission the majority of health services in place of PCTs, and the NHS commissioning board will authorise consortiums and hold them to account for their performance. The CQC will no longer have a role in assessing commissioning. On the involvement of patient and clinical experience of services in the regulation and inspection regime, instead of focusing on the measurement of processes or targets, the CQC now places the experiences of the people who use health and social care services at the very heart of its work.
The CQC actively seeks the views of people who use health and social care services when making assessments of the quality and safety of that care. When inspecting a care provider, it asks to see evidence of outcomes and evidence that patients experience effective, safe and appropriate care. Rather than looking at policies, it speaks to people experiencing care, to their families and to staff to find out what the quality of care is like in practice. The CQC also actively seeks the views of clinicians, who play a crucial role in improving the quality of care. When there is a problem, it works with them to work out the best way to solve it and to improve care. Clinicians’ expertise in service delivery and design is invaluable, as I am sure my hon. Friend will agree.
In addition, the CQC works in partnership with a range of professional regulators, such as the General Medical Council and the Nursing and Midwifery Council, to ensure that its assessments of a provider are informed by their views on clinical best practice. Integration with HealthWatch, as announced in today’s White Paper, will give patients in Cornwall and throughout the country a greater public voice, providing a greater connection between their views and the actions of the regulator.
I reassure my hon. Friend, my colleague the hon. Member for St Ives and all other hon. Members from the great county of Cornwall that we are determined to improve and enhance the quality of care in the county and throughout the whole country. We want to ensure that the improvements are experienced by patients, because patients are at the heart of the new NHS that we envisage. Only by taking into account what they want and their patient experience within the NHS can we make the improvements necessary to ensure that we have a great NHS not just for the next five years but thereafter.
Question put and agreed to.
Written Ministerial Statements
(14 years, 5 months ago)
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National School of Government
(14 years, 5 months ago)
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The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
The 2009-10 annual report and accounts for the National School of Government have been laid before Parliament today. The report has been placed in the Library of the House for the reference of Members and copies will be made available in the Vote Office.
Children's Commissioner for England
(14 years, 5 months ago)
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The Secretary of State for Education (Michael Gove)
I am today announcing that the Government have commissioned Dr John Dunford OBE, currently general secretary of the Association of School and College Leaders, to carry out an independent and consultative review of the office, role and functions of the Children’s Commissioner for England. Dr Dunford has wide practical experience of the reality of children’s lives. I have written to him today to set out the remit of this review and would like to take this opportunity to provide the House with further details.
The education, health and well-being of children are vitally important for our society. The Government are committed to the United Nations convention on the rights of the child (UNCRC) and believe it is vital that children and young people have a strong, independent advocate to champion their interests and views and to promote their rights.
The role of Children’s Commissioner for England was created by the Children Act 2004 with a remit to promote awareness of the views and interests of children in England. I would like to acknowledge the work that the current commissioner, and her predecessor, have done to this end and make the voices of children and young people heard.
It is now over five years since the first Children’s Commissioner for England took up office but the role and remit have not yet been reviewed. There is continued debate about the remit of the post: as compared to its counterparts in other countries and the devolved Administrations; its public profile; and the impact it has had.
The Government have committed, in our coalition agreement, to increase accountability and review the cost of quangos and, therefore, I agree with the broad consensus that it is now time to take stock of the office, role and functions of the Children’s Commissioner for England through a detailed and considered review. This will provide an opportunity for the Government to consider the views of a wide range of partners on how Government can best promote children’s interests.
The review will take a wide-ranging and independent look at the office, role and function of the Children’s Commissioner. Dr Dunford will determine how the review will be conducted but I have asked him to ensure maximum opportunities to consult are taken and to consider the broad spectrum of opinions on this issue including the views of children and young people. With this in mind, I understand that Dr Dunford will be launching a call for evidence and I am sure he will be keen to secure the opinion of parliamentarians.
In particular I have asked for the review to cover three key aspects:
1) The powers, remit and functions of the Children’s Commissioner.
2) The relationship with other related functions supported by Government.
3) Value for Money.
A copy of my full remit letter to Dr Dunford is available in the House Library.
I have asked Dr Dunford to provide me with an update in mid-October and a full report by the end of November. I will then consider the recommendations and the implications for any further action by Government, including the need for any legislative change.
The current role and functions of the Office of the Children’s Commissioner will of course continue during the period of this review.
Agriculture and Fisheries Council (June)
(14 years, 5 months ago)
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The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)
My hon. Friend the Minister of State and the Under-Secretary with responsibility for the natural environment and fisheries, my hon. Friend the Member for Newbury (Richard Benyon), represented the United Kingdom at the Agriculture and Fisheries Council in Luxembourg on 29 June. Richard Lochhead MSP also attended. This was the last Agriculture and Fisheries Council under the Spanish presidency.
On fisheries Commissioner Damanaki set out a fairly clear picture of the current state of fish stocks. The Commission had published its annual policy statement which set out the framework for determining what catch limits would be proposed for 2011, once the scientific advice was published. However, it proposed more strict catch limits for over-exploited stocks to reach the level of maximum sustainable yield (MSY) by 2015, in line with agreements at the 2002 Johannesburg World Sustainable Development Summit.
Most fishing member states commented. The UK stressed the following points (with a number of member states supporting each):
Achieving MSY should be done pragmatically given differences of scientific opinion, and the difficulty of establishing targets for single stocks in mixed fisheries;
Catch limits for stocks with insufficient data should be set as per last year, rather than reduced in line with catches as proposed;
Catch quotas (rather than current landing quotas) should be more widely used on a pilot basis in order to reduce discarded fish;
The quality and coverage of scientific data should be improved, including using industry input.
The Commission welcomed broad support on its approach, but remained firm on pleas for certain stocks; fisheries could not remain sustainable with current levels of fishing and numbers of vessels; changes needed to be made.
Damanaki also pressed the need for radical and fundamental reform of the common fisheries policy (negative economic outlook for most fleet segments; overcapacity driving down profitability leading to unsafe fishing practices, non-EU crew and leading to undue pressure on fishing stocks; negative social aspects; the amount of aid directed to the industry; low employment forecasts). A new regime should include a mix of individual transferable rights and effort management for limiting fishing opportunities and be operated on a much more regionalised basis.
The UK lead the support for this (against French, German and Polish defence of much of the current regime) emphasising the following points:
Simplified and decentralised decision-making with a more regionalised CFP;
Move away from rigid quota rules; rights for fishing should be transferrable within a member state;
Support for the social and cultural aspects of fishing in coastal communities;
Reduce discarded fish;
Greater integration of fisheries with other marine policies, especially environmental;
No additional regulation of aquaculture at EU level, external fisheries policies to be consistent with internal ones.
There were two points raised under any other business—the Commission emphasising the importance of immediately submitting national programmes for take up of the European Fisheries Fund (EFF); and Ireland drawing attention to Iceland’s recent declaration of a very large unilateral quota for mackerel in its waters (with the Faroes also threatening similar action). The UK stressed the vital importance of the mackerel stock to its industry being the most important to it economically. The present actions by Iceland and Faroe Islands were threatening the future sustainability of the stock. The Commission were encouraged (lead by the UK) to adopt a strong position to defend EU interests. The Commission undertook to talk to both countries.
Finally on fisheries, Ministers had an informal discussion on the future of the common market organisation of fisheries.
On agriculture, Council conclusions on the international competitiveness of the European agri-food model adopted as an A item without any comments.
Commissioners Ciolos (Agriculture) and Dalli (Health and Consumer Protection) made presentations on simplification and better regulation. This responded to ongoing pressure from the Council to reduce burdens that affect the competitiveness of the sector, and recognising that these can originate from across the Commission. Attention was drawn to the work the Commission had already completed to simplify existing CAP regulation, but noted too that simplification would not halt there; they would adopt a further simplification package in October. The longer-term reform of the CAP would be a further opportunity for simplification.
Eighteen member states, including the UK, had submitted a political memorandum on CAP simplification. This called for continued simplification now and in CAP reform post-2013, a more risk-based approach to financial controls, to dispense with the use of flat-rate financial corrections, and to proceed in cases of financial irregularity with an eye to the real risk to Community funds. The UK also outlined the newly established UK task force assessing the burden of farm regulation, while drawing particular attention to the complexity, cost and disproportional nature of the Commission’s financial control regime.
Next, the presidency sought confirmation of member states’ voting intentions on the Commission’s proposals to approve the placing on the market for food and feed use (but not cultivation) of five new varieties of genetically modified maize and to renew one existing authorisation. The six draft decisions were referred to the Council under the comitology rules having failed to attract a qualified majority in support when first tabled at the Regulatory Committee earlier this year. Since there was neither a qualified majority in support nor against in the Council, it fell to the Commission to adopt the decisions under its own competence.
Ciolos then introduced the dairy quarterly report which, like its two predecessors, continued to show strongly positive trends for all dairy commodities. The Commission flagged its intention to adopt a dairy package later in the year responding to the final report of the High Level Group on the dairy sector. The incoming Belgian presidency said it would debate the High Level Group report at the July Council.
There were three points raised under any other business. Greece urged the Commission to take action in respect of Argentina’s apparent breach of its WTO commitments in blocking imports of Greek canned peaches. The Netherlands encouraged Ministers to attend a conference it would be hosting on 31 October to 5 November in The Hague on food security and climate change. Poland drew attention to the floods that had recently inundated parts of the country.
Agriculture and Fisheries Council (July)
(14 years, 5 months ago)
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The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)
My hon. Friend the Minister of State with responsibility for agriculture and food will represent the United Kingdom at the Agriculture and Fisheries Council in Brussels on 12 July.
This will be the first Agriculture and Fisheries Council under the Belgian presidency, and they will present their Work programme. Discussions will also take place on the following:
Report of the High Level Group on Milk;
Report on the German Alcohol Monopoly;
Proposal for a regulation amending the Single Common Market Organisation (CMO) regulation with regard to the aid granted in the framework of the German Alcohol Monopoly.
Ageing Well Programme
(14 years, 5 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
I am pleased to announce Ageing Well, a new programme designed to support local authorities to improve their services for older people. The key aim of the programme is to provide a better quality of life for older people through local services that are designed to meet their needs, and which recognise the huge contribution that people in later life make to their local communities. The programme consolidates current best practice from local authorities and the lessons learned from earlier pilot activities and will be delivered by Local Government Improvement and Development. An essential aspect of the programme is to help authorities to improve efficiency while still delivering quality services.
Ageing Well recognises that local concerns need local solutions and will encourage authorities to take the lead to work in partnership with other local organisations to develop imaginative approaches to the issues faced by their particular communities. We want to help local authorities to use their resources effectively, to promote well-being in later life, to ensure that older people can live independently for longer, to engage older people in civic life and to tackle social isolation by recognising older people’s potential. The programme is driven by this Government’s view that older people in our society deserve every opportunity to age well, in communities that value their experience.
House of Lords
Introduction: Lord Spicer
Introduction: Lord Wills
Introduction: Lord Popat
Leave of Absence
The Lord Speaker (Baroness Hayman)
My Lords, the Inter-Parliamentary Union World Conference of Speakers is to take place in Geneva next week. Accordingly, I seek leave of absence from your Lordships’ House on Monday 19 July.
Supreme Court: Retirement Age
(14 years, 5 months ago)
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Lord Pannick
To ask Her Majesty’s Government whether they propose to increase the retirement age of Supreme Court judges to 75.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, the Government are considering the issue in consultation with the judiciary and others.
Lord Pannick
I am grateful to the Minister. Will he congratulate the Lord Chancellor on his 70th birthday earlier this month, and suggest to him that to require Justices of the Supreme Court to retire at that age, if they were appointed to the Bench after March 1995, is a terrible waste of judicial experience, wisdom and knowledge? It is especially unfortunate when some Supreme Court Justices are only appointed to that court in their mid to late 60s.
Lord McNally
My Lords, I first assure the noble Lord, Lord Pannick, that the Lord Chancellor and I share the view that reaching 70 is not the end of a contribution to public life. In fact, in this House most think that it is only beginning. The age limit of 70 was brought in by the reforms of my noble and learned friend Lord Mackay. The Lord Chancellor is examining it, and he is also consulting carefully with the judiciary.
Lord Falconer of Thoroton
My Lords, I declare an interest: I am only 58. Does the noble Lord, who is a great friend of the Supreme Court, agree that the problem is now urgent? There is a member of the Supreme Court—the noble and learned Lord, Lord Collins—who will be forced to retire after only 18 months in the job of Supreme Court Justice. If the matter is not looked at and dealt with quickly, it will be a great loss to law in this country.
Lord McNally
I hear what the noble and learned Lord says. As he knows, there are ongoing arguments for making maximum use of the undoubted talent in the Supreme Court—his point—and about what others rather inelegantly call “bed blockers”. How to bring forward and rejuvenate the Supreme Court must also be fed into this debate.
Lord Trefgarne
My Lords, never mind extending the tenure of Supreme Court judges to the age of 75 —is there any provision for shortening their tenure if they prove not to be up to the job?
Lord McNally
One thing that the Lord Chancellor told me when I joined him in the Ministry of Justice is that the politicians and the judiciary kept well apart. I intend to follow that advice.
Lord Woolf
My Lords, further to a point that has already been made, may I remind the Minister that age is not the only consideration that must be borne in mind when finding a replacement for one of the Justices of the Supreme Court? In particular, there are members of that court who have a special expertise that is very difficult to replace. Although we have not mentioned his name, the member of the Supreme Court who is due to retire next May, and will then have been there less than two years, is probably the outstanding private international lawyer in the judiciary as a whole. The argument about keeping people there while holding up others does not apply when it comes to replacing that sort of expertise.
Lord McNally
My Lords, I hear entirely what the noble and learned Lord says. Without prejudging the issue to which he referred, dare I say that hard cases make bad law? However, there is a wider issue about our Supreme Court. It would perhaps be revolutionary to get our second woman and our first ethnic minority representative in the Supreme Court. A lot of work has to be done if we are to have a Supreme Court that reflects Britain in the 21st century but there is clearly room for 58 year-olds in it as well.
Lord Borrie
My Lords, does my noble friend agree that some of the finest judgments of the past century have been made by Law Lords in their 70s? Does he not think it sensible to retain people who in all probability are at the height of their intellectual powers when they are over 70 and ensure that they are not lost to the judiciary just because some slightly younger people aged 58 or 59 perhaps also ought to be there? You can always create more posts in total.
Lord McNally
These are very powerful arguments, which may be why the Lord Chancellor is looking at the matter. However, as I said, in parallel with the concern to retain the talent of the Supreme Court, there is, or should be, a similar concern to ensure that our Supreme Court better reflects our society in the 21st century.
Baroness Scotland of Asthal
Bearing in mind the comment just made by the noble Lord that breadth is important, and given that so many women have to take time out of their career, does he agree that one of the ways of ensuring that breadth is by identifying talent—not age or gender—as the criterion which should determine appointment to and retention of these posts?
Lord McNally
I treat that intervention with all the respect it deserves—and in that I do not make a joke
Lord Thomas of Gresford
The Minister will know that there is certain angst that Supreme Court Justices no longer get a peerage. Will they get an automatic peerage on retirement at 70, or will it depend on performance in the eye of the Government of the day?
Lord McNally
That is another matter which is under review and discussion. Arguments are being made both ways about how, when or if a Supreme Court Justice should get a peerage.
Prisons: Muslim Prisoners
(14 years, 5 months ago)
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Lord Dholakia
To ask Her Majesty’s Government what is their response to the Chief Inspector of Prisons’ thematic review on Muslim prisoners’ experiences.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, the Government welcome the report. We are pleased that it recognises the considerable progress prisons have made in meeting the religious needs of Muslim prisoners.
The National Offender Management Service has an ongoing programme of work to ensure that all prisoners are treated with respect and decency and that service provision is fair.
Lord Dholakia
My Lords, I thank the Minister for that Answer. Does he accept that it is a matter of serious concern that Muslim inmates constitute 10 per cent of our prison population as against a representation of 3 per cent in the community? There is no evidence that this group is proportionally involved in more crime than any other racial or religious group. Will he therefore undertake to ensure that the sentencing guidelines and the sentencing variables have no adverse impact on this group? Will he also develop a strategy for effective staff engagement with Muslims in which prison staff and the Muslim community are involved?
Lord McNally
My Lords, there may be several reasons why the proportion of Muslims in custody is as it is. I was surprised to find that they constituted 3 per cent of the population but 10 per cent plus of the prison population. Further study is needed to see whether we can identify some of the reasons for this.
On training, we are committed to developing effective communication between prisoners and staff. We have already taken a number of actions aimed at ensuring effective staff engagement with Muslim prisoners. During my briefing, I was shown a card issued to all staff on how to engage with Muslim prisoners. It very much emphasises a respect for their faith and how it should be handled within the prison.
Lord Harris of Haringey
My Lords, what is the rate of conversion to Islam within prisons and what steps are the Prison Service taking in terms of monitoring radicalisation and external speakers who come into prisons?
Lord McNally
I do not have precise figures on conversions, but I know the background to this question of whether or not there is radical Islamisation in prisons. The studies that I have been shown reveal no conclusive evidence of this, although there are examples which give rise to concern. The staff and the wider Prison Service keep a close eye on imams in prisons. Bringing them in to lecture, preach and minister within prisons has been one of the benefits, but we must make sure that it is a positive influence, as the noble Lord suggested.
The Lord Bishop of Chester
My Lords, will the Minister join me in paying tribute to the work of imams in the Prison Service, which is warmly commended in the report? Does he agree with my own experience that a general difference between a good prison and a bad prison is the relationship between the staff and the inmates and that what is so significant about the report’s findings is that there are so many negative perceptions of Islam among wide sections of prison staff?
Lord McNally
First, in parallel, I pay tribute to the role that Anglican and other Christian pastors play in our Prison Service, which is greatly appreciated. On the dangers of radicalisation in prison, in many ways prison staff reflect the fears of our wider society. Therefore, it is worth reminding people that only 80 of those in prison are there for terrorist offences and that the vast majority of convictions are not terrorist-related. What we must not do—and we have some hard lessons to learn from drug regimes—is think that people go to prison as Muslims or having converted to Islam and are then radicalised. There are dangers that prison could provide this kind of background. I was, in fact, talking with my noble friend Lord Dholakia about the idea of perhaps encouraging more young and successful Muslim entrepreneurs from society in general to become prison visitors or mentors, make contact with these young people and demonstrate to them that there is a positive role. I said at the beginning that there is an impressive training programme which is trying to educate the staff to deal with this problem.
Lord Brooke of Sutton Mandeville
My Lords, given the chief inspector’s recent report, can the Minister find out what proportion of prisoners are Muslim by conversion and let those who have asked questions today know the answer, given that it would affect the statistical discrepancy?
Lord McNally
I will find out, write to the noble Lord and put a copy of the letter in the Library. It is clear that the statistical discrepancy is not explained by mass conversions in prison. There is a suspicion by old hands that some people may convert because they think that it will give them a more privileged regime. However, I suspect that sometimes people—well, I will go no further. We are looking at conversion as an old soldier’s way of missing out some of the more onerous parts of the prison regime, but the main discrepancy lies far deeper. I will get the exact figures and put them in the Library.
House of Lords: Royal Gallery Frescos
Baroness Trumpington
To ask the Chairman of Committees what steps are being taken to restore the frescos in the Royal Gallery.
The Chairman of Committees (Lord Brabazon of Tara)
My Lords, the Waterloo and Trafalgar murals in the Royal Gallery are painted on plaster using the water-glass technique, and no safe and effective method for their cleaning has yet been established. Early next year, the Curator’s Office will subject the paintings to a full condition survey. The feasibility of improving the appearance of the murals through conservation or lighting techniques will be considered by the Works of Art Committee.
Baroness Trumpington
My Lords, I thank my noble friend for that reply. I am glad to hear that some action is going to be taken. Does he not deplore the present state of the murals in a place that is a showcase for Heads of State as well as many members of the public? Does he not agree that the Japanese experts who did a wonderful job in the Sistine Chapel should be consulted on the future of these murals? Finally, does he realise that “son of a gun” is not an American expression but an English one? Many women can be plainly seen in those murals, women who sewed, cooked and nursed—so “son of a gun” is an English expression.
The Chairman of Committees
I am grateful to the noble Baroness for the last part of her question. The water-glass technique was originally developed in Germany in the mid-19th century and adopted by Maclise for painting the Royal Gallery murals. They were begun in 1859 and finished by 1866. By 1869, only three years later, there were comments in the press that the paintings were already substantially faded. It is not known why this happened. The technique was successfully used elsewhere in the Palace. It is not a question of not having done anything about it, but a question about finding a way of doing something about it and so far no way has been found.
I am of course aware of the work done to the frescos in the Vatican. They are a different kind of fresco from our water-glass technique frescos. They were substantially and very successfully restored in the 1980s and the results are very striking, as the noble Baroness says. However, the same techniques could not be used on the Royal Gallery murals because of the water-glass technique that they were originally painted in. The Vatican work cost several million dollars, which is another factor.
Viscount Falkland
My Lords, have any other frescos in the British Isles needed similar restoration? Both the splendid pictures that adorn the Royal Gallery are rare in terms of their size and indeed because they are frescos, which do not thrive in our climate. The German technique, introduced by Prince Albert, was very experimental at the time. If we have knowledge of any other work done with a similar technique, would it not be helpful to see whether they can be restored at all and what the cost may be?
The Chairman of Committees
Of course, other frescos in the Palace have been restored, but they were not done using the water-glass technique—that appears to be the difficulty. Other frescos elsewhere have been cleaned, dirt and dust have been removed and they have been greatly improved. I point out to noble Lords that Maclise painted a quarter-sized version of the Trafalgar mural on canvas in rich colours. It is in the Walker gallery in Liverpool and is available to look at on the internet, which I did before I came to answer this Question. It gives some idea of how magnificent the colours must have looked when they first went up, but unfortunately they have not survived 150 years.
Lord Gavron
My Lords, although the technique used in the Royal Gallery is different from the technique used by Michelangelo in painting the Sistine Chapel ceiling, would it be worth consulting the Vatican Restoration Laboratory, which established new rules in 1978 for restoration, before we abandon any idea of restoring our own wonderful murals?
The Chairman of Committees
My Lords, we have not abandoned the idea. Over the years, the Curator and the Works of Art Committee have looked many times at ways in which we might be able to do this, but so far no method has been found. Tests have been done on the murals which have not really had any satisfactory results. Lighting has been considered and perhaps could be improved. New lighting techniques will be adopted for the Armada paintings which might help, but even good lighting will not restore the colours to the murals as they are.
Baroness Tonge
My Lords, if the frescos proved difficult or impossible to restore, as the Minister seems to be implying, would it be total heresy—I suspect it would—for me to suggest that we should commission a contemporary artist to replace the pictures in the Royal Gallery?
Lord Swinfen
My Lords, the Chairman of Committees has said that the frescos were painted using a technique developed in Germany. Has anyone asked the Germans whether they have similar problems with frescos in Germany and, if so, how they have dealt with them?
The Chairman of Committees
My Lords, as I said earlier, the House has looked at this issue over a number of years. I can only guess that the Germans would have been asked, although this technique was established in the middle of the 19th century so there is not likely to be anyone around with an original view on it. We have looked into ways of doing this and, so far, nothing has been found.
Lord Grenfell
My Lords, France’s heritage is rich in frescos, as we all know. If there is to be an international search for a good method of doing it, could we have some guarantee that the French would not be excluded on political grounds?
The Chairman of Committees
My Lords, the French certainly would not be excluded, despite the subject of the two murals. Maybe, at the time, they were not foolish enough to use the water-glass technique.
Law Reform: Murder
(14 years, 5 months ago)
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Lord Lloyd of Berwick
To ask Her Majesty’s Government whether they will bring forward proposals for reforming the law of murder.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, we are mindful of the recommendations of the Law Commission’s report, Murder, Manslaughter and Infanticide. This is one of the issues at which the Government will be looking in their review of sentencing policy in general.
Lord Lloyd of Berwick
My Lords, I thank the noble Lord for that Answer. Does he accept, as I think he does, that reform of the law of murder is now long overdue? If so, I have two questions for him. First, is he aware of any other country, whether in Europe or the Commonwealth, that has a mandatory sentence of life imprisonment in all cases of murder, including, for example, cases of mercy killing? Secondly, does he agree that it is the mandatory sentence which distorts this branch of the law and stands in the way of much needed reform?
Lord McNally
My Lords, I would not presume to give my own judgment on that, but I suspect that the noble and learned Lord is right that there are few precedents for that very broad sweep of our law. He is also right to say that the Law Commission's report puts forward a variety of alternatives which would give a degree of flexibility to the judiciary when dealing with this matter. I know that the Lord Chancellor is sympathetic to the line taken by the Law Commission. It is a matter of consulting and then finding time to bring forward proposals on the second part of the commission's report. As the noble and learned Lord knows, the previous Administration brought forward partial proposals, and we are now looking at the matter with a sense of urgency.
Lord Walton of Detchant
My Lords, the Select Committee of your Lordships’ House on Medical Ethics, which I was privileged to chair, strongly recommended that the mandatory life sentence for murder should be abolished and that judges should be given some degree of flexibility, because we had reported to us 23 cases where family members had ended the life of a loved one suffering from a painful terminal illness. In every case, a charge of murder was originally proposed, but in all but one of them, the charge was amended either to attempted murder or to manslaughter because it was felt that no jury would be likely to convict. Is it not time, therefore, for the position to be revised?
Lord McNally
My Lords, the short answer is yes. Such strong recommendations from a Select Committee carry weight, but we must be careful to ensure that in addressing the issue of the mandatory sentence for murder, we do not slip into other issues which have caused problems, such as mercy killing and euthanasia, which I think need to be considered separately as a matter of law.
Lord Hamilton of Epsom
My Lords, in the light of the coalition's new enthusiasm for referenda and its desire to consult the people about changes in the law, will the Government be holding a referendum on the restoration of the death penalty?
The Earl of Listowel
Does the Minister recall that the recommendations from the Law Commission on the disposals for child homicides found that an adult with a mental age of 10 was treated more leniently than a child aged 10? Will he look carefully at that matter in his considerations?
Lord McNally
I can assure the noble Earl that we will. It is a broad issue where the groundwork has been done by the Law Commission. I know that the Lord Chancellor is taking a close personal interest in the matter. We will be bringing forward precise proposals to Parliament in the near future.
Lord Clinton-Davis
When does the Minister think that he can come forward with definitive proposals? We cannot kick this into the long grass; we must have a definite date. Is the Minister inclined to venture an opinion as to when it is appropriate?
Lord McNally
My Lords, I am looking across at some very distinguished former members of the team at the Ministry of Justice, and I am sure that not one of them would have given the kind of precise date that the noble Lord asks for. As for kicking it into the long grass, that is simply not our intention.
Lord Campbell of Alloway
I was a member of the committee on murder set up more than 20 years ago in this House. Our recommendations were not implemented. Without going into the details of any case, will the Government now take it as an urgent priority to amend the law on murder?
Lord Thomas of Gresford
The Minister will recall that the piecemeal reform of the law of provocation carried out by the previous Government was described by the Law Commission as “bizarre”. Will he assure us that if there is a reform of the law of murder, it will be done as a whole?
Lord McNally
Yes, although certain provisions of the Coroners and Justice Act will come into force this October.
Arrangement of Business
Baroness Anelay of St Johns
My Lords, at a convenient point after 4 pm my noble friend Lord Howe will repeat a Statement on the NHS White Paper.
House of Lords: Working Practices
(14 years, 5 months ago)
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Lord Strathclyde
To move that this House takes note of the case for reviewing the working practices of the House of Lords.
The Chancellor of the Duchy of Lancaster (Lord Strathclyde)
My Lords, we have a fine number of speakers on the speakers’ list this afternoon, and I welcome the opportunity of hearing the views of the many noble Lords who have set their names down for this debate. Others who have not will, no doubt, make their views known over the next few months.
A number among us think it may be time to review our working practices and, at the outset of a new Parliament, I share that view, which is why I proposed that this debate should be arranged. It is my intention that this debate should pave the way for a systematic review of our working practices to be conducted by a Leader’s Group that I will appoint before the House rises for the summer. I will ask the group to investigate what improvements could be made to our working practices to allow us to carry out our work effectively, while maintaining our efficiency in terms of the timeframes within which legislation is taken through the House.
That does not mean that I believe there are fundamental problems with procedure in your Lordships' House. Indeed, in the years I have been here, there have been times when I have contemplated ill digested legislation coming from the other place and reflected how much better the other place might operate if it introduced some of our own procedures. The privileges enjoyed by every noble Lord, the ability to table an amendment and have it answered, the wide freedom to speak and to question Ministers, the lack of restraint from the chair and other freedoms are immensely valuable to the House, and they are not shared by Members in another place. These open procedures enabled the House to carve out, after 1911, a role as the pre-eminent revising Chamber. Consider, for example, that over the last two full-length Sessions of the previous Parliament—2007-08 and 2008-09—we made on average over 80 amendments to each government Bill passed by this House.
As Leader of the House, I see it as my duty to defend that role and those freedoms. The essential self-regulating character of the House—rare in any legislative body—is something that I believe that noble Lords on all sides greatly value. Nothing this Government would suggest would set that at risk. I have never set my face against change; indeed, I was the other half of the conversation that led to the initiatives of my predecessor, the late Lord Williams of Mostyn, which resulted in some significant changes in the modern House, including the wider use of Grand Committees and the introduction of carry-over Bills. Furthermore, the House has regularly reviewed these matters—I need only mention the group set up by the noble Baroness, Lady Amos, in 2004, Lord Williams’s review or the Jellicoe committee of 1992—so it is time to look again at our working practices and consider ways we might refresh and improve the way we go about things.
However, we should not forget that one of the advantages of this House is that self-regulation allows us to adapt and change as we go along. Take, for example, the way we revise legislation in Grand Committees, which many of your Lordships rightly favour. After the Williams review, the number of Bills sent to Grand Committee, with full co-operation from the Opposition, rose from five in 2001-02, to 11 in 2002-03 and 18 in 2003-04. In 2005-06 there were 23, but since then their use has fallen away. In the past two Sessions, only six Bills have gone to Grand Committee, the same as in the last years of the old House in 1997-99. In 2003-04 and 2004-05, more than half the hours that your Lordships spent in Committee were spent in Grand Committee. In every year but one since 2003, the proportion of Committee time in Grand Committee has fallen from more than 50 per cent in 2003 to under a third in 2008-09 and less than 30 per cent in the previous Session. Yet the total number of hours spent in Committees of both types in our previous two full Sessions was more than 813, against 744 in the last two years of the old House and 404 hours in 1994-96. We are definitely talking more.
I use these statistics to show that our procedures are constantly evolving. It may well be that we should renew greater use of Grand Committees. The usual channels routinely consider whether the Committee stage of Bills could take place in Grand Committee, but the Leader’s Group could investigate whether morning sittings in the Moses Room might be introduced on Tuesdays and Wednesdays, for Bills or for other types of business. Then again, we already have procedures to send Bills for evidence-taking to Special Public Bill Committees or to Select Committees but, save for famous examples such as the Constitutional Reform Act, we have been sparing in our use of them. A Leader’s Group might consider whether that is right.
In the case of the Constitutional Reform Act, some who were most angered by the use of the Select Committee procedure, including the then Lord Chancellor himself, came to acknowledge its value. Indeed, our Select Committees have played a vital role in examining draft legislation, including secondary legislation, and scrutinising public policy. They have provided us with the authoritative analysis and advice that enables us to perform our scrutiny function effectively. On the other hand, wider use of these procedures would detract from the important principle that every Peer can contribute to revision and amendment at every part of every stage of a Bill.
In seeking to review how we scrutinise legislation, the Leader’s Group might also consider whether we could make better use of the minimum interval between the First and Second Readings of Bills. That interval could be used to invite evidence on Bills ahead of Second Reading, as some noble Lords have proposed, without prolonging the overall timetable for the passage of the Bill. The group may even wish to look at whether the case for minimum intervals of the length we currently observe is as compelling today as when they were introduced in 1977. The House has changed markedly since then, as have the technologies used to reprint Bills and Marshalled Lists of amendments.
Having re-examined its own practices, the other place is implementing many of the recommendations put forward by the Wright committee. Over time, they too might have an impact on this House, not least if legislation is more thoroughly scrutinised by the time it reaches us, so it is a timely moment for us to look at our own ways. In addition to some ideas that I have already mentioned, the group may wish to explore how we could ensure that, when scrutinising Bills that have arrived from the Commons, we focus on the provisions that received least attention in the other place. Some noble Lords have called for the provision of information on which clauses of Bills arriving from another place have not been subject to debate. I understand that this would not be as straightforward an exercise as it sounds, although I favour the idea behind it, but it merits further investigation.
There is much that a group might consider without extending the time that a Bill spends in this House. The Leader’s Group might wish to look at other areas of the House’s activity. It could, for example, examine how we might avoid duplication with another place when we repeat Ministerial Statements and Urgent Questions and consider whether the Moses Room would be a better venue for such matters. It may also wish to explore how we could ensure that our procedures are more transparent and accessible to Back-Benchers on all sides of the House, including those who have joined only recently or attend less frequently. This might, for instance, mean taking another look at how Private Members’ Bills are introduced and how Questions for Short Debate are tabled, with a view to widening the range of Back-Bench Members who successfully use these vehicles to raise matters of interest.
The overriding principle of self-regulation underpins all our work. The self-restraint that characterises this House has ensured that we have never needed to resort to selection of amendments, enforced groupings, programme Motions or guillotines. I sincerely hope that we never shall. We equally need to recognise that that would change if the freedoms that we have were unnecessarily abused. I am glad that they never have been, and long may that continue.
The usual channels are essential to this alchemy. They are a conduit for the different interests in the House and a vital lubricant in the conduct of business in a self-regulating House with no overall majority. I am conscious that there are some in the House who wish to see a greater role for the chair, notably at Question Time. My view is that our existing practice, whereby it is the responsibility of the whole House—of all the Members present—to draw attention to breaches of order or failures to observe custom, continues to serve us well. The government Benches of course have a special responsibility for assessing the mood of the House and intervening accordingly, and I take my responsibilities in this matter most seriously, as I know that former Leaders have done as well. It is not as easy as it looks perhaps and sometimes there are complaints of unfairness or favouritism to certain Benches. All I can say is that, on the anecdotal evidence, the party of the Opposition is hugely favoured in Question Time, but we are looking for the scientific proof to demonstrate whether that is the case.
This does not amount to a power of direction, and nor should it. Such powers, whether exercised from the—
Lord Campbell-Savours
The noble Lord did not refer to the Speakership in the context of work which might be considered by the Leader’s Group. I wonder whether he has a view on that.
Lord Strathclyde
My Lords, let me make it clear: I believe that it should consider that. It should be a widely drawn committee on working practices and not simply on the procedures of the House, so that it can examine all sorts of matters which are not strictly speaking procedural; that should, of course, include the role of the chair in the House.
As regards appointments to Select Committees—an aspect of the reforms in the other place which a number of noble Lords are keen to emulate—there is nothing to stop individual groups or political parties in this House from introducing elections for particular positions. Some have already done so, and I believe that it very much suits those groups.
I trust that this brief tour d’horizon has made clear that the Leader’s Group will have a wide-ranging remit. It will also have plenty of time in which to conduct its work, which I hope will culminate in a major piece of work that sets us on the right course for the years ahead. I hope that today’s debate will lend momentum to that process and serve as a reference point for the group in conducting its review.
There are many speakers and the debate will be wound up by my noble friend the Deputy Leader, who will also speak in his capacity as leader of the Liberal Democrat party in this House. All contributions are important in this discussion, including those from Members who will not speak today; I am sure that they will be invited to put evidence forward to the Leader’s Group. I beg to move.
Baroness Royall of Blaisdon
My Lords, this is an important debate for this House and for the Members of this House. It is, too, I believe, an important debate beyond this House, because how this House works and how it does its job, helps to set how the House carries out its important role in our politics, in our legislative process and in our constitutional arrangements. So this is a very welcome debate. I welcome as well the announcement by the Leader of the House to set up a Leader’s Group to review the working practices of the House. That is absolutely the right thing to do, although, like the noble Lord, I recognise that our procedures have evolved over the past few years.
To some, a review of working practices might sound rather dry and boring. But this is not just about more efficient and effective practices. It is about the health of our political system. It is about good governance. It is about our working relationship with the other place and our ability better to engage with the public. It is about building on the value of our House.
I believe that the review has assumed greater importance since the formation of the coalition Government. Why is that? It is because the fundamental role of this House as a revising Chamber has been changed by the new arithmetic. Evidence from the Constitution Unit at University College London in a paper by Meg Russell and Maria Sciara entitled, The Policy Impact of Defeats in the House of Lords, shows that,
“many Lords defeats are substantially accepted”,
and that,
“furthermore, many of these are on key policy issues”.
They show that in four cases out of 10, Lords amendments were accepted after defeats in the Lobbies and, of course, many more were accepted without a vote. The Leader of the House informed us that more than 80 amendments were carried in the previous two Sessions of Parliament. That was right and proper, although sometimes painful for the Government. With the coalition Government, this situation is bound to change, and I think it has changed already, with a profound impact on the constitutional role of this House. The new voting pattern in this House of the new politics is putting into question the traditional role of this House as a revising Chamber. If the Government have a permanent inbuilt majority, the prospects of this House being able to carry out that role are limited. This is not sour grapes. We know we lost the election and we know that that had consequences, but it is the new reality of the House. I hope that the Leader’s Group will keep this in mind as it reviews our procedures.
I pay tribute to the staff in the Library for their excellent notes for today’s debate. I pay tribute as well to all those who have doggedly pursued these issues over many years, and especially to those who have been members of the various more recent groups, including the group of Labour Members chaired by my noble friend Lord Grocott.
My contribution today will be brief. There are so many suggestions on the table for the Leader’s Group to consider. I hope that, in its work, the group will be able to take soundings from all Members of this House who wish to make their views known. In debates such as these it tends to be the aficionados who speak and make very fine contributions to the debate, but there are many others who have clear views on these issues. In our debate in February on the Motion tabled by the noble Lord, Lord Norton of Louth, the noble Lord, Lord Higgins, noted that we have increasingly refined our views and increasingly a consensus has emerged that this matter is coming to a point where action must be taken. I agree with the noble Lord, but for real ownership of any changes—which of course must be agreed by the whole House—all those Members who wish to make their views known should be able to do so. To be clear, I want to see change, but I also subscribe to the process of evolution, not revolution.
It is clear that one of the recurrent themes since the Leader’s Group established in 2001 by the late Lord Williams of Mostyn is the desire for pre-legislative scrutiny. That group suggested that virtually all Bills should be subject to pre-legislative scrutiny, but it was later agreed that while the growth in pre-legislative scrutiny was welcome, the aspiration that it should include virtually all Bills was unrealistic. That is obviously a matter for the new Leader’s Group, not for debate today, but I would suggest that we have not quite got the balance right. Pre-legislative scrutiny is an opportunity to improve draft legislation, to ensure that it better meets the needs for which it was designed, and to engage with experts and members of the public who are interested in the subject in question. There was more and more pre-legislative scrutiny under the previous Government, but the demands of government often meant that not enough time was built into the legislative timetable. We need to do better. All Governments should be in favour of enhanced pre-legislative scrutiny. It is one small but very important way of rebuilding trust in our political system.
In a similar vein, there have been demands over the past years for post-legislative scrutiny. Like many other noble Lords who have spoken on this in the past, I believe that the House is particularly well suited to this scrutiny. We have the expertise, we have the time, and it would be an opportunity to identify good practice in terms of process and content. One suggestion that has been made by my noble friend Lord Puttnam is that the recent Digital Economy Act 2010 should, in due course, be subject to post-legislative scrutiny. I believe that that is an excellent suggestion.
Should pre- and post-legislative scrutiny be undertaken only by Joint Committees of both Houses or is it something that on occasion the Lords could do alone? Again, that is a matter for the new group. However, having noted in the previous debates the demand for a plethora of Joint Committees, I suspect that in practical terms we might have to consider some Lords committees. We certainly have capacity in terms of members with our ever-growing numbers, but I recognise that it would mean extra demands on the Clerks and on financial and spatial resources. At a time of financial constraint, it is not easy to make a case for extra resources, but we are talking about enhancing our democracy.
Pre-legislative scrutiny takes time and, having recently had the privilege of both leading your Lordships’ House and being a Member of the Government, I am acutely aware of the need to take the timing of business into account. Some new procedures would take preparation time but would not require additional time on the Floor of the House; for example, the flagging of clauses when a Bill passes from the Commons to the Lords in order to identify clauses not already debated. I know this is more complex than at first it would seem, but it is the right way forward if possible. Other new procedures could save time in the Chamber, as the noble Lord said, by dealing with Statements so that we are not merely repeating what has been said in the other place.
In the previous debate, several noble Lords raised the issue of cross-cutting areas of public policy which are never properly addressed or scrutinised because the government machinery does not exist. This may well be something that we in the Lords should do through the adaptation of our committee system. I realise that the House has recently agreed the proposals of the Liaison Committee in relation to committees during this Parliament, but I suggest that, following the decisions taken on the basis of the recommendations of the Leader’s Group, the Liaison Committee might re-convene with new criteria.
The Leader’s Group is also a timely initiative because it will enable us to respond to the impact of changes made in the other place as a result of the Wright Committee. The way in which one House considers legislation and wider issues is bound to have an impact on the other. It is important that we work together as an effective Parliament but we should also maintain the differences and distinctions of our House—not for the sake of difference but because the two Houses should complement, not replicate, each other.
There is much more that I could say but now that we have a process with the establishment of the Leader’s Group, I think it more appropriate that I make my views known to that group. I do not envy the group in its task of prioritisation but, undoubtedly, it has an important task before it. This House has made great strides forward over the recent period, with a new code of conduct, a standards commissioner and, I hope shortly, new arrangements for the financial support of Members of your Lordships’ House. The work of the group announced today will add to that progress. I look forward to that work starting and producing proposals for this House to consider.
Lord Luce
My Lords, I can say one thing without doubt: the first real improvement in working practice is that today I am privileged to be the first to be called on the Back Benches. I hope that that tradition continues indefinitely.
I thank the noble Lord, Lord Strathclyde, for convening the debate and for adopting a positive attitude towards the question of working practices in this House. I welcome, too, the fact that he is setting up the Leader’s Group to study these matters. I speak as someone who has been a member of one of the three committees—which has been working under the title of Strengthening Parliament—and it is from that experience that I wish to contribute a few views. However, I do not think it would be right to do so without putting into context my view on the broader picture of the Government’s proposals for reform of the Lords.
I start from the concept stated by the noble Lord, Lord Strathclyde, that the powers and role of the House of Lords is likely to remain the same. That puts a heavy onus on the Government and the committee under the Deputy Prime Minister to convince us that an elected or partially elected House will lead to improvements—I use the word “improvements”—in the capacity of the House to revise, scrutinise and persuade the other place to think again. At present, I think that the views put forward by the noble Lord, Lord Steel, for improvements and modernisation of an appointed House are the right way forward. The present policy of the Government looks like a form of populism in order to appease an electorate who are genuinely dissatisfied with Parliament. The Deputy Prime Minister’s description of this House as “an affront to democracy” illustrates this point. What are most needed are hard-headed, practical, unexciting adjustments to improve the performance of this House on behalf of the public. We in this country tend to be better at the rolling, pragmatic, incremental and more coherent evolution of the way in which we operate. In the past decade or two, we have fallen short of that. Our approach has often been shoddy and incoherent. I go along with the view of Edmund Burke, that we should have a,
“disposition to preserve, and an ability to improve”.
I cannot resist reminding the House of the vicar father and his English son travelling through Nebraska. The son said to his father, “You know, Dad, you can fit the United Kingdom into Nebraska”, to which his father said, “To what end, dear boy?” That is the question that we have to ask on every aspect of reform that we consider. We cannot, of course, afford to be complacent; we cannot afford to be self-satisfied in our procedures at any time and we have a duty to the public. But we should acknowledge that there have been many adjustments, in the past decade for example, to the working practices of this House.
The cross-party groups which have been looking at working practices have produced a wide range of ideas, some of which will be acceptable to the House, some of which will not. They are all worth examining as a way to improve the performance of this House. They range from recommendations to improve the scrutiny of primary legislation to ideas for strengthening the means of challenging the Executive more effectively and improving our internal governance and accountability. Many of these thoughts need looking at seriously by the Leader’s Groups.
Without examining all the proposals, which I have no intention of doing, I shall make one or two reflections on them. First, there is a continuing tendency on the part of successive Governments to produce too much legislation. Often, that legislation is badly thought out. It has become too much of a virility symbol for Ministers that they must produce a Bill. But when you look at the quality of the Bill, you really should question it. One of the proposals to come out of the committees’ work is that Bills should be much more fully justified before they are brought before Parliament for examination.
Secondly, there continues to be—it was the case in my day when I was a Member of the other place—a complete lack of contact and understanding between the two Houses. I hardly ever came to this Chamber in 21 years in the other place. But if we are discussing these reforms, including overall reform, there needs to be a much better mutual understanding of how we work. Therefore, I welcome the fact that the working groups recommended a more bicameral approach to many of the issues that we are tackling. I acknowledge that the coalition Government will follow up with a Joint Committee to look at the overall proposals for reform of the House.
The third factor is to redress the balance between the Executive and the legislature. Here, although our procedures are different, we should seek encouragement and learn from the work of the Wright committee in the other House in the previous Parliament. There are certain ideas there from which we, too, can benefit. We had only to see how refreshing, for example, were the recent cross-party elections to the Treasury Select Committee. The proposals of that committee to have more say on the part of the Back Benches in business management of that House are also relevant to this House. I agree with the noble Lord, Lord Strathclyde, that the usual channels are an essential lubricant to business, but I also think that Peers on the Back Benches need to have more influence on the management of the House.
My fourth point is that public ignorance of the Lords is profound. Here, we need to seek ways in which we can involve the public more effectively in the affairs of the House. Again, in these working groups there is a recommendation that we should produce proposals for public evidence hearings on some kinds of legislation; there will be other ways to pursue this matter.
Fifthly, the time is coming—I am glad that this has been acknowledged—when the Lord Speaker’s powers should be looked at. There are arguments for extending the powers of the Lord Speaker, perhaps in certain, somewhat limited ways. I will come to the governance point which refers to the Lord Speaker in a moment, but here I come to something which I realise is controversial in this Chamber and where a lot of people, who have had far more experience, would not agree with me. However, for my part I find Question Time pretty undignified. Possibly it is because the attendance in the Chamber has got much bigger and it is much more difficult to handle self-regulation in that way. While I am totally in favour of self-regulation, for my part it makes much more sense for the Lord Speaker of the day to have the say, as opposed to a partial part of the House—even though the Government are totally trustworthy—deciding which group should be called upon next. That might help a bit to get rid of the slightly undignified aspect where sometimes the person who shouts the loudest is the one who gets in.
On the question of non-legislative matters, I would ask the House not to underestimate the value of topical debates. I have been very fortunate to have had two topical debates in the past two years, which I think have brought some influence to bear on government decision-making. The proposal in the working groups that topical debates should be part of a regular weekly one-hour procedure, at whatever time of the week is agreed as being the most suitable, should be adopted. We should have a more coherent system for that.
I come to the question of governance and accountability, which is my last point. I do not know whether I share this with very many other noble Peers, but my ignorance of the governance of the House was almost total until I joined the committee chaired by my noble friend Lady Murphy. I say without hesitation that this House is certainly very lucky to have the present incumbents who look after its governance, led by the noble Lord, Lord Brabazon, and his team of colleagues. However, we need to be not only a self-regulating House but one with a credible system of self-governance which will command public confidence and meet acceptable standards in today’s age. I, for example, do not feel that I can criticise the Press Complaints Commission as much as I could if I am not quite confident that we have the right self-governing system.
The Institute of Government has produced proposals —I think it was last week—for the governance of the other place: for the commission and the Board of Management to be more open and transparent; for a role for non-executives and for the national audit committee; and for occasional external reviews or financial health checks. It would do us no harm to look at those kinds of things to see whether it would strengthen our own systems of governance. At the same time, there is a case for looking at our lines of accountability. I ask myself what would have happened had there been a police raid on one of my noble friends in this House, as opposed to the other place. Would we have had clear lines of accountability and responsibility for dealing with that? I am not absolutely convinced that we would.
There is a strong case, as we recommend, for the Lord Speaker to provide leadership for the strategic governance of the House and to chair the House Committee with an open election system for that committee and the ability occasionally to co-opt if it needs outsiders to help it in that work. At least we should undertake an independent review of our governance system. I for my part welcome most warmly the leadership of the noble Lord, Lord Strathclyde, in setting up the Leader’s Group.
Lord Howe of Aberavon
My Lords, it is for me personally a real pleasure to follow the noble Lord, Lord Luce, in this debate. We have been in partnership together more than once; he was for a long time my parliamentary private secretary and a ministerial colleague. His own career has been so diverse and distinguished that he is in himself one of the best advertisements for this House. He served in the colonial service for some years and resigned from that on a point of principle. He also had the privilege of serving alongside my noble friend Lord Carrington and, for different reasons, resigned from that, too. He then came back to a second career as a Foreign Office Minister and then, when that came to an end, became a Minister for arts. When that came to an end—I think that I have this sequence correctly—he became vice-chancellor of Buckingham University, governor of Gibraltar and Lord Chamberlain. There are not many legislators in many legislatures in the world who can match that kind of career, and we welcome him most warmly. I agree with almost everything that he had to say in his speech.
I have only a very modest point to make in this debate, not addressing a number of the issues already raised but addressing the simple question of whether we will make the best of the resources in this House that can serve us in so many different ways. I set the context with a rather unusual quote from the San Diego Law Review, from tax law professor, Alice Abreu:
“If taxes had existed in the Garden of Eden, the Serpent wouldn't have needed an apple; the promise of a simpler tax system alone would have seduced Eve”.
That could be said again and again. We are always looking for a simpler tax system or a way of delivering such a thing. A lot depends on the perceived scale and nature of the taxes themselves, the objectives and the philosophy. A great deal depends on the mechanism for making, scrutinising and enacting the law, changing monetary objectives into intelligible legislation.
This is clearly an area where Parliament as a whole has a very important part to play. Every professional and business institution has offered some prescriptions as to how we might improve it. Two basic prescriptions have emerged—first, that there should some kind of agency at least semi-detached from government to keep in mind the objective of tax simplification, to prevent Chancellors letting their imagination run away with them or inspectors of taxation achieving the same effect and producing great complexity. That is one need on which there is agreement. Secondly, we should have the right parliamentary institutions for tackling the enactment of legislation. There have been a number of recent commissions and bodies that have made recommendations about those things. My noble friend Lord Forsyth presided not long ago over a Tax Reform Commission, whose report was entitled Tax Matters. I was invited to undertake a much humbler organisation, a working party to study the methods for making tax simpler. We both agreed with the prescription that has generally commended itself to many other people. The Government have now announced that we need something like an office for tax simplification, an independent body to focus on that all the time.
The second conclusion reached by all these bodies is the necessity for a Joint Committee of Parliament on tax legislation. I emphasise the word “joint”. That is almost universally supported by all the organisations outside the Government that have considered this: the CBI wants such a Joint Committee, as do the Chartered Institute of Taxation and the Institute for Financial Studies. The reason for that, I am sad to say, was set out some years ago by Sir Alan Budd in one of the earlier studies as long ago as 2003. He and his colleagues had this to say:
“The truth of the matter is that the House of Commons has neither the time nor the expertise nor, apparently, the inclination to undertake any systematic or effective examination of whatever tax rules the government of the day places before it for its approval. The irony of the Commons’ failure is that, because current constitutional arrangements allow the House of Lords no participatory role in the scrutiny of tax legislation, taxation legislation receives less Parliamentary scrutiny than other legislation. The criticism of Parliament implicit in this statement is not new. Parliament has rarely attracted praise for its role in enacting tax legislation. The longevity of this problem, however, is no reason for the continuing failure to address it”.
As I say, there has been very little dissent and disagreement about the general nature of what needs to be done. A few weeks ago we had a response to that set of specifications from Her Majesty’s Government in the document produced by the Chancellor of the Exchequer, Tax Policy Making, where the Government propose, among other things, two things. The first is, in order to promote simplicity, to create an independent office for tax simplification, with further details to be announced shortly. I say hurrah to that. The second proposal, in order to provide for greater scrutiny, is for the Government to publish more tax legislation in draft to allow for pre-legislative scrutiny. That is all right. Then, hesitatingly:
“The Government will welcome any consideration by the Treasury Committee”—
that is, the Treasury Committee of the other place—to review how to strengthen the role of Parliament in scrutinising tax legislation. The point that I make today so clearly is that that consideration by the policy committee in the other place must, if it is to be effective, be to the conclusion that all others have reached. We need a Joint Committee of both Houses because thereby we shall be able to mobilise alongside what is, alas, a relatively slender body of people with qualifications in the other place. Professional politicians have increasingly dominated it, and it is a far less well informed place on tax policy than it was 20 or 30 years ago in the days when it was almost fun to join the Finance Bill Standing Committee, with a range of experts doing combat against, for example, the capital transfer tax.
Lord Howe of Aberavon
If my noble friend will forgive me, I am just making a point. I may find a slot where I can make way for him.
The point that I am making is that it is important to have both Houses represented in this joint parliamentary body if we are to make the Lords’ talent as available as it should be, and if we are to encourage the Commons’ talent to work together.
I have one last point but I am curious to know what provokes my noble friend.
Lord Elton
My Lords, for those of us who are less expert in these matters than my noble and learned friend, will he tell us whether the legislation he is speaking of would have no financial content? I assume that tax legislation always has numbers in it. If that is the case, would it not always be subject to a Speaker’s certificate as being a finance Bill? In that case, how does my noble friend see the other place reacting to his proposals?
Lord Howe of Aberavon
I am not quite sure that I follow the nature of my noble friend’s question, to be honest. It must be either so penetrating that I am overwhelmed or so obscure that I am completely innocent.
Let me come to my final point. The anxiety of the other place at seeing us becoming involved in the joint study of this question is that that would in some way encroach on its legitimate and important financial privileges. That is fundamental; indeed, it may be the point about which my noble friend was asking me.
Lord Howe of Aberavon
I am delighted that I have inadvertently answered my noble friend’s question as well as asserted my principles.
Great care has been taken to prevent such fear of encroachment. Some years ago, this House established a Finance Bill Sub-Committee of its Economic Affairs Committee. There was anxiety in the other place then that the fact that this House was studying finance at all, even with an attached condition, would risk encroachment. When this House decided to establish that sub-committee, there was an accompanying prohibition. The House decided,
“to prohibit the sub-committee from investigating the incidence or rates of tax and to allow it only to address technical issues of tax administration, clarification or simplification”.
That was designed to address the concern on the part of the other place. The Cunningham committee—the Joint Committee on Conventions of the UK Parliament —concluded:
“The Lords committee should continue to respect the boundary between tax administration and tax policy, to refrain from investigating the incidence or rates of tax and to address only technical issues of tax administration, clarification and simplification. Provided it does so, we believe there is no infringement of Commons financial privilege”.
Since then, our Finance Bill Sub-Committee has gained a good track record of scrutinising separate and important aspects of the past five or six Finance Bills. It has published its reports in time for consideration at Report stage in the Commons. Both in and out of Parliament, the reaction to its participation has been distinctly positive.
The case that I am making, lest it be at all obscure to my noble friend the Leader of the House and, indeed, to the House as a whole, is that here is an opportunity for the House to enlarge its role and to take part in the Joint Committee of Parliament that the Forsyth commission recommended and which everyone else would like. It is another opportunity for us to exploit our ability in an effective way. I hope that this idea will be accepted with good will in the other place as well as here. That ends my, I hope, tolerably clear presentation of what I was trying to say.
Baroness Jones of Whitchurch
My Lords, I am grateful to the Leader of the House for facilitating this debate and very much welcome the tone in which he set out the issues and raised the prospect of real reform.
I am contributing to this discussion conscious that I am still, relatively speaking, a new girl, having joined your Lordships’ House only four years ago. I am also very much aware that greater minds than mine, many of whom are speaking today, were working away on these issues for a considerable period prior to my arrival. Nevertheless, in the hope that I could at least bring something of a fresh perspective, I agreed to join the small working group on procedural reform established by the Labour Peers and chaired most ably by my noble friend Lord Grocott. Our discussions ranged widely but ultimately focused narrowly on some practical recommendations for reform that could complement the incremental changes that have already been made and which could be introduced quickly. I commend the recommendations to your Lordships.
It seems to me that any procedural reforms should meet two key criteria. First, they should enable wider participation in the work of this House to take maximum advantage of the wealth of wisdom and experience that undoubtedly exists here. Secondly, they should help the outside world better to understand our processes so that we become more accountable, more accessible and more transparent.
In that respect, I have to confess to having been mystified and occasionally alienated by some of the more arcane procedures with which I had to come to terms when I first joined this House. Since then I have become quite affectionate towards some of the rituals and ceremony that distinguish our work. I suppose some might say I have gone native. A key objective should still be to deliver proper respect for our history and traditions, but not when they get in the way of effective participation and scrutiny. In this context, I highlight the following recommendations from our report.
First, it is true that Question Time is, in many ways, very popular and it is certainly well attended. However, it is far from inclusive and sometimes downright scary. It has the capacity to hold Ministers to account, yet many of the noble Peers best able to do so would not dream of participating in what sometimes degenerates into an undignified shouting match. I am grateful for the research provided by my noble friend Lord Campbell-Savours, which unearthed that in the previous Session, of the 3,039 supplementary questions asked, almost half were asked by the same 57 Peers. There appears to be no tradition of giving way to those who speak less often and, as a result, questions can be repetitive and predictable. At the same time, as the Leader of the House acknowledged, there is inevitable pressure on the Front-Benchers responsible for order to demonstrate that they are not being partisan—which, frankly, some achieve better than others—while, at the same time, they have their back to half the Chamber.
Part of the solution to this problem requires a change in culture rather than procedure. Perhaps, for example, if we issued a questionnaire to those in the Visitors’ Gallery, asking what they thought of the spectacle, the outcome might shock us into a change of behaviour. In the mean time, I hope noble Lords will take on board the more practical solution in the Grocott report—to take advantage of the Lord Speaker’s undoubted authority by transferring responsibility for order and conduct to that position for a trial period. This has the added advantage that the outside world already believes that this is the Lord Speaker’s role.
Secondly, there is an urgent need to streamline the Committee stages of Bills. As a relative newcomer it has been a struggle for me to distinguish on occasion between the Committee and Report stages, with their endless opportunities for repetitiveness and near identical speeches, whereas the legislative stages in the other place appear much more transparent. This repetition is most marked when both the Committee and Report stages take place in the main Chamber. As our report pointed out, there are physical and deliberative reasons why the Committee stages of a Bill are better suited to debate in Grand Committee. The layout allows better communication and is less partisan, and the slightly more informal style allows Ministers and participants to get to the heart of the issue and work through solutions.
As the Leader of the House recognised, it has previously been recommended that all but the most important government Bills should be dealt with in Grand Committee and I very much endorse this view. I also endorse the view that using rooms other than the Moses Room for Committee stages of a Bill—and even allowing morning sittings—should be considered. Interestingly, one of the facts that came to light as we were debating these issues was that the Commons currently spend up to a third more time scrutinising and revising individual Bills than we do. If we are to justify the added value of a second, revising Chamber, we have to set aside the necessary amount of time to deliver effective scrutiny, use the right facilities and use that time wisely.
Finally, I add my voice to the campaign for the Lords to carry out post-legislative scrutiny. There is currently no authoritative process for reviewing the effectiveness of legislation. Did it achieve what we had intended? Were there any unforeseen consequences? Did those at whom it was aimed really understand what was required of them? Were the resources made available for the legislation to be properly enacted? I could go on, but I am sure noble Lords will have their own list of questions they would like to be probed in a follow-up to legislation being passed. One small example quoted in our discussions is that we always seem to require new bodies which we set up to produce an annual report as a way of holding them to account. What is the cost of those reports? Are they actually produced and, if so, who reads them?
The point is that we are too quick to pile on new layers of legislation without taking stock and learning the lessons from the Bills which have already been passed. I know that some will point the finger at the previous Government as a sinner in this regard, but we were not the only culprits. You have only to look at the forthcoming Bills listed in the Queen’s Speech to realise that nothing much has changed.
Your Lordships' House is ideally placed to carry out a post-legislative function with the aim of improving the quality of legislation in the future. Obviously, this would need to be taken up proportionately; for example, it would not be possible to subject all Acts of Parliament to this process. But a suitable process of scrutiny by a post-legislative committee could provide real learning benefits for both Houses. I hope that it will be given serious consideration.
These are relatively modest but practical examples of the changes that could help to modernise our procedures and, in so doing, make us more relevant and effective. As I said at the outset, we should measure reform against the need to widen the participation of Peers and increase public understanding. I believe that these proposals, as well as those contained in the report of my noble friend Lord Filkin, would achieve this.
From the debate so far, there appears to be a growing consensus for reform. I hope therefore that the outcome of this debate will be more than congratulatory words and that, in summing up, the Minister will be able to set out a precise route map, with timescales, for taking these issues forward.
NHS: White Paper
(14 years, 5 months ago)
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The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Health.
“With permission, Mr Speaker, I would like to make a Statement on the future of the National Health Service. The NHS is one of our great institutions and a symbol of our society’s solidarity and compassion. It is admired around the world for the comprehensive care it provides and for the quality, skill and dedication of its staff. I begin today by paying tribute to the staff of the NHS and the commitment they show to patients.
This Government will always adhere to the core principles of the NHS; a comprehensive service for all, free at the point of use, based on need not ability to pay. This principle of equity will be maintained, but we need the NHS also consistently to provide excellent care. The NHS today faces great challenges: it must respond to the demands of an increasing and ageing population, advances in medical technology and rising expectations; it remains stifled by a culture of top-down bureaucracy, which blocks the creativity and innovation of its staff; and it does not deliver outcomes in line with the best health services internationally—many of our survival rates for disease are worse than those of our neighbours. The NHS must be equipped to meet these challenges—we believe it can do much better for patients—so today I am publishing this White Paper, Equity and Excellence: Liberating the NHS, so that we can put patients right at the heart of decisions made about their care; put clinicians in the driving seat on decisions about services; and focus the NHS on delivering health outcomes that are comparable with, or even better than, those of our international neighbours.
For too long, processes have come before outcomes as NHS staff have had to contend with 100 targets and more than 260,000 separate data returns to the department each year. We will remove unjustified targets and the bureaucracy which sustains them. In their place, we will introduce an outcomes framework to set out what the service should achieve, leaving the professionals to develop how. We should have clear ambitions, and our approach to this will be set out shortly in a consultation document. For example, our aims could be: to achieve one and five-year cancer survival rates above the European average; to minimise avoidable hospital-acquired infections; to increase the proportion of stroke victims who are able to go home and live independently—in short, care that is effective, safe and meets patients’ expectations. The outcomes framework will be supported by clinically established quality standards, and the NHS will be geared across the board towards meeting them. We will do this by rewarding commissioners for delivering care in line with quality standards; strengthening the regulatory regime, so that patients can be assured that services are safe; and reforming the payment system in the NHS, so that it is not just a driver for activity, but also for quality, efficiency and integrated care.
Patients will be at the heart of the new NHS. Our guiding principle will be, “no decision about me, without me”. We will bring NHS resources and NHS decision-making as close to the patient as possible. We will extend personal budgets, giving patients with long-term conditions real choices about their care. We will introduce real, local democratic accountability to healthcare for the first time in almost 40 years by giving local authorities the power to agree local strategies to bring the NHS, public health and social care together. Local authorities will also be given control over local health-improvement budgets. This will give an unprecedented opportunity to link health and social care services for patients.
We will give general practices, working together in local consortia, the responsibility for commissioning NHS services, so that they are able to respond to the wishes and needs of their patients. This principle is vital, bringing together the management of care with the management of resources. With commissioning support, GPs collectively will lead a bottom-up design of services.
In addition, we will introduce more say for patients at every stage of their care, extending the right to choose far beyond a choice of hospital. Patients will have choice over treatment options, where clinically appropriate, and the consultant-led team by whom they are treated. They will have the right to choose their GP practice. And they will have much greater access to information, including the power to control their patient record.
We must ensure that patients’ voices are heard, so we will establish HealthWatch nationally and locally, based on local involvement networks, to champion the needs of patients and the public at every level of the system.
To achieve these improvements in outcomes, we need to liberate the NHS from the old command-and-control regime. So all NHS trusts will become foundation trusts—freed from the constraints of top-down control, with power increasingly placed in the hands of their employees; and we will allow any willing provider to deliver services to NHS patients, provided that they deliver the high-quality standards of care we expect from them.
Our aim is to create the largest social enterprise sector in the world. But it is not a free-for-all. Monitor will become a stronger economic regulator to ensure that the services being provided are efficient and effective, and that every area of the country has the NHS services it needs to provide a comprehensive service to all. The Care Quality Commission will safeguard standards of safety and quality.
An independent and accountable NHS commissioning board will be established to drive quality improvements through national guidance and standards to inform GP-led commissioning. The board will allocate resources according to the needs of local areas, and lead specialised commissioning.
In the coming weeks, detailed consultation documents will enable people to comment on the implementation of this strategy, leading to the publication of a Health Bill later this year.
I recognise that the scale of today’s reforms is challenging, but they are designed to build on the best of what the NHS is already doing. Clinicians are already working to facilitate patient choice—giving patients the information they need to make an effective decision. GP consortia are already established in some areas of the country, and ready to go. Local authorities in some areas are already working closely with local clinicians to co-ordinate health and social care, and improve public health. Payment by Results already gives us a starting framework for building a payment system that really drives performance. Foundation trusts are already using the freedoms that they have to innovate.
We will build on this progress, not dismantle it. With this White Paper, we are shifting power decisively towards patients and clinicians. We will seek out and support clinical leadership. That means simplifying the NHS landscape and taking a further, radical look at the whole range of public bodies. We will reduce the Department of Health’s NHS functions, delivering efficiency savings in administration costs. We will rebalance the NHS, reducing management costs by 45 per cent over the next four years, and abolishing quangos that do not need to exist, in particular if they do not meet the Government’s three tests for public bodies—shifting more than £1 billion from the back office to the front line.
Form will follow function. As we empower the front line, so we must disempower the bureaucracy. After a transitional period, we will phase out the top-down management hierarchy, including both strategic health authorities and primary care trusts. Later in the summer, we will be publishing a report setting out how we see the future of NHS-related quangos. I can say now that this will mean a reduction of at least a third in the number of such bodies. This is part of the wider drive, across government, to increase the accountability of public bodies and reduce their number and cost. The dismantling of this bureaucracy will help the NHS realise up to £20 billion of efficiency savings by 2014—all of which will be reinvested in patient care.
Today’s reforms set out a long-term vision for an NHS which is led by patients and professionals, not by politicians. It sets out a vision for an NHS empowered to deliver health outcomes as good as any in the world. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Baroness Thornton
My Lords, I thank the Minister for repeating the Statement made in the other place. It was certainly a help to me to read the contents of the White Paper in the Daily Telegraph and in other media outlets over the weekend. However, the coalition Government must recognise that it is far from satisfactory that Parliament should be the last place to learn about matters of such importance.
In opposition, the Conservatives promised that there would be no more pointless reorganisations. The Prime Minister gave this promise to the Royal College of Nursing last year. The coalition agreement states:
“We will stop the top-down reorganisations of the NHS that have got in the way of patient care”.
However, now it is in government, the coalition proposes the biggest structural upheaval in the NHS for 60 years —for which GPs are unprepared, which NHS staff do not want and about which patients were never asked. Inevitably, my first question to the Minister is: why have the Government broken their word on this matter? The Minister will be aware that I have never said that there was not more that could be done to make the NHS better, or indeed to give more say to patients and clinicians.
In the past two weeks, there have been two sources of independent comment on the effectiveness of today’s NHS. A couple of weeks ago, the Commonwealth Fund said that the changes Labour had made had given the NHS a fantastic rating on quality, and that it was the most efficient health service in the world. I am sure that we all welcome the report published today on the survival rates for sufferers from bowel, lung and ovarian cancer. It shows huge progress and experts have said that this is due to the waiting guarantees that Labour introduced on access to cancer specialists, so that people have their cancers diagnosed early. Of course, that is another part of the system that Andrew Lansley is now wiping away. My question is: why is this great upheaval necessary when we have a health service that is providing good care to the vast majority of people and when waiting times are as low as they have ever been? Does this policy mean that there will be a grave risk that the NHS will go backwards?
This Statement is full of “coulds” and “might bes”: it is remarkably lacking in doing words. If the coalition Government had found an appalling situation, as we did in 1997, they might have had some justification for radical solutions; but this is not the case. The White Paper and the Statement talk throughout of building on the work done by the previous Administration, which is all well and good, and which I welcome, but I am very sorry that, in our view, it has led them to the wrong conclusion.
Today, the NHS is not on its knees. We saved it by investment and commitment to its values. A period of stability is needed so that energy can be focused on the financial challenges ahead and to do that it needs a confident and motivated staff to continue the development of the many services that we initiated; for example, specialist trauma services; the reconfiguration that has been necessary to deliver stroke services; the co-ordination of partnerships to make the best use of expertise for diabetic care at local level; and the investment in and the building of special expertise for kidney dialysis so that more people can look after themselves at home.
What will happen to all those services which require regional and local strategies and—a matter close to the heart of many in this House—how will the many hundreds of GP practices in London cope with the way in which TB manifests itself and spreads in London? A pan-London strategy is needed. How will a bottom-up service cope? It would be unsurprising if people conclude that this White Paper and the proposals that it contains are ideologically driven. That is why there is a betrayal of the promises that were given by the coalition. With that betrayal one also has to take a second glance at the patient voice mantra that we hear from the Secretary of State. We have to question whether that is a convenient cover for a concerted attempt to change completely the way in which healthcare is delivered in this country and is part and parcel of the determination of the Conservative Party to shrink the state. It is best to be honest about such matters and I ask the other partner in the coalition to say whether that is its view too.
Many will believe that this is tantamount to the privatisation of the commissioning function of the NHS. Will there be any restrictions on the use of the private sector to support GPs? Added to that, the Government are bringing in a series of market reforms for hospitals. The Secretary of State has previously admitted that his plans would allow hospitals to go bust. Can he confirm that if a foundation trust got into financial difficulty he would step in to protect it, or would he allow it to fail? Even more important, if all the NHS delivery is done through foundation trusts, what will that mean for patients?
Frankly, I do not believe it is good enough to conduct a huge experiment on an organisation that is delivering for its patients an improving service. The staff of the NHS do not need years of uncertainty about the future of their organisation and their jobs. The NHS needs confident, motivated staff, but today the noble Earl has opened up uncertainty for the 1.3 million people who work for it.
Let us turn to accountability for £80 billion of public expenditure. I ask the noble Earl to confirm that the Treasury also had something to say about accountability in this respect. GP practices are mostly small enterprises; they are small businesses. If, for example, another network of small businesses, such as the Federation of Newsagents, was about to be handed £80 billion of public money from the Treasury and told to spend it how it liked, I suggest there might be some small concern. We support a strong role for GPs but we have to question the wisdom of wiping away oversight and the handing over of £80 billion of public money to GPs, whether they are ready or not.
We are not alone in our concerns about this. Michael Dixon, chair of the NHS Alliance, says that only about 5 per cent of GPs are ready to take over commissioning responsibility. So what will happen to the other 95 per cent? Sir David Nicholson has judged that even the best GP practice-based commissioners are only about a three out of 10 in terms of the quality of their commissioning and that is not good enough to give them £80 billion of public money to spend. So what sound evidence does the noble Earl have that 100 per cent of GPs are ready, willing and able to commission services for the entire population?
The Statement talked of rewarding commissioners who hit outcomes. Does that mean yet more money for GPs and, if so, how much?
How many jobs do the Government expect to be lost, and how much money have they put aside for redundancy costs? What guarantees can the Minister give the House that people will not simply be paid off by the NHS to be re-employed, doing the same job, by someone else? Crucially, where is the public accountability and the accountability to Parliament? The Patients’ Association has said that nothing can replace the accountability of the ballot box. I absolutely agree, and I invite the noble Earl to join me in that support.
How will GPs be held to account for the £80 billion of public money for which they will be responsible? Chris Ham of the King’s Fund has questioned whether the independent NHS board, the world's biggest quango, will be able to hold more than 500 GP consortia to account in an effective fashion. What does it mean for the accountability to Parliament if the Government go ahead and set up the NHS board? An annual report is not sufficient. Those of us who work with a lot of voluntary organisations in the health sector know that they will not think that that is sufficient. MPs at the other end of the building will really think that that is not sufficient when they want to raise questions asked by their constituents.
The Earl of Onslow
My Lords, the noble Baroness has spoken for nine minutes. I thought, and it has been my experience in 30 or 40-odd years in this House, that you are supposed to ask questions concisely, not to make a 10-minute speech—because I see that she has some more pages to read.
Baroness Thornton
We are the Opposition, and the only Opposition here. I have asked five or six questions so far and I have more.
That leads us to look at the bureaucracy involved in the proposals. The White Paper has managed to unite progressive views in opposition to it with the unlikely figure of Melanie Phillips of the Daily Mail. She wrote:
“Oh dear. The last thing that's needed right now is yet another massive reorganisation, which may well incur even greater costs … it could mean yet more paperwork - and that GPs would be likely to demand more money for the additional responsibilities”.
Well, quite.
In my experience, PCTs are staffed with decent, hard-working public servants who care greatly about the NHS and its patients. How does the Minister think that they felt when they read the quote from a senior Department of Health source—I apologise to the House for the language—who anonymously briefed the Health Service Journal this week, and said:
“PCTs are screwed. If you’ve got shares in PCTs I think you should sell”.
Is that any way to treat staff who have served the NHS loyally? What does the Minister think about bureaucracy. The Government may find that what they think of as bureaucracy is the system for accounting for the expenditure of public money. Can the Minister tell me precisely how the replacement of 130 PCTs by more than 500 GP practices and consortia will reduce bureaucracy and paperwork?
The White Paper represents a roll of the dice that puts the NHS at risk in a giant political experiment with no consultation, no piloting and no evidence. The sadness is that the Government are taking an £80 billion gamble with the great success story that our NHS is today. Of course we welcome positive change and benefits for patients. We saved this NHS. At a stroke, this Government are removing public accountability, demoralising NHS staff at a time when we need them. For patients, it opens the door to a new era of postcode prescribing which will vary from street to street. We know that the streets and the patients who will suffer most are those whom we on this side of the House are determined to defend. We will be challenging the proposals along those lines.
Earl Howe
My Lords, I am sure that the House will be grateful for the noble Baroness’s questions, although I have to express considerable disappointment that she finds so little to commend in the White Paper, which to me is a very exciting document, and one which builds in many important respects on the structures which her Government put in place. Lest it be thought otherwise, I am the first to knowledge the improvements in the health service which the previous Administration effected. They did so with the benefit of a great deal of extra public funding and no doubt we should be grateful for that. The problem that we perceive is that despite the progress that was undoubtedly made during the 13 years of the Labour Government, one thing did not keep up with funding: the outcomes that we saw emerging from that increased investment. The fact is that we are not matching the performance of our counterparts in Europe in a number of respects: in cancer survival rates and an array of other conditions. That has to change. We have asked ourselves how we can best deliver those outcomes and the quality of care that the noble Lord, Lord Darzi, envisioned in his strategy when he became a Minister. We want to build on the work of the noble Lord, Lord Darzi, and we believe that this programme of action will do that.
Our plans for GP consortia are very much based on practice-based commissioning arrangements and clusters. Our plans for economic regulation build on the work of Monitor. Currently, many of the functions of the NHS commissioning board already exist within the Department of Health. We are carving them out and slimming them down by stripping out avoidable layers of management. We have always been clear that we want to have GP commissioning, and our plans are the logical extension of that.
I must comment on the noble Baroness’s first remarks about the leaks to the press. I very much regret them. We do not know where they came from and are making the kind of investigations that she would expect. Our policy and our aim are always to make announcements of this kind to Parliament in the first instance. I am sorry that that has not happened in some cases. The press coverage has not been accurate in all respects.
I hope that when the noble Baroness digests this White Paper, she will come to view it rather more favourably than she has indicated. She suggested that our proposals are ideologically driven. There are only two pieces of ideology here: the desire to continue the quality agenda that the noble Lord, Lord Darzi, started and a desire to bring health and social care much closer together. The proposals for the role of local authorities will achieve that and, at the same time, they will introduce a greater degree of democratic accountability. Accountability will operate on several levels, and the noble Baroness asked me about it. There will be accountability to Parliament through the Secretary of State via the NHS commissioning board, which will hold GP consortia to account for the money they receive. At a local level, there will be accountability through HealthWatch and local authorities. That dimension of local authorities’ remit to enable them to have a say in the planning and configuration of services at a local level is a very important development because it will enable public health, social care and the NHS to be looked at in the round.
The noble Baroness asked whether we envisage any limit on the use of the private sector by GP consortia. The principle that we will adopt is that GP consortia should take on as much responsibility as they wish. The national commissioning board will support them in developing the necessary expertise but, if they want to, we are proposing that they should be able to seek support from elsewhere, including the private sector, within their budgets. In no sense are we proposing a privatisation of the NHS. In particular, lest anyone should think otherwise, our proposals for foundation trusts do not do this. I refer noble Lords to paragraph 4.21 of the White Paper, which makes this unequivocally clear.
There are certainly risks in managing the transition. Indeed, managing risk is not a new problem in the health service—it has happened since time immemorial—but the NHS chief executive and Ministers are extremely mindful of the need to control and manage risks, particularly during the transition. David Nicholson has set out the framework for implementation, with clear plans to minimise risk such as shadow-running bodies for a period of time.
It will take time for these changes to become fully embedded. That is a good thing. We recognise that not all GPs will be able to go at the pace of the fastest, and those who are not in the vanguard will be supported appropriately, but we are clear that GP commissioning is the way forward. It will align decision-making for clinical care with decision-making for financial flows. These are segregated at the moment. If you bring them together, commissioning is much more likely to be cost-effective and in the better interests of patients. While I recognise that the noble Baroness has anxieties, I hope that my colleagues and I can reassure her over the weeks and months ahead that this is a programme to be excited about, rather than the reverse.
Lord Walton of Detchant
My Lords, does the Minister recall and accept that I have said on a number of occasions in the past few years that what the NHS needs least is another major reorganisation? We have been beset by too many reorganisations over the years, but, having made that point, I should say that there are many valuable things in this White Paper on which we shall all wish to reflect over the coming months before the legislation is laid before the House. The development of outcomes, measurement and framework is very important.
There is also a case to be made for making all trusts foundation trusts, but only if Monitor and the Care Quality Commission have the strength and improved ability to monitor behaviour so that we avoid the kind of disasters that have occurred in one or two foundation trusts in the past few months.
I have said on a number of occasions that the NHS is beset by the activities of an intolerable quangocracy. There are far too many quangos, which have the right to examine and assess the performance of health service bodies, and a reduction in the number of these will be very valuable. However, we wish to know which quangos the Government have in mind. Valuable, too, will be the reduction in bureaucracy.
Many of those who are so proud of the NHS have major concerns about the GP-commissioning element of the White Paper. No doubt the Minister will remember GP fund-holding under the previous Conservative Government, which was not a great success and had to be withdrawn in the end because it failed to fulfil the objectives. I know, and the Minister will agree, that a number of general practitioners are very enthusiastic about this idea, but many are deeply concerned and anxious about the new responsibilities that will be imposed on them. What administrative support will the GP consortia be given to enable them to fulfil this very arduous responsibility? Is it really right that every form of regional strategic planning should be abolished? What is to prevent overambitious foundation trusts embarking on programmes to bring in highly expensive—
Lord Campbell-Savours
My Lords, with all respect, could someone remind the House that we are discussing a Statement?
Lord Walton of Detchant
Will the Minister say whether he believes that abolishing all regional planning is absolutely right? I believe that it could be dangerous.
Earl Howe
My Lords, I am grateful to the noble Lord for his questions. He will know that our plans do not constitute reorganisation for its own sake. The only purpose of the reorganisations that we are proposing is to embed higher-quality practice and better outcomes for patients, and for no other reason.
The noble Lord asked several questions about GP commissioning. As he will know, the previous Administration introduced practice-based commissioning more than five years ago. Some consortia are doing an excellent job, but many GPs have been frustrated by not having clear responsibility and control. They find very often that PCTs get in their way rather than help them. I think that it will be music to their ears that they will be able to create structures and management systems for themselves that will help them rather than get in their way. We are going to enable them to learn from the past. We are engaged in talks with the profession about how we implement the change, which will, I emphasise, be bottom up.
The noble Lord also referred to GP fund-holding, which as the House will know was a policy introduced by the Conservative Government. There were good points and bad points about fund-holding. The good points were that it empowered GPs and, in many cases, delivered good quality care. But the criticisms revolved around high transaction costs, bureaucracy and, in many ways, inequalities that resulted. We want to avoid those pitfalls. The support that GPs will get will not be prescribed from the centre. A range of support is already available for commissioning, including PCT teams, local authorities and independent commissioning support organisations. There will be no shortage of help out there.
Baroness Northover
My Lords, perhaps I may remind the House, as invited, that this is a brief Statement. We have 20 minutes all together and we are already five minutes in. Many people want to intervene on this extremely important Statement, so if people can be brief we will be able to cover as much as possible.
Baroness Morgan of Drefelin
My Lords, the Minister talked about an NHS that was stifled by top-down bureaucracy. Given the impressive outcomes that we have seen with improvements in cancer treatment, I do not think that many people would recognise that story. Does the Minister accept that medicine is a fast-changing field where innovation needs to be translated into practice on the front line as quickly as possible? Does he further accept that there needs to be leadership in a complex system like this if patients are to have access to the improvements in innovation and care? How does he see that leadership working?
How will patients be represented throughout the system? For example, how will they be represented at the NHS board? How will GPs ensure that they can access fairly and without bias the views of all their patients, not just those they see regularly? How will GPs translate those patient perspectives into commissioning in line with this new strategy that the local authorities will be responsible for developing? I want to hear the Minister answer that important question in some detail.
Earl Howe
My Lords, the noble Baroness makes an important point about innovation. We are clear, as is the White Paper, that driving innovation through the system will remain an extremely important part of what we mean by quality. The QIPP agenda is alive and kicking. For those noble Lords who are not familiar with the acronym, QIPP stands for quality, innovation, productivity and prevention. The innovation part of that will be driven in several ways, not least by the NHS commissioning board, which will have access to sources of advice from NICE, the NHS quality board and many other sources. But we also plan to put in place incentives in the tariff, which will drive innovation and high-quality care. Our proposals for those will be forthcoming.
The noble Baroness asked about patient representation. She was absolutely right about clinical leadership, but she was also correct to say that we need to ensure that the patient’s voice is heard at every level of the health service. At the local authority level, there is no doubt that Health Watch will have a presence as the voice of local patients. We are also creating a national Health Watch, which will act as the national voice for patients, feeding directly into the Care Quality Commission so that assessments of quality can be informed by patient experience on the ground. We are not planning in any way to dilute the duty under Section 242 of the 2006 Act to involve patients in the configuration of services. It is important that local people feel that they have a say in the way that services are developed. Our proposals for this will be laid out in an engagement document that is to be published in a short while.
Baroness Barker
My Lords, I welcome the Statement repeated by the noble Earl, and in particular the fact that it builds on many of the best innovations developed by the previous Government such as the commitment by the noble Lord, Lord Darzi, to clinical excellence as the lead factor in the development of services. What I also welcome is that, unlike under the previous Government, the default position is that power will be vested in local communities rather than with the Secretary of State, particularly the commitment to ring-fenced funding for public health and, even more so, having a public health strategy that includes mental health.
I have two questions for the Minister. The first concerns the choice of provider. A large section of the paper emphasises the right of patients to choose a provider. Is it not the case that, in order for there to be a choice of provider, there has to be overcapacity in the system? Can the noble Earl tell us what estimate the department has made of that, given that the White Paper also talks about the challenging financial position in which these plans will go forward? The second question concerns a statement in the papers that the Government intend to create the biggest social enterprise sector, which no doubt will be welcomed by the noble Baroness, Lady Thornton, as doing such a thing was also a policy of her Government. Can the noble Earl explain whether that means that many, if not most, of the existing providers of health services will cease to be providers of those services in the future?
Earl Howe
My Lords, I am grateful to the noble Baroness for her positive comments. On public health, she will see in the White Paper that we will be publishing a further White Paper later in the year specifically about public health. Quite deliberately, there is only limited information on that subject in this White Paper. As regards choice of provider, she will see in the White Paper that our policy is clear: it is a policy of “any willing provider”. That means that any provider who is able to provide services to the NHS at the right level of quality and at or below the tariff will be allowed to do so. However, as I said in the Statement, this will not be a free-for-all because providers, if they provide services to the NHS, will be subject to the scrutiny of Monitor, and there will be a joint licensing system between Monitor and the CQC in respect of financial systems and quality, so that those providers who offer their services to the NHS will be regulated on a level playing field. I shall take away the concern she raised at the end of her question, and if I have not covered it adequately in my answer, I will write to her.
Lord Snape
Does the Minister accept that this is not a reorganisation of the National Health Service being proposed by the Government, but a balkanisation of that service? Did he not notice the lack of enthusiasm for these proposals of those on the Benches behind him, particularly his junior partners in this alliance? Where is the sense in taking away powers from primary care trusts and strategic health authorities and giving them to individual GPs—ironically, to those in the one group who are not employees of the National Health Service? How will it be possible to continue with a unified National Health Service throughout the United Kingdom if hundreds, if not thousands, of GP practices all promote their own ideas in their own specific areas? These proposals will kill the National Health Service, as the Government well know. Why their allies are supporting them, only they will know.
Earl Howe
My Lords, I am not sure what the noble Lord’s question was but I profoundly disagree with his analysis of the proposals before the House. Far from killing off the National Health Service they will give it added life. What is the National Health Service about? It is there to serve patients. If we take as our guiding principle that patients matter more than anyone else—more than the system and more than PCTs—and that we want to take care of patients in the best possible way, we need to enable doctors and patients, working together, to take ownership of the patients’ state of health and to take decisions together. If you arrive at that conclusion, the structures that we are proposing are the logical outcome. The noble Lord’s concerns are for the system, which has often got in the way of patient care. The whole point of these proposals is to remove those obstacles. I hope he will have cause to change his mind as he reads the White Paper.
Lord Newton of Braintree
My Lords, I preface my three questions by declaring that I am the chair of an NHS trust. First, does the Minister think there is scope for organisational reconfiguration, to use an awful phrase, to contribute to the achievement of the Government’s objective of higher quality in a cost-effective way? Secondly, if he does, does he think—as I do—that such experience as there is suggests that the road to such reconfiguration is strewn with bureaucratic obstacles, delays and unnecessary costs? Thirdly, if he agrees with that, will he do something about it?
Earl Howe
My Lords, I agree with my noble friend. There is no doubt scope for reconfiguration but we are not going to prescribe it from Whitehall. The structures that we propose in the White Paper will facilitate reconfiguration in a much more coherent and structured way on a local level because, with the buy-in of patients, local authorities will have a major say in the way in which services are configured, as will GPs, acting in consortia, jointly. The key issue is whether reconfiguration makes sense from a clinical perspective. Politicians are not in the best position to decide that. Having said that, there will be occasions when people will be unable to agree at a local level and we have plans to cater for that situation: ultimately, the Secretary of State will stand as arbiter in such difficult cases. However, in the majority of cases, we see decisions as properly lying at a local level.
Baroness Finlay of Llandaff
I have two brief questions. First, in the Statement the Minister referred to outcomes. Given that secondary care sometimes has patients—sadly too often—referred late because of delayed diagnosis in primary care, how is the clinical care of the general practitioner going to be held to account in this system? My second question relates to the Minister’s mention of “any willing provider”. What security will there be to ensure that a provider cannot introduce a loss-leader service with clearly defined boundaries in order to gain a market share, and to prevent complex and difficult cases not covered by that provider being dumped on the NHS? This has been the experience with some private practices where patients are in private hospitals but, when things become too complicated, they are shipped down the road to the local NHS intensive care unit.
Earl Howe
My Lords, the noble Baroness identifies two particularly important issues. How will GPs be held to account for the clinical care that they provide? The data emanating from their performance will be transparent and published. The consortia will monitor the performance of each practice. They will identify outliers, whether good or bad, and act accordingly. We do not have those information systems sufficiently in place—I hope that, over the next 18 months or so, there will be time to develop the systems needed for consortia to do this—but it is vital that GPs are held to account for their performance and they will be incentivised in their remuneration to provide high quality.
The noble Baroness made an important point about loss leaders among providers. The NHS commissioning board will license a provider only if it is satisfied that the quality of care delivered by that body is of an adequate standard. I think that the board will look with great care at the practice of introducing loss-leader services and rule out, if there is any doubt at all, quality being compromised in the process.
Lord Warner
My Lords, I warmly welcome some of those ideas in the White Paper that build on the previous Government’s reforms such as choice and competition. However, is the Minister aware—as am I from my own experience as a Minister—that many in the NHS do not wish to be liberated? What will be his approach to those areas where GPs’ consortia do not live up to the standards required of the commissioning board? What will he do to ensure that we do not lose the benefits of regional specialised commissioning, which it has taken many years to bring to the level of quality that exists today?
Earl Howe
My Lords, I shall be brief because time is against us. I agree with the noble Lord that we must not lose the gains that we have made in specialised commissioning following the Carter reforms. He will see that the national commissioning board will retain responsibility not only for national specialised commissioning but for regional specialised commissioning. That will safeguard the quality of those services.
The noble Lord referred to GPs who do not wish to commission or who are in some way found wanting in their performance. Our experience to date—a number of consortia have been formed around the country, all of which are working encouragingly well—suggests that those GPs within the consortium who are in the lead and are the most go-ahead are best placed to bring up to standard their colleagues who are perhaps struggling. We have witnessed that in a number of instances. Those GPs who are incapable of being brought up to an adequate standard may be subject to a question over their future. In certain consortia, we have seen GPs retiring from NHS service.
Baroness Northover
I am sure that we will return to this subject, but I am afraid that we are past time.
Lord Campbell-Savours
My Lords, does not what has happened today indicate what the problem is over Statements? Are the Government now going to sort it out?
House of Lords: Working Practices
(14 years, 5 months ago)
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Lord Maclennan of Rogart
My Lords, perhaps I may cross the bounds between the Statement and what we are about to debate by drawing attention to the recommendation of the Back-Bench Peers’ informal group, chaired by the noble Lord, Lord Butler of Brockwell, that time for Statements might best be found in the Moses Room or in Grand Committee. However, this has been an extraordinarily important Statement and I know that the whole House will have listened to it with great interest.
I begin by thanking the noble Lord the Leader of the House for announcing at the beginning of the debate that a Leader’s Group would be established to consider its substance and, I assume, many of the reports which have preceded it, including those of the three informal groups established by Back-Benchers, which have produced a range of extremely important and detailed recommendations—and which there is certainly not time to cover in a debate of this kind. I also thank the Lord Speaker for the important address that she gave to the Hansard Society last December on strengthening Parliament. She put forward a number of propositions, the relevance of which is clear and which ought to be among the first matters to be considered by the Leader’s new committee.
In particular, however—here I hark back again to the Statement—we ought to know whether it is procedures, processes or outcomes that we are most concerned about in considering these issues. In the Statement that they have just made, the Government have taken the view that outcomes are more important in the National Health Service context than processes. I beg to suggest that it is important that in considering the reform of our processes we are clear what we are trying to achieve. There is a degree of ambiguity about this. It was made somewhat clear by the noble Baroness, Lady Royall, in her remarks that we must be complementary to the workings of another place. Sometimes, that may seem like taking crumbs from the rich man’s table; sometimes, it may seem as though what is required is for us to pick up the ball when it has been dropped in another place.
I suggest that this ad hoc approach is really not appropriate for a modern Parliament and that there ought to be a much clearer delineation of the roles of the two Houses. Of course, we touched upon that in our recent debate on the reform of composition and powers and I do not wish to go over that ground again, but we have to know what is in mind before we can judge the suitability of the changes of process. It seems to me that that needs to be made explicit by the Leader’s Group both before it starts operating, so that the evidence it takes is geared to answering that question, and in its final report on how it sees these process changes actually assisting the goals which it has set out.
In her speech, the Lord Speaker made the point—it was a very valid point—that when one House changes its way of working it has an effect in the other. She particularly spoke of the timetabling of legislation in the Commons leading to the Lords taking on its line-by-line scrutiny role. We are told, and reference has been made to it in this debate, that another place is considering the recommendations of the Wright committee. While that is good, it affects what we do here. It therefore seems to me that we cannot at this point in time consider more than a number of discrete proposals that might have immediate relevance. We should certainly not attempt to rewrite the Companion or any of the guidance in a wholesale manner. That would be untimely, not least of course because of the wider debate on powers and composition but also because we do not yet know how another place will tackle its role and what should be the complementary role, at the very least, that this House plays.
I ask my noble friend how the Government see the interaction with the other place during these discussions. We should not simply tweak our timing here and there, whether we sit during the Summer Recess in September or take on certain ways of handling prelegislative scrutiny, which we can do only in an interim fashion until we know what prelegislative scrutiny arrangements may be favoured in another place. What we should be determining today is how we interrelate in these discussions with another place. I would have hoped that we might have some kind of Joint Committee with another place to consider how best to distribute the work between the two Chambers. Yes, second-guessing is sometimes of value, but separation of functions and priority to one House for one set of issues is to be preferred to always second-guessing. As we have discussed, money Bills are primarily for another place, but in this place there are some areas of policy that our procedures should allow us to take particular account of and be apt in delivering the outcomes. I hope that we will look at that. We have heard from the Leader of the House that the mandate or remit of his committee will be very wide. It would help us a little in feeding into that work to know exactly the areas or topics that it would consider appropriate for evidence purposes.
One subject that I would suggest the committee considers, because it has not been considered anywhere else in this House, as far as I am aware, although I cannot possibly cover all the recommendations made by these three significant sub-committees or Back-Bench informal groups, is a post-legislative review. That is crying out for attention. We have had a lot of talk about overlegislation; it in a sense pre-empts the consideration of legislation that has ceased to be of value. We should also consider the flagging up of legislation mentioned on both Front Benches that has not been properly considered in another place. That is of very great importance because we cannot allow Bills not to be properly considered. There may be difficulties in determining procedurally what is appropriate to flag up, but that is a very significant task, and it is a new constitutional development because the practice of timetabling has become so much more common.
The noble Baroness, in opening the debate from the opposition Benches, raised a number of issues on which I support her. She was right to draw attention to the number of occasions on which this House has carried amendments to legislation that have gone unchallenged subsequently. The quality of the input into that scrutiny depends upon the expertise and knowledge of those who are participating in the debates. As we move towards a differently structured House, it may be necessary to make different procedural arrangements to ensure that evidence is taken on a more standard basis in pre-legislative scrutiny and during the passage of legislation if this House is going to do more than replicate the political arguments that may have been heard already at the other end of the Corridor. These are wide matters but what I am most interested in hearing in the conclusion of this debate is how the Government propose to open this discussion up to evidence and ensure that its wide remit is fulfilled, answering all the many questions and suggestions that have been made.
Lord Kakkar
My Lords, I thank the noble Lord the Leader of the House for having provided this opportunity for discussion on the case for reviewing the working practices and processes of your Lordships’ House. I think that all who greatly value the bicameral parliamentary system that we enjoy welcome this opportunity for discussion.
There is no doubt that your Lordships’ House works well and I strongly believe, from my short experience here, that it has delivered well for the people of our country. It is important, however, that we review our practices and ensure that we are able to provide most effectively the functions that the people of our country expect of us. In this regard, all three areas that were covered by the cross-party groups that reported in March this year are important, but I shall confine my comments principally to the scrutiny of legislation.
I was compelled by the suggestion that there should be a committee that looked at legislative standards. This is important. It would be a sad situation to have a parliamentary system that did not expect of the Executive careful thought regarding what legislation was being brought to Parliament and what each part of that legislation was expected to achieve. It is also important that we look at how scrutiny of legislation is undertaken between the other place and your Lordships’ House. It is clear from the debate that we have heard so far that changes to working practices in the other place are under review, and it is important that those changes are well understood when we look at how we might change our working practices and processes in your Lordships’ House. Will the Minister be able to make some reference to how questions of changes in practices in the other place and in your Lordships’ House might be considered together so that at the end of this process, which may take some time, we have the most effective strategy for the use of Parliament across both Houses?
The flagging of clauses that have not been properly scrutinised in another place is important, and I wonder if that could be addressed more quickly. With a new Government, a lot of legislation will be coming to this House, and for your Lordships to be more effective we need to be able to identify where we should put our efforts to ensure that the people of this country ultimately enjoy the very best laws after a period of careful scrutiny.
The next issue is post-legislative review. This has not always been at the forefront of the minds of either your Lordships or Members of another place, but it is terribly important. The people of our country must be confident that as laws are passed and they start to be implemented, there is a body in this Parliament that determines whether the laws indeed achieve the purpose that was originally set out and that all the time, effort and expense have been for a good and rightful purpose. A way of identifying that early on would also be a useful approach to improving legislation as it passes between the two Houses and eventually becomes law.
The debate about reviewing the working practices of your Lordships’ House is important, but it is part of a continuum. In the short time during which I have been a Member of your Lordships’ House, we have seen the adoption of a new Code of Conduct and the appointment of a Commissioner for Standards, and we are in the process of reviewing the finance and allowance arrangements for Members of the House. Taken with the vast range of proposals that will now be dissected and eventually agreed on by the Leader’s Group, these changes should show that your Lordships’ House is committed to reform, but reform to ensure that this House remains and is improved as a Chamber for scrutiny and revision of legislation, working with the Government of the day to ensure that the people of this country enjoy the very best laws.
This debate is somewhat different from the one that we had some weeks ago on the question of membership of your Lordships’ House, so the final point on which I seek some clarification is how the two processes will run together. The process of looking at working practices will be taken forward by the Leader’s Group, but it will be considering issues at the same time as your Lordships’ House receives the draft Bill on creating a predominantly or fully elected second Chamber. How will we ensure that these two important pieces of work have appropriate time for consideration in your Lordships’ House and that they do not cancel each other out or result in a situation that looks somewhat inappropriate and implausible to those who are looking from the outside at what we are trying to achieve?
Lord Cope of Berkeley
My Lords, I have shared responsibility for the arrangement of business as a Whip in both Houses over more decades than I like to think about, both in government and in opposition. As the noble Lord, Lord Kakkar, said, this debate is part of a continuum. The procedures and practices of your Lordships’ House have been under almost continuous scrutiny and change for the past decade and more. That is well set out in the Library note issued before this debate, as the noble Baroness the Leader of the Opposition pointed out.
I welcome the setting up of the committee by the leaders to consider these matters, but I agree with the noble Lords, Lord Maclennan and Lord Kakkar, that there is a problem with how this fits together with the proposals for changes to the constitution of your Lordships’ House. The proposals that are before us—from the four reports and so on—are all for changes to the present House. A fully elected House would both need and want different procedures to reflect the fact that the elected Members would each have to take an interest in a far wider range of questions—those issues that concern their constituents—than your Lordships currently do. We each have our interests and, for the most part, we do not interfere with others.
The time pressures on an elected House are much greater, as those of us who have been involved in the management of or been Members of the House of Commons know well. That is why the other place has, over the years, adopted guillotines, the selection of amendments, the grouping of amendments and all the other things for speeding up the business and trying to fit more into the time available.
In considering procedure, we should recognise clearly that the provisions that are appropriate to a House such as your Lordships’ House, which contains a large number of Peers who are high in expertise on specific matters, are very different from those that are appropriate to a House in which everyone has to take at least some interest in practically everything. Of course, if this House were to become a hybrid House—partly elected and partly appointed—it would need hybrid procedures, as it were; it would need some parts from both. Even that would mean a significant change to the procedures and practices of the House. It is important to remember these differences, particularly when considering the adoption of some of the Commons practices.
I was surprised to read in the report from the committee of the noble Baroness, Lady Murphy, that the usual channels are considered opaque. The usual channels are defined in the Companion with some care. I was a member of them as opposition Chief Whip from 2001 to 2007. The results of their daily and more or less continuous negotiations are announced to the House in the form of agreed business, together with frequent Statements to the House by the government Chief Whip about particular modifications and what is happening. Speaking with personal experience only of my party, and with only hearsay from the other parties and the Cross Benches, no one is more accountable to the members of their party than a Chief Whip in the Lords.
Every week the Chief Whip reports to the party group—the Association of Conservative Peers in our case—the results of the usual channels’ discussions on the business of the House, is openly questioned and pressed on various matters, and has to do his or her best to respond to what is said and wished for. Every week the Chief Whip also has a private meeting with the officers of the Association of Conservative Peers. What is more, every day the Chief Whip is about the House, open to informal questioning or lobbying. I can assure noble Lords that Members approach the Chief Whip every five minutes, it sometimes seems, about one matter or another. They do not always say the same thing; they press alternative views and different points, which is the central difficulty. It is impossible to please everybody all the time. All you can do is try to please as many people as possible within your group for as much of the time as you can.
The report of the noble Baroness, Lady Murphy, acknowledged, as has been said, that some process of this kind is necessary to lubricate the business of the House. That is right. The Chief Whip, the Leader of the House and the leaders of the various other parties are under pressure from other directions—from the Government themselves, the other place and their colleagues. These are pressures to which the Chief Whip and so on are subject, in a sense, on behalf of the House. There are many other people who are interested in and affected by the progress of legislation, as well as the membership of your Lordships’ House.
It is suggested that it would improve the transparency of the usual channels if the Leader of the House were to have a weekly question time. I think that is an error. Such a procedure would not have the intended consequence. The Leader would quickly be asked questions designed to score political points, not to elucidate information about the scheduling of business. Those who have listened to Leader’s Questions in another place know exactly what I mean. Every week the Chief Whips and the Convenor are formally questioned in the group meetings. That is the better way to proceed. By the way, this is a highly detailed point but the usual channels are nothing to do with the refreshment department’s hours, as is suggested in the report, except to suggest to the refreshment department when the House is likely to be at its fullest. That is obviously right.
As I say, one cannot please all the people all the time. That applies in spades to appointments to committees. All appointments to official committees of your Lordships’ House are put to the vote on the Floor of the House. It is very rare that any amendments are made when the recommendations come forward. That is because of the very wide consultation which takes place between the parties about balance and the individuals who might serve. The difficulty is that Peers are reluctant to serve on some committees and have to be persuaded to do so. On the other hand, other committees are extremely popular and the difficulty is to select the right people to serve on them. There are a lot of other proposals in the various reports—far too many for me to respond seriatim. I record my support for the remarks of my noble and learned friend Lord Howe of Aberavon and for his proposals on tax simplification. However, as I sat on his working party, I suppose that I could be expected to support those.
To my mind the most important recommendations are those concerning pre- and post-legislative scrutiny. There are some valuable proposals there. I should also like to see renewed consideration of how Bills are drafted. A very important report by our late lamented colleague Lord Renton was published a few decades ago. The recommendations of that excellent report have never been properly implemented by any Government between then and now. Like others, I am strongly in favour of a self-governing House but wish to make it clear that that obviously calls for self-discipline and self-restraint. However, that is not the whole thing—self-governing means that the House is governed by everybody in it and that we are all responsible for the rules being followed not only by ourselves but by other people as well. Peers can, and should, draw attention to possible breaches which they think may have occurred, either openly in the Chamber or in the committee—that is sometimes done—but also privately outside if somebody has said something which is not within our normal rules. Each of us is responsible for all of us in a sense. I remember very well—as I am sure some of your Lordships do—the occasion when the late lamented Lord Russell thought that a Minister had been rude to him and invoked the Standing Order on asperity of speech. We all voted on whether the Clerk should read that Standing Order. The vote was carried and he did. Lord Russell was a notable expert on your Lordships' customs, but that is not something which should be allowed to fade entirely into oblivion. Let us adapt our customs but do so in a thoughtful manner, conscious of the unintended consequences.
Lord Filkin
My Lords, the Leader of the House with his customary suaveness has shot the fox that a number of us were pursuing, in that we expected that we would have to spend some time arguing the case for a Leader’s Group with wide terms of reference. He has taken the wind out of our sails and I am delighted that he has done so. This must, of course, mean that our debate will finish that much sooner this evening, which will be a comfort to us all.
I will confine my remarks to two points: first, the working group on the scrutiny of primary legislation, which has been referred to previously; and, secondly, some points on governance. First, the cross-party group, of which I was pleased to act as convener or chair, set out a number of recommendations. I shall speak to the most important of those, which has been touched on briefly by the noble Lord, Lord Kakkar. It is essentially the argument that, before legislation enters this House, the Government should commit to ensuring that it is properly prepared and ready for this House. This, of course, causes no fear to the Leader of the House as his party, like mine, was never guilty of a sin in that direction, as I am sure he will concur. However, to be more serious, all parties sin in this respect at times. I think the paper is suggesting that, before legislation is introduced, the Government should have set out: the policy argument and evidence as to why they are legislating; the underlying policy objective that the legislation is part of a process of achieving; what they seek to achieve—in more specific terms, what success might look like and by when—and the processes by which they will achieve those objectives, of which legislation is of course only a small part in many cases.
The purpose of all that is not to be tedious and to employ civil servants, but to try to ensure that when this House is scrutinising legislation it does not just dive for the detail of clauses—which it must do, of course—but looks at the larger picture and actually holds the Government to account as to whether their policy objectives are clear and whether or not they are likely to achieve them. We spend little time in our legislative scrutiny processes on such an agenda, but we spend a lot of time repeating—as has been mentioned —the detailed, clause-by-clause element. We would be better served if the process I described were to be carried out. It is not that difficult. It would do for primary legislation essentially what the Merits Committee already does for secondary legislation. There should be a set of standards set by the Cabinet Office which the Government of the day say they would seek to fulfil, and the House should have a process looking at whether those standards are met, and make a report at Second Reading.
The Minister of State, Ministry of Justice (Lord McNally)
Is the noble Lord suggesting that that is a job for the existing Merits Committee or for a separate committee?
Lord Filkin
There could be a separate committee; the Merits Committee is quite busy enough already and its focus is different.
The process that I am talking about would logically apply only to legislation that started in the Lords, because it would be slightly strange for this House to say, “We have looked at this Bill. It does not seem to us to be ready for legislation”, when another place had spent a lot of time on it. That may be slightly self-denying, but it is almost common sense. We could hardly argue for reversing a process that was already under way. Therefore, the process would not apply to a lot of legislation, but it ought to apply to all Lords starters.
Let me say a few words about governance—the principle, not the detail. I hope that the argument that the House should review its own governance does not need making. I assume—and I hope that I am right, given the warm tones with which the Leader spoke—that the governance review will be part of the working group that he announced would be set up as a Leader’s Group.
Why we need to review our governance does not need labouring. We have not had a happy year or two and we do not have the confidence of the public. I will not provide statistics; there are plenty of statistics as to how this House is seen, and they are a disappointment and a point of regret for this House, because most of us believe that we generally do a good job. The challenge for the House is to ensure that we meet the high standards expected of a public body. That goes beyond whether we think that generally we are good chaps and do a good job, to whether the wider public think and understand that our governance is: transparent; comprehensible to them and us; instils confidence in them, or at least in the informed public; and is well able to prevent—or, if not, address— crises, because crises will occur in the future as they have done in the past.
Noble Lords can tell by my tone that I am not taking a view that all our governance is self-evidently flawed, but it needs to be reviewed and needs to be seen to be reviewed thoroughly and thoughtfully. That is even more important because, as has been mentioned by many speakers, we are a self-governing House. Self-governing institutions start with a problem, because most of the public believe that it is difficult to be judge and jury in your own court. It is difficult to convince the public that we keep separate our personal interests and the wider public-policy interests that the institution serves. I will not labour the point, but noble Lords can see why we might feel that we have a case to prove. I shall not go into grisly detail on that, but it is a fact that self-governing institutions have a harder case to make that they actually act in the public interest than have that public interest tinged at times by the interests of players. I make no sweeping accusation about the House, but that perception increases the challenge for us to be seen to carry out a proper review.
While we have had many reviews, I cannot see any evidence in recent times of a proper review of the governance arrangements of the House. Therefore, such a review would look at the governance of finance—because as a House we will be challenged on that—and at performance.
Finally, to have confidence that a review process was well done, it would be desirable for the Leader’s Group to ask someone independent from the House to cast an eye over what we have learnt about good governance standards from Cadbury, the Audit Commission and elsewhere, and bring back, without making it a long business, a short report to the Leader’s Group on what the process looked like from the point of view of an outsider of eminence and authority by comparing our governance standards against the standards that can be found in other public bodies and public companies. That would accelerate the discussions about governance and give confidence to those outside who had an open mind that we were treating this process seriously.
I thank the Leader again for his clear statement and thank all those on my group and others who worked to advance a little of the agenda that I am delighted we are now discussing seriously.
Baroness Hamwee
My Lords, one of our new colleagues asked me last week how it was that the House was self-regulating when there were so many things that he could not do. That led us to talk about self-regulation starting one step back from day-to-day procedures but it being important that the process should take the House with it when agreeing what our procedures and rules should be. Like the noble Lord, Lord Cope, I have been thinking about some of the things that Lord Russell used to talk about. He felt strongly that if we had a Speaker with a role similar to that of the Speaker in the Commons, we would all rapidly begin to behave rather badly. We would push at the boundaries and wait to be pulled back, and our behaviour would worsen significantly.
Baroness Hamwee
I do not know whether my noble friend’s “Hear, hear” was a comment on the rest of us or himself.
There has been a band of brothers and sisters working energetically on these issues, many of whom are speaking in this debate and are to be congratulated. I should like to speak mostly about the “what”—what we do—rather than the “how”, but it is time to review the role and remit of the Lord Speaker, because if we do not do that now, it will be some time before we can do it. We are coming to the end of the first term of the Lord Speakership. I doubt that its role and remit will make it into the manifesto of candidates in future campaigns for the Lord Speakership or that the House would welcome that. We would not be comfortable turning the election of an individual into a referendum on the role.
Four years ago, we resolved to elect our own “presiding officer”—that was the term. The outside world and many inside the House would expect a presiding officer to have more of a role within the Chamber. Self-regulation has meant that Question Time, for instance, has become quite a noisy affair, as other noble Lords have mentioned, and the logic of the government Front Bench rather than the presiding officer acting as the traffic warden is not obvious to everyone. If we are to look at the role of the Lord Speaker, some changes to the role of the Deputy Speakers would naturally follow, but, as the governance group identified, there is scope for the development of their roles, and what was once a logical distribution of work between the Chairman of Committees and the Deputy Speakers may no longer apply.
Huge strides have been made, many at the instigation and under the guidance of the Lord Speaker, in demystifying the work of the House. One of our guiding principles—this was very much the thrust of the speech of the noble Baroness, Lady Jones—should be not just transparency but intelligibility and accessibility. Democracy demands this. At a time of reform, there is a danger in being seen as having our gaze fixed on our collective navel, and we should be aware of what the public expect and want—although I am aware that they are not one homogeneous entity. Much of this comes down to common sense.
One thing that most people would expect of any organisation is that it reviews and evaluates what it has done to help it in future. That is why I am keen to see a development of the scrutiny of legislation both before and after its enactment. I declare an interest as a co-president of the Centre for Public Scrutiny. Most of us are alert to this House being complementary to the House of Commons—and we are all spelling “complementary” with an “e” this evening. This House is particularly suited to undertaking the work that many noble Lords have described. Parliament has a role that is distinct from government. I am perhaps the first this afternoon to say that we have a coalition Government, not a coalition Parliament. It is inevitable that Back-Benchers on the government side will be teased if we say anything mildly critical of the Government, but I have never seen scrutiny as equivalent to opposition. If you are on the government side, you hope to be a critical friend. Friends and opponents working together can do a very good job of scrutiny. Both want to test a proposal; the opponents because they want to show that it will not work, the friends because they want to ensure that it will. That was an observation that I gleaned fairly early on when I was chair of the London Assembly, the main job of which is scrutiny of the executive in London.
I hope that we will be able to extend our pre-legislative scrutiny. Once we in this House get stuck into a Bill that has had only partial attention in the Commons, we can be like terriers; but by this stage—and this applies also if the Bill has started here—Ministers are defending rather than debating. Positions are polarised, and that is not a good basis for taking forward a discussion. It might be easier for the Government, which is one reason why Parliament and not the Government should determine which Bills are presented in draft. Pre-legislative and post-legislative scrutiny are part of the same process, each building on the other. Identifying how legislation might have been better should feed in to improving it in future. It is a frequent complaint that Government do not let legislation settle down before introducing the next tranche. The noble Lord, Lord Luce, referred at the start of the debate to the quantity of legislation. Teachers, school governors and LEAs have been wearied by 33 education Acts in the past 26 years. Health has had 35, criminal justice 108 and the constitution 123. I am not arguing that these were all bad, but neither were they all good.
The noble Baroness, Lady Royall, mentioned the Digital Economy Act. We all have our candidates for post-legislative scrutiny. Freedom of information and data protection might well be high on the list, because the world that they were addressing has changed technically and politically. The previous Government committed themselves to reviewing legislation after three years. As I understand it, the current Government intend to continue this. I am not sure whether this refers to three years after enactment or after commencement. What might come out of post-legislative work could be the flushing out of the number of Acts and sections within Acts that are not in effect. It is very confusing—again I am taking the point of view of a member of the public—for those who need to know day-to-day what sections are actually implemented. My noble friend Lady Thomas of Winchester, who is the new chair of the Delegated Powers Committee, would have made that point had she been able to be here this evening. Review by the Government is not the same as scrutiny. It is not a substitute for cross-party consideration of the operation of legislation, hearing from stakeholders, questioning Ministers, considering whether the legislation is fulfilling its purpose and whether the costs, risks and benefits were properly and accurately identified.
As I have said, this Chamber is complementary to the House of Commons. Our work could be done in conjunction with the House of Commons, or, if the Commons is not inclined to do this, separately, being mindful of what the Commons does not find time for. There is a case for a committee separate from the Commons Select Committees, because a specialised committee could develop expertise and perhaps be in a better position to disseminate best practice across the board. I am not arguing that every Bill should go through the process. We need to find the right balance. The workload is not negligible, and nor are the resources needed, but I hope that the Leader’s Group will look at the mechanisms available and perhaps, as a first step, undertake a scoping exercise.
I am lucky enough to have been appointed recently to the Merits of Statutory Instruments Committee. Not everyone would say that was luck, and the size of the first agenda was a facer. However, as a Member of the House who has taken advantage of the committee's work in the past and who is now a member of the committee, I endorse it. Requiring both Ministers and civil servants to justify secondary legislation should lead to better practice. With around 1,100 statutory instruments a year, we need formal, structured attention, not a haphazard response relying on luck rather than management. In the short time that I have been a member of the committee, I have been very impressed by the workload carried by those officials who support the committee and who do a lot of thinking for us. It takes particular skill to give a critique while remaining on good terms with those you are critiquing, in this case the departments. However, they manage to carry through work that reflects the joint approach that we want to operate properly within our terms, even if we do not share policy objectives. There is a case for post-legislative scrutiny, including post-implementation reviews of statutory instruments.
None of this is groundbreaking: it is common sense and what the public expect. It should not be seen as threatening what is good about the way in which we work. If the message is to be got over, we will also need to work with the media. When I have said this before, in effect the comment has been, “steady on”; but they are part of the way in which our democracy operates. What is common sense but also novel in the UK Parliament, though not in other parts of our constitution, are procedures that recognise the changed political configurations within the Chamber. The public pretty much support political parties working together, as two of us now are, but they also expect us calmly to tweak the procedures to fit the new reality. I take issue briefly with the noble Baroness, Lady Royall, who referred to an inbuilt government majority. That is not the case—I will not say “unhappily not the case”. The first vote of the Session made that clear.
Scrutiny is not a second-class activity: good government needs good scrutiny. I congratulate those who have done so much work. There is a lot more that could be said, but I will regulate myself and say simply that I hope that the House can do justice to all the work that has already been done.
Lord Norton of Louth
My Lords, speaking as a member of the Merits Committee, I can assure the noble Baroness that, as the Session progresses, she will find that the agenda gets considerably longer.
I very much welcome this debate and I congratulate my noble friend on initiating it. Like him, I take the term “working practices” as an all-encompassing one. Working practices exist for a purpose. My starting point therefore is to address the basic principles that should guide us in determining those practices. First, we need to establish the purpose of Parliament and the relationship between the two Houses, as several noble Lords have already said. This point is fundamental, both to the debate about the composition of this House and about its structures and procedures. Parliament is the body which calls Government to account. The Government are the body that crafts public policy and is responsible for the administration of the state, but does so within constraints imposed by Parliament. Parliament sustains the Government but it also scrutinises them to ensure that their measures, as well as their actions, are appropriate and that they justify approval. To fulfil those tasks, it needs appropriate resources. Its fulfilment of those tasks is enhanced, both in terms of effect and legitimacy, by being carried out openly and through engagement with people outside the Palace of Westminster.
The value of Parliament is maximised by having two Chambers that work in such a way as to complement one another. The difference between the two is a particular strength of our political system. The House of Commons is the body through which the Government are chosen and the body that, by virtue of being elected, constitutes the grand debating arena of the nation. It is the place where the battle between the parties is fought. MPs are returned to support their party and to argue the case for that party. Election affects fundamentally the terms of trade between the parties. The parties fight it out in the full glare of national publicity. Partisanship is intrinsic to the way the House operates. The other place, quite naturally, focuses on vote-winning exercises. Members' legitimacy in fulfilling their tasks derives from election.
This House is very different. By not being elected, there is not the same clash between the parties. By not being elected, Members do not need to achieve high profiles for the purposes of promoting their parties and their own re-election. This House can complement the other place by fulfilling tasks essential to Parliament, but tasks for which the House of Commons lacks the political will, time or sometimes the resources to fulfil.
In addressing our working practices, we thus need to recognise that we are not here to emulate or to challenge the ultimate authority of the elected House. Rather, we exist to add value by fulfilling tasks that play to our strengths and enable the other place to focus on those tasks to which it gives priority. This House complements the other place by engaging in rigorous and detailed scrutiny. The other place determines the ends of public policy and devotes some time to examining the means. This House focuses primarily on the means.
Our legitimacy for engaging in detailed examination derives from the experience and expertise of Members. I cite in aid the findings of the Ipsos MORI poll, commissioned by the Constitution Unit at University College London and carried out in 2007. The survey found that considering legislation “carefully and in detail” was ranked as very important in determining the legitimacy of the House by 73 per cent of those questioned. Having many Members who are experts in their field was also ranked as very important by a majority of respondents.
That is my first point. That establishes our core functions. If we are to fulfil our functions effectively, then we need to have appropriate structures and procedures in place. Who, though, determines those structures and procedures? How do we ensure that they remain the most appropriate? How do we review them on a regular basis?
This House does a good job in fulfilling the functions I have mentioned. We variously point out how good we are at legislative scrutiny, not least relative to the other place. We have various procedural advantages which are denied to MPs, as my noble friend Lord Strathclyde outlined. Yet in some respects we are in danger of being left behind by the other place. Public Bill Committees are now utilised by the House of Commons. Government Bills not subject to pre-legislative scrutiny are sent, after Second Reading, to evidence-taking committees. We have procedures for sending Bills to evidence-taking committees, but, as my noble friend Lord Strathclyde mentioned, very rarely use them.
We need to review our practices, but the mechanisms for doing so are rather clunky. Our means of review are occasional and reactive. Our working practices start to look a little worn and Members recognise that there may be a case for reviewing them. What happens? We have to press for a review, for example, through a Leader's Group. There is a growing recognition that we need to develop our committee structure. What happens? A Member or Members of the House write to the Liaison Committee asking it to recommend the creation of a committee. In short, we lack the means for examining what we do on a holistic and continuing basis. The Liaison Committee has recently reviewed the committee structure and generated criteria for assessment. That is a welcome development, not least given that the criteria take into account the relationship between the two Houses. However, we need to go further.
Our committee structure has developed on an ad hoc basis. We need to examine whether there are gaps that can usefully be filled by committees in this House. What cross-cutting issues receive no systematic parliamentary examination? Can our committees be reconfigured and form part of a coherent committee structure? We need a body that can engage in such reflection. Not only that, we need a body that can review the committees of this House and our working practices generally and do so on a continuing basis. We have nothing equivalent to the other place in being able to do so. Our Procedure Committee is essentially a reactive body. We need something like a permanent Leader's Group, one that comprises Members from all parts of the House, is empowered to set its own agenda and to take evidence. Then and only then can we ensure that our working practices remain effective and efficient for fulfilling our core purposes.
It is essential that we make use of this opportunity to press for such a committee and in the interim to identify those changes that will strengthen our working practices. As has been mentioned, we have the reports from the three working groups that reported at the end of the previous Parliament. I served on all three and I endorse the recommendations that they produced. They are well targeted for ensuring that this House fulfils its functions. In the time available, I wish to identify three changes relating to legislation that have been recommended and that will enable this House to play to its strengths in undertaking detailed scrutiny. In so doing, I shall reinforce some of the points already made by noble Lords.
The first is the recommendation of the working group, chaired by the noble Lord, Lord Filkin, that a committee on legislative standards be appointed to advise the House on whether a Bill meets an agreed set of criteria on legislative standards and Bill preparation. This strikes me as eminently appropriate. It fills a gap in the existing legislative process and it plays to the strengths of this House. It fits very much with what the public expect of this House. Such a committee has the potential to identify best practice and to help to raise the standard of legislation in this country.
The second relates to a Bill once it has been introduced. The Constitution Committee of your Lordships' House, in its 2004 report, Parliament and the Legislative Process, recommended that each Bill should, at some point during its passage through Parliament, be subject to examination by an evidence-taking committee. Since then, the other place has introduced Public Bill Committees. What flows from this, as recognised by the group chaired by the noble Lord, Lord Filkin, is that a government Bill starting life in this House and not subject to pre-legislative scrutiny should be referred to a temporary Select Committee. That would bring us into line with the other place.
I add one qualification. We should not preclude the possibility of following the same procedure for Bills brought from the Commons. There are problems with the Public Bill Committee procedure in the other place—not least the limited time between evidence taking and commencing consideration of amendments—and some Bills may be unduly rushed or not even be submitted to such evidence-taking.
My third point relates to post-legislative scrutiny, a point on which several noble Lords have touched. The Constitution Committee, in its 2004 report, recommended that post-legislative review be introduced and that reviews undertaken of Acts be submitted to a Joint Committee of both Houses. The Government referred the recommendation to the Law Commission. The commission endorsed the recommendation, including the creation of a Joint Committee. The Government accepted the recommendation for post-legislative review, and, as has been mentioned, most Acts are now reviewed three to five years after enactment. However, no action was taken on the proposal for a Joint Committee. The Filkin group has reiterated the case for a Joint Committee. Like the Constitution Committee, it recognises that if there is no interest in the other place in setting up a Joint Committee, this House should establish such a committee.
For the reasons I mentioned earlier, there may well be little interest in the other place in a Joint Committee. It is not politically high profile; there is no scope for partisanship and attracting votes. It again is something that would play to the strengths of your Lordships' House. It would enable post-legislative reviews to be considered in Parliament and for best practice to be identified.
It is important for such a committee to be created fairly quickly. That is for two reasons. The first is that several post-legislative reviews have already been published, including on anti-terrorism legislation and the Constitutional Reform Act 2005. The second is that, at a time of austerity, there is the danger that the Government may view suspending post-legislative review as an easy way of reducing costs. If they do, we revert to the situation where Ministers see success in terms of Royal Assent—getting a measure through—rather than in terms of the effect it has. Creating a committee on post-legislative scrutiny, which need not be particularly resource-intensive, will be a step towards improving the quality of legislation in this country. Again, it will play to the strengths of this House.
The arguments I have just outlined for a committee on post-legislative scrutiny also apply to the case for creating a committee to examine treaties—an essential step, in my view, following enactment of the Constitutional Reform and Governance Act.
There is a great deal that we can and should do to strengthen our working practices. There are clear and compelling recommendations from the three working groups. Those recommendations need to be set within a clear conceptual framework of the purpose of this House in our political system. We need to be clear as to what we are here to achieve, and we need to have in place mechanisms that enable us to keep our structures and procedures vibrant and efficient. This debate is a starting point, or at least one step on the road, to achieving that. By playing to our strengths, we deliver what the public expect of us. Let us make sure that we live up to expectations.
Baroness McIntosh of Hudnall
My Lords, first, I thank the noble Lord, Lord Strathclyde, for setting up this debate and, in particular, for his announcement of his intention to set up a Leader’s Group and to give it the widest possible remit on the issues that we are discussing today. That is remarkably welcome, and I am sure that the whole House is grateful to him.
There are several disobliging terms sometimes applied by natives, mostly of rural communities, to describe those that they regard as outsiders. Among those that can be repeated here are “grockle” and “blow-in”. It can take several generations for the stigma of being one of those to wear off. I have been a Member of this House for almost 11 years but, like my noble friend Lady Jones, I still feel like a new girl and occasionally like a fraudulent interloper, so I venture into this debate with some trepidation. I do so armed with a little confidence having been a member of the cross-party group chaired by the noble Baroness, Lady Murphy, and of the group of Labour Peers referred to by my noble friends Lady Royall and Lady Jones, chaired by my noble friend Lord Grocott, so I feel that I am slightly better informed than I might have been a few months ago.
I am not a natural radical. I have little appetite for change for its own sake. I respect and admire the resilience of things that have survived the test of time, whether they be pieces of old furniture, the language of William Shakespeare or, indeed, the traditions of this House. I especially and vehemently do not want this House to become a replica or shadow of the other place. However, in my short time here—as, for Peers, it is a short time—a lot has changed. We have seen the loss of most hereditary Members, the exit of the Lord Chancellor, and the very welcome, in my view, creation of the post of Lord Speaker. I take this opportunity to join the noble Baroness, Lady Hamwee, in paying tribute to the enormous contribution made by the present incumbent in her time in office. There have been changes in sitting times, the working week and the working year, and we have seen a much increased use of Grand Committee. As my noble friend Lord Grocott observed, most of those changes were not universally welcomed, but have since become established parts of our practice.
However, in the world outside and, I have to say, to some extent within Parliament itself, the impression persists of this House as obstinately adhering to arcane tradition and exclusivity. We need to look only at how we are routinely portrayed in the media—it is always the ermine that gets into the picture. This is not good. It makes us vulnerable and calls into question the value of what we do. We have a duty to do our best to correct any misapprehensions but, more importantly, to try to see and hear ourselves as others do and to review our working practices and procedures with humility and on a continuing basis, as suggested by the noble Lord, Lord Norton.
We have just been through a very turbulent year. At the start of this new Parliament, with many new Members—to whom, whether they come from another place or from outside Parliament, I imagine that the practices of this House must appear somewhat perplexing, at least at the beginning—and faced as we are with the prospect of major reform, this House could adopt one of two positions. It could either decide to do nothing, reasserting its independence and unique character by setting its face against any challenge to the way that it does things now—thankfully, so far this afternoon I have heard no support for that position—or it could take the opportunity for some further incremental change that could significantly improve the effectiveness of the House and help to enhance its reputation. I am delighted that the noble Lord the Leader of the House, by setting up a Leader’s Group, is encouraging us to take this opportunity.
I want to draw attention to two specific points. I fear that they are the same two specific points that my noble friend Lord Filkin drew attention to, and he probably did it rather better than I will but, in the true traditions of this House, that is not going to stop me. The first concerns the observations made by his group about ensuring that legislation, when it comes forward, should,
“meet objective tests of being adequately prepared”.
That point was eloquently made by the noble Lord, Lord Norton, and mentioned by a number of other noble Lords. My noble friend’s group proposed a committee on legislative standards, with a remit to examine upcoming Bills against a clear set of criteria, which I will not read out because he has already enumerated them. I very much support this recommendation, and I also support the various suggestions about evidence-taking before Committee stages. I agree with my noble friend Lady Royall about pre-legislative scrutiny, an issue that has been raised by many other speakers. If legislation were consistently well prepared—this was a point noted by the noble Lord, Lord Kakkar, who is not in his place—much of the time and effort taken by both Houses to scrutinise that legislation would be much better used and some of the difficulties discussed elsewhere in the paper by the noble Lord, Lord Filkin, and the paper by the noble Lord, Lord Butler, would diminish.
My second point concerns governance and accountability, which were covered by the group chaired by the noble Baroness, Lady Murphy, of which I was a member. It was subsequently addressed in a very useful briefing paper from the Hansard Society, which I received this morning, and by the noble Lord, Lord Luce, and other noble Lords. I am well aware that these matters are sensitive—probably more so than those concerning the House’s legislative role. However, like the noble Lord, Lord Filkin, I urge that we do not flinch from considering whether our governance arrangements would bear the kind of scrutiny to which other aspects of lives have recently been subjected. It is no longer enough, as he pointed out, that we should understand and be content with how we do things—although, as was evidenced in what the noble Lord, Lord Luce, said, not everyone does—we must also consider whether we are taking into account the way that things are done elsewhere. In a community—I hesitate to use the word “organisation” or “institution” —as complex and unusual as this one, there is a great temptation to think that everything not only is, but has to be, sui generis. I worked for years in the arts where this kind of view was for long enough prevalent, but eventually it dawned on us all that emphasising what made us different did not always work to our advantage. It was far better to look about, adopt what was best in business and other practices and become more efficient and effective by learning from others. Perhaps paradoxically, the things that really made us unique emerged much more strongly once we began to join the rest of the world.
I hope that this House will review its own governance in the same light and take seriously some of the suggestions that have come forward about accountability and transparency. They are not frightening nor, frankly, especially radical, but they might be—to mangle Robert Burns, and with apologies to my Scottish colleagues—power that,
“…the giftie gie us
To see oursels as others see us!”.
Lord Butler of Brockwell
My Lords, I join other noble Lords in thanking the Leader of the House for this debate and in thanking him and the Leader of the Opposition for the positive and open-minded way in which they introduced it.
As has been mentioned, following the Lord Speaker’s speech to the Hansard Society on strengthening Parliament, the noble Lord, Lord Filkin, the noble Baroness, Lady Murphy, and I agreed to lead three cross-party groups in which we divided up various aspects of the working processes of your Lordships’ House. I did not involve myself in that work as a critical or—certainly not—as a disgruntled Member of your Lordships’ House. On the contrary, I hugely admire the work that this House does and my purpose in taking part in it was to contribute to suggesting ways in which we could do it even more effectively.
As other noble Lords have said, we ought to start this debate by asking: what is our role? I believe in strengthening Parliament because I believe that an effective Parliament is not the enemy of the Executive but is essential to their success. Having spent my career in the Executive, I think I am in a position to say that a strong Parliament is essential to keeping the Executive up to the mark because absolute power does corrupt, and the Executive becomes weak and inefficient if there is not a strong Parliament to call it to account. In that belief, I am encouraged to find that I am now in good company. The Prime Minister, the Leader of another place, the Deputy Leader of another place, the Speakers of both Houses and the Front-Bench spokesmen in this House have all expressed themselves similarly. That was a theme of the Better Government initiative, in which I served on the executive committee and of the report Good Government, which it produced. That report has frequently been quoted in this House and elsewhere. It is very welcome that the reforms proposed in another place by the Select Committee chaired by Dr Tony Wright are being very largely implemented, so things are moving in an encouraging direction.
I am sure that the noble Lord, Lord Filkin, the noble Baroness, Lady Murphy, and the other Members who served on our groups would agree that the ideas in our various papers are not intended to be a comprehensive or even, perhaps, a coherent prescription for further changes. They are an à la carte menu of ideas which the participants thought worth bringing to the attention of your Lordships, and I hope they will be worth considering by the Leader’s Group that the Leader of the House announced today.
In my remarks, I shall concentrate on some of the ideas in the group that I chaired on the non-legislative aspects of the House’s procedure but, first, I shall comment on the suggestion made by the group chaired by the noble Lord, Lord Filkin, on which I also served, and say how striking it is how many speakers today have picked up this idea. The noble Lords, Lord Luce, Lord Kakkar, Lord Maclennan and Lord Norton, and the noble Baronesses, Lady Hamwee and Lady McIntosh, have all referred to the idea of a committee similar to the Merits Committee, which looks at statutory instruments, that would look at the merits of legislation brought before Parliament. Since other speakers have so eloquently dealt with it, I shall not go into the details, but shall say just two things about it.
First, since the quality of legislation is of crucial interest to Parliament as a whole, this committee would be most effective if it were a Joint Committee of the two Houses. I agree that it if were a committee of this House only, it ought to look only at legislation being introduced here, but a combined committee would be a way of avoiding duplication and increasing co-operation between the two Houses. Secondly, speaking from my experience in the Executive, if there were ever a prospect that, on the basis of a report by such a committee, a House of Parliament might refuse to give a Second Reading to a Bill and might refer it back to the Executive for better preparation, that would hugely improve the care with which legislation is prepared within the Executive. That might be a nuclear weapon but, as we know, nuclear weapons are there not to be used, and it would be very effective in dealing with some of the problems of excessive and poorly prepared legislation, of which we are all conscious.
As regards the suggestions of the group I chaired on non-legislative procedures, the theme underlying our suggestions is making best use of the time available to the House. We started with the three principles of our procedures to which the Leader of the House referred: the House being committed to self-regulation and the role of that in encouraging a spirit of courteous compromise; the characteristic that any Member of this House can raise and explore amendments to legislation without being prevented by formal timetables or guillotines; and the informal convention that allows all sections of this House to be fairly represented in debate. Our group felt that these were crucial characteristics that we ought to bear in mind in any considerations of our processes in the future.
In that context, let me have my two penny-worth on the role of the Lord Speaker during Question Time, which I know divides opinion in this House. I would not be in favour of the Lord Speaker being given a role calling individual speakers. However, like the noble Lord, Lord Luce, I take the view that it would not be inconsistent if the Lord Speaker took over from those on the government Front Bench the role of indicating which section of the House should have the next question—a role that has become even more controversial since the creation of the coalition. Apart from what I think many of us feel is the unseemliness of present procedures, there is clearly a danger of those on the Front Bench becoming open in this matter to accusations of political partiality.
The rest of my group’s suggestions concentrate on ways of using to best advantage the crucial period between Question Time and the dinner hour when attendance is at its highest and the opinion of the House can most conveniently be tested. We suggest that more Statements and more Committee stages of Bills should be considered in Grand Committee, where any Member can take part in the business. The time available for the very important Statement that we had today on the National Health Service would not be as constrained as it was today, and the business of the House would not be interrupted. This debate today has been interrupted. Perhaps that does not matter, but it matters more when important debates on Bills are interrupted on Report.
We also suggest, and other speakers have referred to, more opportunities for topical debates and Questions—and, yes, we suggest shorter supplementary questions and answers. We suggest that, to increase the transparency of the House’s arrangements, the Leader of the House should submit himself to a weekly Question Time of 20 or 30 minutes. The noble Lord, Lord Cope, had a bit of fun with this, but he has been one of the usual channels in another place. As one or two noble Lords have said, the arrangements by which the House is administered are not as clear to some Members of the House, even those who have been here for a long time, as they are to others. I very much remember intervening in a debate and asking the noble Lord, Lord Davies of Oldham, whether he could tell me the difference between the usual channels and the House authorities. With all his ministerial experience, he said in the most charming way that he could not.
Lord Cope of Berkeley
I apologise for interrupting the noble Lord, but I was not joking at all, particularly in my remarks, to which he drew attention, about the prospect of the Leader of the House answering questions. That would not be a positive improvement, and would not achieve the results which the noble Lord’s sub-committee sought.
Lord Butler of Brockwell
I was not suggesting that the noble Lord was being frivolous. I, too, seriously suggest that if it is important that the House should be self-governing, which it is, widely giving Members the opportunity to put points of concern to the Leader of the House when they can during the week would increase the sense of involvement and participation and make the House more collegiate.
Lord Elton
My Lords, while the noble Lord is on this point, am I right that he proposed half an hour for this? Would that not really be rather excessive?
Lord Butler of Brockwell
This is certainly an open matter for debate. I should have thought that 20 minutes would be perfectly sufficient. Clearly, if the suggestion finds favour, the Leader’s Group and the House could look at it.
We suggest that more publicity should be given to the excellent reports of Select Committees of the House by their chairs being given five minutes for a trailer on the day of publication, and we trail our own coats by suggesting slightly earlier sitting times and the ending of the wearing of medieval robes at times when the public gaze, through television, is most likely to be on us. We want to convince the world of the relevance of our procedures, and it is not helpful that we are most often portrayed in the newspapers and on television in our robes.
Not all these or our other suggestions may find favour with all your Lordships. As I said at the beginning, they are intended as an à la carte menu that we hope may provide food for thought, but I am greatly encouraged by the open-minded way in which they have been received by those on the Front Benches on both sides of the House.
I will make a final point about the timetable. It has been said that it would be useful if the Minister replying to the debate indicated the timetable which the Government have in mind for the Leader’s Group. A report by the end of the year would be helpful so that discussion of these matters is not overtaken by the preoccupation with more controversial matters such as the draft Bill on the future of your Lordships’ House.
Lord Campbell of Alloway
My Lords, it is an extraordinary privilege to be able to follow the noble Lord, Lord Butler of Brockwell, particularly on the first few points of principle in his speech and what he said about the Executive, about things—we all know what he was referring to—getting better, and about combined committees with the other place; the noble Lord, Lord Maclennan of Rogart, and my noble friend Lord Norton of Louth referred to that.
Right at the start of my contribution, I would like to say a word of gratitude to my noble friend Lord Strathclyde for tabling this Motion on working practices. The initiative was taken in 2001 by Lord Williams of Mostyn, who set up a group to report on working practices. I also thank the noble Baroness, Lady Royall of Blaisdon, for placing in the Library the fundamental documents that we are entitled to use, and need to use, in this debate; and the Library staff who produced our notes.
Having said that, I should make it plain that I will speak to only two working practices. One relates to what my noble friend Lord Norton of Louth said on 28 January, 25 February and today about pre-legislative and post-legislative scrutiny. I will speak later on how the Government can take steps to implement that. The other is the role of the Lord Speaker at Question Time. I am afraid that I respectfully disagree with the suggestion made in its report by the group of the noble Lord, Lord Butler; he mentioned in effect what it says. I will come to that a little later, but I object really on the basis that it sets aside the report of the Select Committee on the Speakership, which reported in December 2005 and was approved by the House on 31 January 2006. I will refer to the passage in it which is frankly put aside by what the noble Lord suggests.
I shall move on to my main point; the business of the Lord Speaker is relatively subsidiary, but in a way it goes against the grain and extends the remit of the appointment unnecessarily. On pre- and post-legislative scrutiny, my noble friend has proposed, in effect, that a new, formal effective structure should be established—a standing committee, preferably of both Houses—that pre-legislative scrutiny should be the norm; and that a Special Public Bill Committee or a temporary Select Committee should be set up for post-legislative scrutiny. Then he referred to the case for setting up a Joint Committee of both Houses. That is a bit loose and needs to be pulled together. There has to be a pattern of implementation, which should be provided by government in a written form. It should include the essence and details of what is proposed, how it will affect the process that will be used to implement it, and what sort of guidelines or criteria shall be established.
I will not go on for long, but there is a lot to be done with the details before you can get this going. In a sense, I am flat out for it. It is totally right and it is time we really got down to details which can be laid before the House and either approved or amended. It is a matter for the House. It is not really a matter for me at all. I shall leave legislative scrutiny and turn to my point about the Lord Speaker.
When I mentioned the report before, I forgot to say that it said that the group concluded that,
“assisting the House at question time should remain with the Leader and not be transferred to the Speaker”,
which was approved by the House. What the justification is for going against that today I do not know. Recently, it has been quite a difficult job and has needed authority—far more so than some years ago.
The noble Baroness, Lady Royall, and my noble friend Lord Strathclyde have done a very good, fair and effective job in difficult circumstances. Why? It is because they have authority. You cannot do that job unless you have personal authority; that is, authority which is generally accepted. You take a risk if you put the Lord Speaker in that. Nothing to do with the wondrous and wonderful work that she does within her remit requires the exercise of power, but this does, and the remit of the appointment will be extended. To what end and need? I therefore oppose it. On any showing, there is a certain element of discourtesy. The Leaders of both parties sit on their Front Benches. The Leader of the Opposition is usually here on the Front Bench. Frankly, it is discourteous when they are sitting there to have someone in the chair over there taking part of their authority. I do not see the sense in that or why it should be done.
I do not think that I will say any more. That is my contribution on working provisions.
Lord Rooker
My Lords, the title of the debate includes the words, “the case for reviewing”. I think that the case was made before we started. Therefore, we can limit the evidence we have to give because the Leader’s Group will look at it in some detail. I do not think that we can escape the fact that questions will have to be asked about what we are here for. It will get inexorably linked with the other debate that we are going to have. I have been here eight years. Some of us on the informal groups—last year, I had the privilege of being on one of them—asked: how do you get any change in this place? That was the starting point. Who do you go to? What do you do? What is the infrastructure to get some change? We discovered that it was not there. In the other place, there is more of a structure. I was told about the Procedure Committee, but others advised me that that was not the proper route.
I have two words at the top and the bottom of my notes, which I would ask the Leader’s Group to think about. My noble friend Lord Campbell-Savours knows what I am going to say. The words are “trial” and “pilot”. Do not come back with anything that looks like it will last for ever because the House will not buy it. To be honest, that is my experience. Offer every suggestion that comes to the House on a trial basis, perhaps until the next Parliament, for the whole of a Parliament or for a Session, depending on the menu. I do not think that the Members of this place, who are by and large more experienced than me, if I may put it that way, and slightly more conservative with a small “c”, want to buy a lot of change. But trial and pilot should be offered and we can see how we go. The way to get change is quietly.
I am very pleased that the third report on governance is encompassed in this. To be honest, I had no involvement in that whatever. Like everyone else, I read the report when it was produced and it worried me more than the other two. I say that because people in this House who have experience on outside bodies that are governed by codes of practices and procedures for appointment and governance and finance do not recognise what they have read in that report. I think that the noble Baroness, Lady Murphy, and her team were right to bring those matters to the House and I hope that they will find some favour with the Leader’s Group. But at the least they should be put to the House because, in the end, Peers have to decide these things.
I think it would be whistling in the wind to think that, if we ever get elected Peers—I do not want to get into that debate—they will arrive here and not use the powers. The restraints we put on ourselves will go out of the window, a point touched on by the Leader of the House in his opening gambit. If we are going to have some rules, we have to codify them, otherwise it will be absolute chaos.
I am not going to speak for long so I shall make just a couple of points. The issue I raised last year in the debate on the Queen’s Speech was about having flagged up the bits of Bills that have not been looked at before arriving here from the Commons. That idea came to me while I was driving home one day when the House was not even sitting. I would have had a job explaining that to Bill Cockburn and his committee, who asked us what we did as Peers—how we clock on and clock off and so on. I was thinking about how we could make Bills better. I realise that someone has had a look at this suggestion and I know that it is not as simple as it appears, although it has a seductive appeal. I realise that sometimes a clause of two lines can bring in a schedule that might be 50 pages long. Which bits would you say were not debated? Generally speaking, if there is an elephant at the door, we recognise it, and therefore I think we can recognise the parts of the Bill that have not been debated or scrutinised, and then we can choose whether to look at them. We may decide that it does not need to be done, but those parts need to be flagged up in a systematic way. I cannot believe that there is not a way of doing that, and it is important.
For Bills that start in this place—personally, I do not think that they should, although that argument is not going to carry the day—certainly we need different procedures. Some major Bills have started in this place. The Climate Change Bill started here because I brought it to the House, as did the 2002 police reform legislation. It is true that politically contentious Bills generally do not start over here, but some major ones do, and we need to take a serious look at that.
The idea of a pre-legislative committee is also important. I do not want to criticise parliamentary counsel, but there is some slipshod work being done in Whitehall—under pressure from Ministers to get Bills before Parliament. Sometimes they say, “Slip it into the Lords first”. I have been there when these discussions have taken place. Parliamentary counsel say, “We’re not quite ready”, and they are told, “That’s all right. Put it in the Lords. They can sort it out because they have got more time and are more flexible than we are”. That is not an effective way to produce good legislation for our fellow citizens. It would be a power to parliamentary counsel if we had that kind of committee.
I would not have raised the next issue if it were not for what happened today—and I have sat through all the debates today, including on the Statement. The noble Lord, Lord Cope, might say that we all failed, but no one was brave enough to stand up at the beginning of the Statement and say something when one of our Members took 25 per cent of the time available to the whole House.
Lord Rooker
Only after the event, and that is the difficulty. The argument for taking Statements in Grand Committee is powerfully made. Five minutes were taken up by one person when there are only 20 minutes for questions because there is no mechanism for getting some order into the system. If there was, I would not say anything, but going into Grand Committee is important.
I want to raise an issue which I know from some of the speeches is controversial. By the way, I agree with everything that has been said, but the role of the chair, particularly at Question Time, is not an unimportant matter. Between 2005 and 2007, the noble Baroness, Lady Amos, was the Leader of the House and I was the Deputy Leader, I had responsibility for Question Time. I have kept all the daily papers from that time. I have got them in a box, and I know exactly who got called, when they were called, and their party, for every Question Time for those two years. I can produce the figures. They were difficult to do, but nevertheless I kept all the papers because I just walked out of here and chucked them into a box.
Lord Rooker
No, no. There was almost a competition between us. My noble friend Lady Amos would say, “I once got 36 supplementary questions through. How many did you get today?”. I usually managed 24 or 25 supplementaries in half an hour, which is pretty good going when you think about what happened during the Statement today. I want to repeat a point I made last October in the debate on the Queen’s Speech. There is a serious problem in that with the expertise in this House and the range of Questions that can come up on a daily basis—we are not constrained like the other place—I think that there are hundreds of Members of this House who are reluctant to try to ask a supplementary question. That is because the method of doing so is to enter a bear pit.
I have no experience of it. In fact, last week I stood up for the first time ever and asked a supplementary question at Question Time. I had never done it before, and it was an easy one because no one else stood up. However, it can be a bear pit and many people just will not do it. But if you were to ask them whether they had something to say, they would reply, “Yes. I had a good point to make but I wasn’t prepared to join in. If I could have been called, I would take my luck with everyone else”. I know that this is a tricky one because, in a way, it would give the chair the authority of the Leader. It is important because I do not think there is another legislature anywhere in the world where the Executive decides who is asking the questions that scrutinise the Ministers. That is intrinsically wrong for a start. It has got to be a bad principle in terms of democracy. The Government decide which Member can ask the Government a question. I know it is done fairly because for two years I supervised it myself, but it looks wrong. The Lord Speaker could do it in terms of the blocks as people stand. My noble friend Lady Jones is not here, although I am pleased to see my noble friend Lord Grocott in his place.
When I referred to this last October, I said that I had not done any research on it, but I did say that we keep hearing from the same noble Lords at Question Time. After that, someone did some work on the figures, and we had them today. Over a whole Session, half of the supplementary questions—over 1,500 of them—were asked by 8 per cent of Peers, which is 57 Peers. The same people asked all those questions because they are prepared to bully and shout and intimidate others into sitting down. That cannot be conducive to proper scrutiny at Question Time. A few people dominate, and we know who they are because we see them all the while—the same 57 people ask half the supplementaries. So I appreciate the fact that that research was carried out.
Baroness Kennedy of The Shaws
I would be interested to ask how many of them are women. I think that women are particularly intimidated by the way in which Question Time is conducted.
Lord Rooker
To be honest, there are quite a few women among the 57 Peers, but I do not want to go down that road, and I have reached the end of my time. I just think it puts people off.
Lord Hunt of Kings Heath
Can I ask my noble friend where the noble Baroness, Lady Gardner of Parkes, comes in?
Lord Rooker
Many who would stand up if they could be called are put off, and they are world experts in the variety of issues that this House deals with. Peers should be asked about this, and I am pleased that when the Leader talked about how the silent majority were going to rule, I think that that is what he was referring to: those who are not here as opposed to those who speak. There ought to be some questionnaires from Leader’s Group asking people what they think before proposals are brought back to the House for decision.
I shall finish with my two key words. When decisions come back, pilot them and trial them. That way, we might make a bit of progress.
Lord Kirkwood of Kirkhope
My Lords, it is a great pleasure to follow my noble friend Lord Rooker. I say that because he and I have been studying these things across both Houses for a number of years. I enjoyed his speech and I concur with absolutely everything he said. What I want to try to do with the short time allocated to me is argue that we really do have a new set of circumstances surrounding this debate. Whether or not it was a shot fox, as the noble Lord, Lord Filkin, said, I welcomed the announcement as soon as the coalition was formed that we were going to have a Leader’s Working Group. I hope it will give consideration as to whether it should be a standing group; the noble Lord, Lord Norton, is right about that. I am relatively new here. I have never experienced a Leader’s Working Group and I therefore do not know what the rules of engagement are or how its members are selected. I suspect the answer is “through the usual channels”, which takes us back into the loop we heard about earlier and whether or not they will have influence. I hope that the style and approach of the work of the Leader’s Group will be open and transparent. There is a case for electing Back-Benchers to the group; otherwise it will be far too easy for party political groupings to put forward members who may have grudges and form on issues.
There is a majority for change in this House if it is handled properly. At my first political demonstration, I followed Jo Grimond, marching towards the sound of gunfire. What was the chant? It was, “What are we for? Moderate change. When do we want it? In due course”. I am now in the coalition and a holy warrior for change: I want change and I want it quite soon. I can put a time on it now because the difference with this debate today is that we know we are going to have five-year Parliaments. There is high risk that this House, this important institution, could be facing profound change by 5 May 2015. That does not sound a long time and we have a great deal of work to do if we are to have a modern legislature that is capable of anticipating that change, facing it and planning for it. We do not know what will happen to us, but if we do nothing it will be worse.
There is a new urgency about what the Leader’s Group will bring to the House. The noble Lord, Lord Rooker, is right. We need to pilot things and think carefully about them. I am very pleased to be the chair of the Information Committee. I was fingered by a Whip and told that I was to be chair of the Information Committee, which was very interesting. I thought, “Do I not need to face an election?”. “Oh no. Nothing as bizarre as that”, I was told. My role is to try to help in outreach, which is a horrible word. My predecessor, the noble Lord, Lord Renton of Mount Harry, produced a fantastic report called Are the Lords Listening? Creating Connections between People and Parliament, and noble Lords such as the noble Lord, Lord Puttnam, and the Lord Speaker are doing wonderful outreach work in explaining the House to people. The noble Lord, Lord Luce, said that there is “profound ignorance” among the public about what we do here. He is not exaggerating; that is an absolute statement of the current position. If that is the case, we should spend 25 per cent of our time—I shall certainly spend 25 per cent of my time—in Parliament for the next five years trying to explain to people what we do here.
It is not difficult. I have visited one or two schools as part of the schools outreach programme, which I recommend to noble Lords. You get mostly positive feedback, some of which is amusing and entertaining, and you always bring back anecdotes to tell down the pub on a Friday night. It is worth doing. We need to get into a position where people understand that we are legislators. That is all we need to say: “We are legislators”.
I think it was the noble Lord, Lord Luce, who made the point that substantive debates were influential on government policy. People say to me that it would be helpful to use the IT and social networking sites that are available as these could provide the opportunity for an effective dialogue. People want propositions tested. For example, if they are against the genetic modification of crops, or whatever, they would want to raise a debate but not, for heaven’s sake, move for Papers and then withdraw the Motion. Try explaining that to a 15 year-old. I have tried and failed. We have to get the terminology, the language and the formality of this place in tune with people who do not know what Papers are because everything is done digitally. The noble Lord, Lord Puttnam, and his colleagues have done an enormous amount of viable work in this direction but we must do more. Explaining how we work and what we do should not be difficult. However, we do not have an endless amount of time in which to do it.
The Information Committee organises and supports the work in the Library and we need to consider extra resources to support the working practices. There are 400 active Members of the House. How do I know that? Because the lists are in the Library. People are in and out of the Library, calling on resources and using them productively on the Floor of the House in order to do the work they are bidden to do in Parliament. Those 400 people need better support. Why? Because we are getting bigger in number and the facilities need to be properly promoted. The struggle for resources is a constraint on us all. We get valuable assistance from the Library and we need to keep up its quality. However, I warn the House that, unless we put resources in over the next five years, that quality is bound to slip and become diluted. There are plans for extra members in the Library in the new island site when it comes on stream but, as chair of the Information Committee, I give notice that I will be making a robust but sensible application for continuing support for individual Members who are trying to do their work in this House. I shall also look for support from colleagues to do outreach work.
We have to consider how we shape the perception of the House. The Robert Burns quote of the noble Baroness, Lady McIntosh, was apt but she missed the last two lines:
“O wad some Pow’r the giftie gie us
To see oursels as others see us!
It wad frae money a blunder free us,
And foolish notion:
What airs in dress an’ gait wad lea’e us
And ev’n devotion!”.
It is an old, superior Scottish culture and I could not resist it. I had to refer to the book to get the quote right, but I hope the accent was better.
I was lucky to be part of the governance committee under the noble Baroness, Lady Murphy. Again, the noble Lord, Lord Luce, set the tone of the debate when he said that there needs to be an independent review of governance. I was a House of Commons Commissioner for a long time and I was very nervous about this. I was the external spokesman for the commission during my time in the Commons and, when we had the Braithwaite review, the scales fell from my eyes. Someone from outside—no one particularly special—came in, sat down, went round, asked some quiet questions with no axes to grind and produced a devastating report on what was happening externally and where we were deficient. We should not be frightened of doing that. although we shall have to do it quietly and sensibly and we cannot throw the baby out with the bathwater and so on. We need an internal standing committee, as suggested by the noble Lord, Lord Norton, to look, with external help, at the issue of governance.
The noble Lord, Lord Cope, busily defended Whips—the poor souls—and said that people speak to them every five minutes. That is a great shame; what a load it must be if people talk to you a lot. I was a Whip and I know that Whips look after party interests. However, those are not the only interests here. The government Chief Whip and the Leader of the House look after the executive interest but in the House of Lords there is also the holy grail of the institutional interest which the Lord Speaker should hold tightly in his or her grasp. I think that the usual channels do not take a sufficient overview of the institution and have too much influence. However, you always think that if you are not a Whip and think the reverse if you are and nothing much will change in that direction. However, it is not sufficient to say it is okay; that the usual channels have got it fixed and it all works. It does—and I am grateful to the people who do it—but we need to have a completely new transparency and consider how it looks from the outside. People need to see what is happening so that they can be confident that what they are being told is fit for purpose.
Lord Cope of Berkeley
There are differences between the way in which Whips in this House and Whips in the other House operate. Of course, Whips in this House look after the interests of their party among other things, and they also have a great responsibility, as they do in the other House, for the institution as a whole, but the Whips in this House have in addition a great responsibility for the members of their group, be it their party or the Cross Benches. If they do not look after them, they do not get on very well. They are also extremely open to both public and private scrutiny.
Lord Kirkwood of Kirkhope
I defer to my noble friend’s greater experience: I have never been a Whip here nor do I intend to apply to become one. The usual channels need somebody to oversee what they do. There needs to be more constructive tension between the Government, the Whips, the usual channels and the Lord Speaker. We need some sensible, adult thought about that.
Lord Elton
My Lords, as one, I presume, of the 57 Peers whom the noble Lord, Lord Rooker, had in mind, I am very glad not to have had to bully, shout at, or intimidate anybody to get into this debate. I am very sorry to hear that he might think that I have had to do so in Questions.
The House has changed enormously since the days when I joined it, which were, I admit, 37 years ago. That change has accelerated rapidly since the removal of the rest of my hereditary colleagues. In my early days in the House, to have to shout in order to get into Questions, or not to give way to a Privy Counsellor or somebody who had more experience, would not happen. The increasingly rapid flow of new Members into the House has made it more difficult for the traditions of the House to be handed on to the new entry. If it were possible in some way to instil in the new entry, in a block brainwashing scheme, the principles of good manners, on which the House used to conduct itself, we would become a much more efficient as well as a much more agreeable place to work.
I shall not talk about the detail of the papers—except in one respect—because that can be done in response to whatever consultation comes out later on. I shall speak instead about the context in which the consultation is taking place and which I fear from time to time slips from our consciousness. We need, as three Peers have said before me, to remember what Parliament is for: it is to control the Executive. The House of Lords is there to assist the House of Commons to do that and supply what the House of Commons either cannot or will not do, or has not done. A lot of that is in legislation. In a recent debate, I pointed out how, on 10 and 11 March 2005, we prevented the House of Commons allowing the Government what amounted to a lettre de cachet, renewable every 90 days, to put people into detention without trial. That is the big thing that we are there for; it is made up of a lot of little things in the way of legislation. Governments like making laws; they like getting their own way; and they like getting it easily. The noble Lord, Lord Kirkwood of Kirkhope, used the nice term “institutional interest”. It is an institutional interest that we have to watch here: the interest of Her Majesty’s Government, of whatever party, in securing their legislation as swiftly, as easily and in as large a bulk as possible.
Like, I am sure, the noble Lord, Lord Rooker, and many other of your Lordships, I have been in the position of being a new junior Minister and finding Permanent Secretaries, or, sometimes, slightly less senior civil servants, put it across that really what sort of a man or woman you are will come out of how big a slice of legislative time you can get for your department. That is built into the Civil Service and Governments need to resist it. To the extent that they do not or cannot, they need to be supported by Parliament to see that this great inertia of legislation has a brake put on it.
Grand Committees were invented to take the brake off. There did not used to be Grand Committees; all Committees were on the Floor of this House until relatively recently—for those who are of my generation. They were invented, I think, in Margaret Thatcher’s day—I regret to say it, but I may be wrong—to free up the logjam in the Chamber that we keep hearing about, although I have not noticed there being one at the moment. But whose logjam is it? It is a logjam of government business. Most of us are agreed that there is too much of it. Therefore, I am not of the chorus which says that we must have more Grand Committees; I am in the very small group which says, “Actually, we could do better with none, but let’s stick with one”. As my noble friend on the Front Bench said in opening the debate, there is spare capacity there now, because the number of Bills that have gone through Grand Committee recently is not as high as in the peak. So let us not start messing about with more Grand Committees.
I have to follow the noble Lord, Lord Luce, and others in saying that all this inexorably links to the question of reform, because what you do in this House and how you do it depends on what it is made up of. We are at a critical point in the process of evolution. We were at one stage much larger than now. I have heard people say with hushed voices in case they should be overheard by the public, “We’ll soon have 800 Members”. When I joined the House, there were 1,084 Members, and it grew after that, but the House was nothing like as crowded as it is now at Question Time, because there was no incentive to come here to talk unless you had something worth saying and knew that people were going to come and listen to you. That meant that you had a very much higher quality of input and a very much shorter list of speakers.
We are now moving towards a decision to have a much smaller body, elected. Instead of a vast crowd from which hundreds of experts in very narrow specialisms can be called when they are needed, we will have a small group of jacks-of-all-trades who will work simply from briefing that they are given every day, just like Ministers working from the same briefs. Where is the improvement in quality of legislation in that? I pray that we may not get there. In the mean time, we are right, are we not, to continue to plan the reforms in our procedures and governance to work with the system that we have got? I think that that is something worth fighting for.
I hope that your Lordships will take away the importance not of widening or increasing the streams of legislation that go through this place but, rather, of focusing them and giving them more expert attention. The noble Baroness, Lady Jones of Whitchurch—I have not seen her in her place since she spoke—said that the House of Commons spent three times as long as we did on scrutinising legislation. It does not say much for the level of its scrutiny when, in particular, not only do the things that it has scrutinised come with glaring mistakes in them but vast rafts of the stuff come from there not scrutinised at all. The figures that the noble Baroness quoted do not accord very closely with those that I got from the Library earlier today.
I merely put this in at the end to focus on the importance of the legislative process that we do for the nation—our country, as the noble Lord said. If we are going to do that at our best, we need to do it in a focused way with a large reserve of individual experts on specific things who are not coming in, frankly, in order to get benefits but in order to contribute to the work which is vital to this country.
Lord Parekh
My Lords, I begin by thanking the noble Lord, Lord Strathclyde, for arranging this debate and introducing it in a most constructive tone. Since he is for change and is welcoming suggestions, I shall add a few more to those that he has already received in this long debate. During the 10 years that I have been in this House, I have often had occasion to wonder whether our practices might not change so that some of us on the Back Benches might be able to participate more effectively than we have so far. If one were to ask how we should judge the practices of this House, I would introduce three criteria. First, do these practices help us to better achieve our objectives? Secondly, do these practices make maximum use of the expertise available in the House and give every Peer, including Back-Benchers, some sort of stake in its goings-on? Thirdly, do they save time, since some practices might achieve what we want them to but at a considerable cost in time?
Judged by these three criteria, I want to look at four important aspects of this House’s practices. I begin with Question Time, because during the 10 long years that I have been here I have found it difficult to stand up and ask supplementary questions. That has been so partly because I am not as quick on my feet as I could be, while sometimes I am not good at outshouting somebody else who might stand up at the same time. It is also sometimes the case that one is not able to stand on one’s feet until the House decides in one’s favour. It is as a result of this sort of experience, which many Peers must have, that about 57 Peers—as the noble Lord, Lord Rooker, said earlier—tend to monopolise between them nearly 1,300 supplementaries or thereabouts.
It is not just a question of the 57 Peers. If you break them down into their backgrounds, I would have thought that nearly 75 to 80 per cent of them would have been either ex-Ministers or ex-MPs. They are used to that kind of practice; some of us who have not been to the other place and are simple-minded university professors are not, and we find it rather difficult to adopt it so there must be some principle that guides us in deciding who follows whom when supplementaries are asked. It is also important that some preference should be given to those who are not normally in the habit of speaking and who might be speaking for the first or second time. That job is best done not by the Leader of the House—however well meaning he might be—but rather by the Lord Speaker, who is able to spot who needs to be invited and whose turn it is. In spite of what the noble Lord, Lord Strathclyde, said at the beginning about not being in favour of passing on this power to the Lord Speaker, I strongly urge that this change is badly needed.
I turn to another area where I have participated more enthusiastically than in supplementary questions: the debates. I would have thought that nearly a quarter of this House’s time is spent debating big issues and about two-thirds dealing with legislation. If as much as 25 to 27 per cent of our time is devoted to debates, we should be asking ourselves how those debates are organised, what they achieve, who participates and whether they are structured in the right way. I shall make three or four important suggestions for improvement.
First, very often we have subject themes for debates which are too general and therefore inevitably too vague to allow us to decide what the debate is about. If I go into the Whips Office and find a subject, it can be interpreted in 20 different ways; one therefore puts down one’s name and takes a particular line on it. In some other legislatures, it is a common practice when a subject is put down for debate to have a paragraph explaining what the proposer of the debate would like to see debated under that rubric. That would not do us much harm. Otherwise, lots of debates that I have sat through lack coherence because different speakers, interpreting the subject differently, approach it from different angles. At the end of the day, there is no meeting of minds.
It would also be useful to ask ourselves what is happening to some of the ideas that we might be able to articulate in those debates. Some of us sometimes spend hours thinking about a subject and trying to see what new things one can say. Having spent that much time, you ask yourself: what is the destiny of those ideas? What is happening to them? The Minister, inevitably, only has a few minutes at his disposal and some suggestions that we might have made get referred to in a sentence or two. What happens to the rest of the points that many of your Lordships might have made? Sometimes, the Minister will write a reply but that is often not as detailed as it could be. It might therefore be helpful if, at the end of each debate, the Minister or his senior officials could provide a fairly detailed reply to all the points that have been made by the speakers. Should that be difficult, there should at least be a meeting arranged with them so that those points can be discussed and clarified.
I also sometimes wonder why the practice of being here not just at the beginning of the debate but sitting until its very end is mandatory in this House. There are second legislative Chambers in the world where that is not so. You must, obviously, be there at the beginning, because that is where frameworks for the debate are set out, and for a couple of speakers before and after you. After that, if you hang around as 20 other speakers follow you, only in the hope that you might get a mention in the Minister’s speech, you might ask yourself—if you think about it realistically and ruthlessly—exactly what the point is of staying on right until the bitter end. One might say it is advisable that you should be there as a matter of courtesy and etiquette. Fine—but should it be mandatory, as it is? I sometimes wonder whether we might not rethink that practice.
I also sometimes wonder whether the four or five days of debate that we have following the Queen’s speech are absolutely necessary. Four to five days of your Lordships’ time are given over to those debates. The same debate then comes up at the Second Readings of Bills. Is it therefore right to have 50, 70 or 80 of your Lordships speaking on any given day and require them to stay from the early afternoon until almost midnight? What would be the point of that?
Going a step further, this year I was particularly struck by the fact that if you take a subject—the Home Office, let us say—a whole day is set aside. Yet the Home Office covers seven or eight different areas. Some of us might want to speak on race, some on police custody and some on immigration. Because the Home Office subjects are not clustered and thematised such that we could put down our names to speak on this subject rather than that, the result is that one of your Lordships speaks on immigration followed immediately by somebody speaking on another subject and the debate tends to lack dialectical engagement or critical coherence.
The third area which we might want to look at a little more carefully is the Grand Committee. Over the years, as the noble Lord, Lord Strathclyde, pointed out, Grand Committees have increasingly come to play a tremendously important role in discussing general Bills. The physical layout of the Moses Room for the Grand Committee allows for easier communication and more relaxed scrutiny and give and take; it is also less intimidating. It might therefore be better if most Bills went almost automatically to the Grand Committee, unless the House decides otherwise by voting on an appropriate Motion.
Finally, I turn to the question of post-legislative scrutiny. It is an absolute must for a variety of reasons. It allows us to compare the outcome against the intended objectives of the legislation and to learn lessons that can be fed into the work of the department and improve future legislation. We can also, through such scrutiny, build up common guiding principles on good and bad practices in the drafting of legislation. This is particularly relevant because this Government seem to want, rightly in my view, to make a bonfire of some of the existing laws. However, that bonfire simply cannot be made on the basis of what the general public want; it must be done on the basis of certain guiding principles, and post-legislative scrutiny should allow us to do that. Some kind of Select Committee to deal with that would be important.
Debates in this House, from time to time, have parochial orientations. We do not look at what happens in other European countries—in the United States, Canada, India or other places. I hope that when the Leader’s Group begins to discuss this very important issue, it might also conduct a short survey of what practices obtain in other jurisdictions from which we might learn something.
Lord Skelmersdale
My Lords, I congratulate the usual channels on arranging for a debate on the practices of the House so early in this Parliament and my noble friend’s intention to set up a Leader’s Group to study them. I hope that this will not preclude a discussion of procedures, which is what I am principally interested in.
Earlier in this debate, my noble friend Lord Cope used a phrase akin to “be careful what you wish for”. Some years ago, I had the opportunity to visit New Zealand, representing both the Merits Committee and the Joint Committee on Statutory Instruments. While there, I picked up a guide to its Parliament, which started with the sentence:
“Few tears were shed when the legislative assembly was abolished”.
The legislative assembly was of course its upper House of Parliament.
I am not an abolitionist but, like other noble Lords, I believe that we can do things better and make better use of our facilities, such as the Moses Room, as my noble friend Lord Strathclyde said. That would take pressure off the Chamber and reserve it for what are arguably more important things. For example, why are Committee stages of Private Members’ Bills invariably held in the Chamber?
Also with regard to the Chamber, I do not think that we should be considering what the Lord Speaker does now, or how she performs her role. For example, unlike the noble Lord, Lord Rooker, I would not like the Lord Speaker to become involved in keeping order in the House, although I note that she has on occasion widened the powers that I thought had been given her to advise the House on procedure. I have no objection to that; it is fine if the occupant of the Woolsack, which is not necessarily the Lord Speaker, is 100 per cent certain of their facts. But—and it is a big but—with the experience and honour of having spent a decade earlier in my time here as first a Deputy Chairman and then a Deputy Speaker, I am well aware of the distance between the Woolsack and the Clerks, who are the fount of all knowledge in this area. In my book, that is why such guidance became, in descending order, the province of the Leader or deputy, the Chief Whip or, indeed, their deputy—and finally, the junior Whips, depending only on seniority as a Front-Bencher who happened to be in the Chamber at the time of need.
Some Chief Whips have been better than others at having extraordinary antennae for identifying trouble in the Chamber. My noble friend Lord Denham was one such, even when he was some distance away from where we are now. It is only failing an intervention of one of these that a Back-Bencher would be brave enough to dip their toe in that particular water, but it is not out of order, as the Companion to the Standing Orders makes clear. When, on rare occasions, I have done it as a Back-Bencher, it was only after taking advice. My noble friend Lord Strathclyde will remember a whispered conversation that we shared before I brought a Question for Short Debate to a grinding halt by moving that a noble Lord be no longer heard. That situation and many others are covered by Standing Orders and the Companion thereto, an edition of which I was, with others, appointed to revise some years ago.
The problem as I see it is that the Companion is now too bulky and heavy to carry in one’s pocket or handbag. With new Members appearing every day, not every noble Lord has read it, although every noble Lord receives a copy. What would be useful is a very basic synopsis, especially for those noble Lords who have not been with us very long. In this connection, I welcome the unofficial mentoring that is undertaken by some experienced noble Lords, although in the heat and thunder of debate it is seldom appropriate to give pertinent advice at a time when it is so sorely needed. Perhaps one transgression is understandable, but a second is generally not.
That said, this debate is about practices, and there are two things that are high on my list of priorities, both of which come under the heading of interruptions. In opening the debate on our future, my noble friend Lord Strathclyde was interrupted no fewer than 11 times when he was trying to set out the Government’s stall on the subject of reform. It was far from conducive to good and sensible debate to break up the logic of what he sought to explain. I accept that his words were miles away from what many of your Lordships wanted to hear. None the less, far from improving the quality of debate, for which we are normally renowned, it actually destroyed it. In my book, the only time when Ministers should be interrupted is during the wind-up. After all, noble Lords can be as disrespectful as they like in their own speeches. If you feel strongly about a subject, you should put your name on the list to speak, but only if you can be in the House for the whole debate. We are not and never should be a version of another place, where such interruptions are the norm. Let us leave the sound and fury to them and major on the logic of the situation. Therefore, I should like to see a veto on intervening on opening speeches, backed up, if necessary, by a technique that we already have—that of the “Before the noble Lord sits down” procedure, used by my noble friend Lord Elton only today.
The other thing that we should do something about is Question Time. I agree with the noble Lord, Lord Luce, in this, although the “bear pit”, as the noble Lord, Lord Rooker, described it, I find a bit strong. It is very rare these days when only one noble Lord rises to ask a supplementary question. Is it only good manners—the noble Lord, Lord Parekh, used the word courtesy just now—to give the floor to someone who knows more about the subject or more senior than oneself. Within this, we should sort out the pecking order as regards the parties and the Cross Benches. Given the coalition Government, some noble Lords, especially in the Official Opposition, regard those of us who sit on the spiritual side of the House as comprising one party—the party of Government. We are not a single party—or perhaps not yet, as I have heard rather premature talk of a single party being formed. I doubt that very much. Politics makes strange bedfellows and my temporary noble friends are just that—temporary. As such, we should return to the status quo ante, with the routine of supplementaries from the three parties and the Cross Benches on a one-one-one-one basis, with the norm of a right reverend Prelate intervening should he wish. Otherwise, we would have to have the Lord Speaker call Members, a procedure that would inevitably lead to a rearrangement of the Chamber. Do those promoting this course really want the Clerks sitting between the throne and the Woolsack or even beside it?
Lastly, we had an occasion on Wednesday last when we sat to what these days is regarded as a very late hour. Not being privy to the discussions between the usual channels, I do not know how it came to be agreed that we should have a late sitting on the day before we were to sit at 11 o’clock. This may not have inconvenienced many noble Lords, but I beg the usual channels to consider our staff and treat them a little more generously. I am well aware that after 10.30 pm they are allowed taxis home, but some who have to be here as long as the House sits or even for a period after it rises have a two-hour journey home. If they leave the House at, say, 12.30 in the morning and then have to be back in the House half an hour before we sit the following morning at 11 o’clock, they can hardly be expected to give of their best. In parenthesis, the same reasoning applies to morning Sittings, especially regarding the Doorkeepers—although I suppose that it would be possible for others to perform the duties that they currently undertake in the Moses Room.
There are two ways out of this problem. The first is to return Thursday to its 2.30 pm sitting time, but I am afraid that 11 am sittings suit the majority of noble Lords so I suppose that we are too far down the track to change our hours back to what they were in the 1980s. However, I wonder how many of us work in or outside the House in the mornings as trustees of charities, directors of firms and so on. A fair number, I suspect. Perhaps it would be sensible to poll all noble Lords on this. The other is to make it a rule never to sit late on a Wednesday, which it should not be beyond the wit of the usual channels to achieve.
I started with “be careful what you wish for”. I do not particularly want to see extra jobs for the boys and girls in your Lordships’ House.
Lord Brooke of Alverthorpe
My Lords, I begin with a word of thanks to the Front Bench opposite for giving us this debate today, which has proved to be an excellent event. I express my gratitude to the Lord Speaker for her speech to the Hansard Society that acted as a spur for a number of us to come together and work in a variety of ways. I personally thank the noble Lord, Lord Butler of Brockwell, for leading the small committee of which I had the pleasure and privilege to be a member, which spent much of its time focusing on the issue of how we use our time.
The noble Lord, Lord McNally, will be pleased to hear that I am not indignant today—in fact, quite the opposite. I hope only that he will not be indignant when the noble Lord the Leader announces that we might be looking to work on Tuesday and Wednesday mornings in future; I remind him that when we were members together in the Leader’s Group under Lord Williams of Mostyn, it was the Lib Dems who opposed working on Thursday mornings when we tried to effect that change. I hope that the coalition has sorted itself out on that issue and there will not be any problems between its members. That is an area where, if there are to be changes of that nature, a poll among Members of the House would probably be appropriate.
Most of the issues that I wanted to touch on have already been dealt with in some depth. There is not much, frankly, on which I can add a great deal more. I can, however, introduce something new regarding the Lord Speaker’s role. The sub-committee that I was on recommended modest changes: the powers presently held by the Front Bench should be transferred to the Lord Speaker but without the right of the Lord Speaker to call individuals, merely with the right to indicate which group is to speak. I support that view.
Noble Lords will be interested to hear that during the course of 2009 my noble friend Lord Campbell-Savours carried out extensive consultation among Members of the House. The result indicated that 241 were in favour of transferring responsibility from the Front Bench to the Lord Speaker, 58 were against and 18 were neutral on the issue. That was in 2009, and since then we have seen further changes take place. I share the view that Question Time in particular has become rather more unruly than in previous years, and perhaps it is time that we had a look at this. I am pleased to hear that the terms of reference will include a review of the role of the Lord Speaker. I hope that it will be confirmed that they will extend to seeing whether there is a possibility of transferring responsibility from the Front Bench to the Lord Speaker along the lines that I have just described.
I support the view, which has been expressed by my noble friend Lord Rooker in particular, that in areas where we may have worries we should be prepared to embrace trials or experiments for certain periods. I should be grateful if the Minister would respond on whether the Government are willing to run some trials. One issue that we will have to address at some point—it has been the subject of a number of Questions recently—is the appropriateness of post-legislative scrutiny. Again, a growing number are in favour of it, and this House ought to give it a trial and see how we can make it work. If we are looking for candidates for post-legislative scrutiny, my Government’s attempt at a Licensing Act in 2003 might be a worthy candidate for close examination and possible review.
Another topic that came up in the group overseen by the noble Lord, Lord Butler, and which has given rise to a number of Questions, particularly from the noble Lord, Lord Cope, is the idea of a Leader’s session. Again, this has some history and some background to it. When we had a Leader’s Group back in 2002-03, the idea came from the then Leader of the House. Lord Williams offered to do a half-hour session on business and any other issues that might arise. That is the source of the recommendation in the paper of the noble Lord, Lord Butler. It is worth reviewing again and I would welcome a comment from the noble Lord, Lord McNally, on this. We had the recent experiment of Secretaries of State taking Questions for half an hour specifically on their areas of departmental responsibility. I think that this was an experiment that ran up to the end of the previous Parliament. I presume that they have now been abandoned. If I have got that wrong, perhaps the Minister will put me right.
An alternative that would help us all would be seriously to consider a Leader’s session of about 20 minutes or half an hour—I would prefer half an hour. I think it would be primarily about the way that business was being run, but additionally it would give Members an opportunity to raise other topics in the Chamber where they see no alternative way to raise such questions under the way that business is presently run. I have been one of those who wanted to raise topics and have invariably ended up with the Chairman of Committees being responsible for trying to reply. Given that he has limited areas of authority, my Questions have had to go back to the government of the day.
We now need to give serious consideration to having a Leader’s session. It would be helpful in terms of business, but more particularly it might release some of the tensions that have been building up and which we have been witnessing during the course of the four Questions each day, when people are increasingly seen to be frustrated at not being able to get their view heard. I hope that the Minister will say whether that will be looked at.
With regard to other issues that we find difficult to raise, it is good to see that the Institute for Government is doing such sterling work. I suggest to those who have some influence within that organisation that they might try to persuade it to give some thought to the following: instead of merely looking at the Commons separately and then maybe looking at activities within the Lords, perhaps there is a case for taking an overall view of the way that the two Houses interrelate in a range of areas. I find it interesting that soon we will be looking to local authorities to find savings in the order of 25 per cent to 30 per cent. I am sure that the Government will be encouraging them to look at closer working relationships with their neighbours in the same way that they have been talking about encouraging the police to work more closely with different areas. Similarly, perhaps there is a case for closer working relationships in the way that we run our business here.
When I first came here, we had separate IT operations for the Commons and the Lords. That set-up was quite impractical for dealing with the way that technology developed. We then had to pass an Act of Parliament to bring the two together and have a combined operation, which was the right thing to do. There is a range of other activities that take place and affect staff and Members in both the Commons and the Lords where, if we are encouraging others in different parts of society to come together, work better and effect efficiencies, there is a case for doing something similar within the Palace of Westminster between the Lords and the Commons. Again, though, there is no mechanism for doing that. I look to outsiders to explore the possibility, or maybe, if we get a Leader’s Question Time and nothing is happening on that front, I will get the opportunity to raise such a Question with him then. At the moment, there is nowhere else where it can be raised.
Lord Tyler
My Lords, the noble Baroness, Lady McIntosh, referred in her powerful speech to the denigration of newcomers to certain areas of the country. In Cornwall, unless you were born there or have lived there for 25 years, you are referred to as an “emmet”, which is certainly a denigratory word. I have been in your Lordships’ House for only five years, but I have been impressed by the way in which, today and on previous occasions, Members with longer experience and Members who are newly arrived have agreed on a whole number of issues.
I do not propose to go over all the issues on which I agree with other Members of your Lordships’ House; instead, I want to reiterate and reinforce one or two of the major themes. In so doing, I congratulate my noble friend the Leader of the House on bringing forward this issue so early in the Parliament, as I think that that will be to the benefit of careful consideration of these issues. I also thank him and the noble Baroness, Lady Royall of Blaisdon, for referring to the need to see how the Wright committee proposals in the other place interrelate with what we are doing here, a point that I shall come back to.
Like the noble Lord, Lord Brooke, who has just spoken, I had a minor role in the discussion on the strengthening of Parliament and I pay tribute to the chairs of the three groups that brought forward those papers. Again, like the noble Lord, Lord Brooke, I think that it is important that we do not just have those papers on the agenda for the Leader’s Group. The Better Government Initiative, the Hansard Society and the Institute for Government have also produced important raw material for consideration of these issues. I very much welcome what my noble friend Lord Strathclyde said about the wide remit for the Leader’s Group.
The main theme that I shall pick up is the holistic approach to the whole work of Parliament—the whole building—which I think is extremely important. For the reasons that have just been elucidated, it tends to fall between two stools—the two ends of the building. Therefore, I am encouraged that there has been a strong emphasis on the total outcome of the work of Parliament rather than just on the two different bits. I refer in particular to the speech made by my noble friend Lord Maclennan of Rogart.
We have to be careful to avoid the silo mentality that is explicit in the way in which the two Houses work. We are so careful not to tread on the toes of the other place that sometimes we do not do justice to the whole of the work of this building. This is not just a question of the Wright committee proposals versus the strengthening of Parliament proposals in your Lordships’ House. We need to ensure that they marry together to improve the total outcome of Parliament.
It is true that we can now work on specifics. The noble Lord, Lord Rooker, in the debate on the gracious Speech, referred to the way in which the other place—the whole of the House of Commons—is trying to own more of the process of legislation. One of the Wright committee’s proposals was that there should be more of a guarantee that Report stage of all Bills in the other place reflected a total acceptance and understanding of the Bill by the House rather than simply being entirely dominated and managed by the business managers of the Government of the day. As I understand it, what came out of that suggestion was that the business committee or whatever mechanism the House of Commons decides to create should certificate to your Lordships’ House which areas of a Bill had not, in its view, received the full attention of the other place. That would be a useful self-discipline, quite apart from being informative to this House. It is one example of where the two Houses have to find mechanisms for making the process work better.
I spent eight years on the Select Committee on the Modernisation of the House of Commons. During the 2001-02 Session, I saw one area of reform under the then Leader of the House, Mr Robin Cook, that I think is an important consideration for your Lordships’ House. It is referred to in the committee’s second report of that Session, which states:
“We recommend that there should be collective consultations with other parties in the House on the broad shape of the legislative year, those Bills intended to be published in draft, those Bills intended to be carried over and which Bills are expected to be introduced in the Commons, including discussion on the likely dates of recesses and related matters such as Friday sittings and Opposition days”.
It will be immediately apparent to noble Lords that, if the House of Commons is going to discuss which Bills should start there, that has huge implications for your Lordships’ House, because presumably all the other Bills will begin their process in this House.
I bring to your Lordships’ attention, as I do not think that it has been noted, the fact that that process took place, albeit only once. After the Queen’s Speech in 2002, there was a meeting chaired by Robin Cook and including the representatives of the other two parties—Eric Forth and me—at which we discussed precisely the most appropriate Bills to come to the Commons and to your Lordships’ House, although, of course, there was no representative from your Lordships’ House. We should build on that recommendation, which has been accepted by the other place, to say that in future this should not just be decided by the government business managers of either House. One of the major problems of indigestion is the London bus syndrome—five, six, seven or eight Second Readings in quick succession in the Commons or coming on to the Lords.
Lord Campbell of Alloway
I think that what my noble friend is talking about is political consensus. Let us hope that in such circumstances there can be consensus. However, if there is not, you cannot have these committees dominating the wish of the Government.
Lord Tyler
I understand what my noble friend says: of course, at the end of the day, it is the Government’s business. However, I believe that the Government would benefit—this has very much been a theme today—if there was such informal discussion. The group that I mentioned was informal; it was not an official committee. Informal discussion about the processing of legislation through the whole of Parliament—not just one House and not just in the Government’s interest—would also allow for agreement about which Bills were most appropriate for pre-legislative scrutiny and for carryover into the following Session. At the moment, that tends to be a take-it-or-leave-it proposal from the Government.
In addition to the lack of Lords representatives at that meeting, the other problem was that, as soon as Robin Cook, sadly, resigned, as a result of the decision to invade Iraq, the government Whips took back control. There was no cross-party discussion of any other Queen’s Speech. I strongly urge my noble friends on the Front Bench to look carefully at whether they can find some mechanism by which both Houses can find a better way of processing legislation, not just to avoid the London bus syndrome, which is bad enough in both Houses, but to get more consensus about which Bills are most appropriate for pre-legislative scrutiny and carryover.
The other issue which has been given a great deal of attention today and which deserves more examination is the way in which this House self-regulates, self-disciplines and self-governs. When I came to your Lordships’ House, I was amazed. I accept that the occupants of the government Front Bench—of all parties—do their very best and are scrupulous during Questions and Statements. Indeed, we had another example of this during the Statement today, when the self-discipline of the House was, frankly, not very effective; it looked more as though the business was being directed by a representative of the Government.
The noble Lord, Lord Campbell-Savours, who has patiently listened to so much of this debate without contributing, has over the months proved the case for thinking very carefully about the role of the occupant of the chair. It is asking too much of the government Front Bench to have eyes in the backs of their heads. I remember the noble Lord, Lord Grocott, who was here earlier—I am sorry he is not here now—asking, as someone who had to perform that role so often, “What other assembly or legislature in the world would ask somebody who has their back to half the potential participants to decide who should contribute next?”. Both at Questions and during the Statement today, there was, I thought, a very undignified process. I used to enjoy Question Time in the other place but the last thing we want to do is go down that route, though we are in danger of doing so at the moment. It looks to Members of your Lordships’ House and to those watching as though, somehow, it is a politician or party appointment who is deciding who should speak. However scrupulously and with whatever integrity they try to look at the issue, it is impossible for Members on the government Front Bench to do what is required.
I agree, therefore, that we must think a little about the role of the Lord Speaker. We should not leave that until the end of the five-year term of office, which is only 12 months hence now. The Lord Speaker has, both in person and in how she has allowed the role to develop, been a triumphant success. However, that does not mean that we should leave it at that and hope that all will be well forever. I take issue with my noble friend Lord Campbell of Alloway. Yes, the Leader of the House at the time has personal authority, but that is because he or she is appointed. The Lord Speaker is elected by the whole of your Lordships’ House. She or he has absolute personal authority from the way in which we ensure that person is appropriate for that role. We should, therefore, in the next 12 months as part of the general role of this new Lords Leader’s Group, look at that issue. We should not take it as a separate issue, but see it as part of the general concern.
There have been some notable contributions today. I was struck by something that the noble Lord, Lord Norton of Louth, said. This should not be an ad hoc operation that we come to every so often, perhaps when there has been some sort of minor crisis. We should have a continuing renewal and review role in the way in which we operate. It does not mean that we will always make changes. It may be that part of the outcome of that renewal and review will be to say that we have got things roughly right. It should not mean that we start from scratch, right at the beginning again. We need to build on what we already have.
I hope that my noble friends on all sides of the House will agree that it is important to make some progress. However, this will not be something that we complete in a matter of months. There will be a need for continuity in this role. I heard what the noble Lord, Lord Skelmersdale, said about some of his new colleagues in your Lordships’ House. As far as I am concerned, all Members of your Lordships’ House are my noble bedfellows. I am proud to be in this House, looking as we are at trying to improve our game. Again, as Robin Cook said so many years ago, this is not a zero-sum exercise. Improving how the other place operates and improving how we operate are not in contradiction or conflict. We need to be better together at holding the Executive to account. We can do that if we make complementary changes to how we operate here.
Baroness Howe of Idlicote
My Lords, with the many different and time-consuming activities of your Lordships’ House, I have come to think about this issue of continuing reform and updating the House’s processes and working practices rather late. Therefore, I particularly thank the Leader of the House for this fascinating and extended debate on the subject. I have now begun to look at the different papers that have been produced, including the Library note that was produced only last Thursday. What a wonderful job the Library does in keeping us informed on so many issues, as we all know. I express my considerable admiration for all the detailed thought, hard work and expertise that these and the previous reports—to which they refer—have over the past decade, since the removal of the hereditary Peers, clearly entailed. They illustrate the value of the huge range of expertise and experience that your Lordships’ House contains. I am one of those in your Lordships’ House who, like my noble friend Lord Luce, is opposed to the coalition proposal for a fully or mainly elected second Chamber. As such, I am certainly not opposed to making more democratic and effective use of our time and resources and, in particular, meeting our citizens’ demands for rather more openness, clarity, public involvement and knowledge of how we go about our duties.
The number of detailed recommendations contained in these papers is considerable. I have immediate very positive reactions to a few points, such as more pre- and post-legislative scrutiny, and clear description of and justification for Bills before this House. I very much like the idea, proposed by the noble Lord, Lord Rooker, that there ought to be some method of letting us know which parts of Bills coming from the other place have not been discussed, so that we can get straight on to those. Setting up a Leader’s Group, now that that has been decided, is clearly the best way forward for the consideration of the totality of the issues before us.
Looking through the papers, I was also immediately struck by their underlying similarity in two essential respects, which will need rather more specific action. First, although there is and will be a need for some form of usual channels, in their present form, the hidden, rather secretive way in which they operate is viewed as rather less than democratic by those not within their magic circle. Secondly, the way the House operates needs to take Back-Benchers’ and Cross-Benchers’ interests more obviously into account. Several noble Lords have made this point, not least the Leader of the House himself. Furthermore, the interests and needs of the wider public should be taken into account as well as those of Cross-Benchers and Back-Benchers.
My thoughts on this go back to my own entry, nearly 10 years ago, to the House as one of that first batch of appointed, so-called—rudely—people’s Peers. Coming directly from chairing the Broadcasting Standards Commission, it was a surprise to find that no House of Lords communications Select Committee existed for this crucial and growing area of importance. Not surprisingly, I set about trying to secure the establishment of such a body, not least because a little research showed that nearly 100 Members of your Lordships’ House had experience, expertise or interest in this area.
The formal approach we made to the Liaison Committee when Lord Williams of Mostyn was Leader of the House certainly produced a hopeful reaction to the suggestion that the committee be set up after the Communications Act 2003 became law. Sadly, though, when that time arrived, he was no longer with us and the reaction of the next Leader—the noble Baroness, Lady Amos—was, frankly, bewilderingly different, rejecting totally the need for any Lords communications Select Committee. However, by that time, an informal group from all sides of the House had come together and eventually, after a strong debate in the Chamber, the Select Committee on Communications was indeed set up. Since then, under the distinguished and expert chairmanship of the noble Lord, Lord Fowler, and many important reports later, the considerable value of its work has by all accounts been very widely recognised. However, the fact remains that during the earlier difficult period, it had been almost impossible to find out why “the establishment” was being so stubborn about everything. It was all conducted in a secretive manner. Indeed, the noble Lord, Lord McNally, was kind enough to say that the decision had probably tipped in the right direction because of the extent to which I had made rather a nuisance of myself.
From that I come to one suggestion for fairly immediate change, which is no more than an imitation of the change recently accepted in the other place; namely, that there should be a greater willingness in your Lordships’ House to enable decisions to be taken by a ballot of the House itself—for example, to decide whether a specific select or other important committee is to be established or, if that is thought to go rather too far in favour or popular choice, at the very least to decide who the members of that committee are to be, and who is to be its chairman. That suggestion is not a way-out novelty. As we all know, it figures in several of the papers being considered today. As it is already happening in another place, why should it not happen here in our own?
Lord Lucas
My Lords, I do not always agree with the noble Baroness, Lady Howe, but I certainly side with the last point that she made. It seems to me that the Commons has shown us the way and that we ought to follow it. However, I do not side with my noble friend Lord Tyler and others when they seem to suggest that in some way the Commons will pal up to us and agree that we should do some things and it will do the others. As was shown demonstrably in the previous Session, the Commons wants to do all the nice things itself, and so it should. Our job is to decide what else needs doing and then to find ways of doing it well or, if we are already doing it, ways of doing it better. If we approach that task in a self-critical frame of mind rather than a self-satisfied one—that is not something we always find easy—take up the suggestion of my noble friend Lord Norton that this should be a continuous operation and pick up what the noble Lord, Lord Rooker, says about using pilots rather than getting too stuck up on what the consequences might be of a change that was not quite right, we shall make good progress. The whole process ought to be one of continuous improvement. It is the way the world outside runs. Frankly, there is plenty of opportunity for it.
To go back to what the noble Baroness, Lady Howe, was saying, this is something we must do as a whole House. We cannot leave this to the usual channels to do at their pace because, to take an obvious example, the whole argument over our expenses was delayed and delayed by the usual channels and tackled only when it became impossible to ignore. The wisdom of the House is on many occasions greater than the wisdom of the usual channels and ought to be employed in these important areas.
I want to concentrate on two areas, the public and Back-Benchers. I know that we are old but, if we are to be a legislature, we must keep up with the way the world is moving. The world is moving in an extremely technological way and the technology is changing every year. We have not been well served by our Information Committee. This piece of junk I have in my pocket that passes for a PDA cannot get the internet properly, twitter or communicate in social media properly. What are we trying to do to ourselves, loading ourselves with that inadequate technology? We are merely cutting ourselves off from the sort of communication that people out there want us to have. Yes, we should get much more involved in those aspects of being a legislature that involve the public. Pre-legislative scrutiny and public evidence-hearing should be what we are really aiming at because it gives the public a chance to participate. We should certainly go for post-legislative scrutiny; I entirely agree with the noble Baroness, Lady Royall, that the Digital Economy Act should be a prime candidate for that. It was only half discussed before it was passed into law and is full of controversial stuff. This time next year we shall have a much clearer view of what is happening and the way it should go.
When we have proper scrutiny of a Bill, we should put it up on Wikiversity. We should let people have a real look at the clauses, comment on them, propose changes and work with those Members of the House who are interested to see how individual clauses and aspects of the Bill could be changed. “Wikiversity” may not be a word that many Members know but we should know it. These techniques are out there and are being used to develop ideas between a number of diverse people rather than within a little conclave. That ought to be the direction in which we are heading. For the first time last week I saw an iPad used in the Chamber. That may startle some noble Lords. However, I live my life electronically. Why do I have to print things out every time I come into this Chamber? I want the Bill and all the comments that I have received in front of me. I use an inadequate laptop at the moment but there is plenty of technology out there which would make it much easier to handle the volume of information we ought to be handling in Committee. Overall, we can make this House much more open to the public, particularly to those members of the public who really understand what is going on in a Bill. Our functions would benefit greatly if we did that.
The second thing I want to cover is the role of the Back-Bencher. I say to noble Lords who were not here when we had hereditary Peers in number that we are in the unusual position of having a Government who are in control of the House, as we saw in the two votes last week. Some of us, at least, got used to the idea that the Liberals were the swing voters and that if you had the Libs with you, you won; if you did not, you lost. We had this rather strange business of effectively talking to the Government but actually trying to persuade my noble friends to come with us in order to defeat the Government. Now we have a position where the Government are in control. We on these Benches will have to learn the virtues of rebellion, which those of us who were here when the hereditary Peers were in the majority knew well because that was the only way the House functioned and had respect. We are going to have to find ways of taking back some of the all embracing power that the usual channels have taken to themselves over the past 20 years.
I must say that my noble friend disappointed me when, almost in his first sentence, he talked about a Leader’s Group which, “I will appoint”. That has too many echoes of what we have seen in committees appointed to consider Lords reform—that is, hand-picked committees, chosen specifically so that they will produce reports which agree with the conclusions that the usual channels have already arrived at. We must be much more open on this, particularly when we are talking about the rules which govern this House. Those who are on the committee, or at least a proportion of them, should be on it with the consent of the whole House, having been openly chosen by the whole House. I side with the noble Baroness, Lady Howe, on that. It would make these committees much more powerful. That should also be a characteristic of the House Committee, the Liaison Committee and other aspects of this House.
There is also scope for a greater Back-Bench voice in the selection of Motions. How do they suddenly appear for dinner-break debate and so on? Mine have been chosen an inordinate number of times, and I am very grateful, but whether or not my Motion has been chosen does not seem to have reflected the will of the House.
How should we choose noble Lords to ask Starred Questions? At the moment, there is a sort of queue at 10 o’clock. This inordinate scramble is like some arrangement from the junior common room whereby only those who are prepared to stay up until two hours past midnight actually get any business done. There was a good suggestion in one of the newspapers—I forget which—that we should hold a ballot two weeks ahead and Members whose names are drawn out of the hat can then put down a Question. That would produce a much more even relationship between us.
We have extensively discussed today the selection of speakers during Questions. I very much side with those noble Lords who think that the chair should be allowed to choose. My noble friend, a self-confessed member of the Heinz 57 group, has a well perfected technique of sitting on that Bench—when he rises he cannot see half the House behind him and therefore cannot give way to other noble Lords because he is unaware of their presence. I am not asking for the Lord Speaker or whoever is in the chair to rule on matters of procedure—which clearly they cannot do, given that they are such a long way from the Clerks—but they can choose who is to speak next. That would mean that, rather than quarrelling among ourselves, we would just rise and not have to compete with ourselves to be heard, and it would not be the noisiest or even the grandest who were chosen. We would presumably have to agree to rules on how we expected the Speaker to operate, but if we were to go down that route, we would have a much more presentable system.
We have talked a lot about what else we can do. I agree with some of the suggestions put forward on how we can improve the way that we operate this House from the point of view of the Government. Taking Statements into Grand Committee would be an excellent idea. They take up a chunk of prime House time. Noble Lords who are interested in a Statement are almost never those who are interested in whatever business they are interrupting. If we put them in the Moses Room, we could give them more time and we could make the timing of Statements more flexible, as it is in the Commons, and reach a point where the Back Benches have exhausted themselves—or at least we could experiment with that.
As a keen participant in Committee stages, we could take a lot of them off the Floor of the House. That would give the Government a lot more time.
Lord Elton
Why does my noble friend think that we ought to give the Government a lot more time if what we are trying to do is restrain them?
Lord Lucas
That is because I want a lot of government time to be taken up by things such as pre-legislative and post-legislative scrutiny, and other good activities on which other noble Lords have commented. We ought to be trying to find the most effective role for ourselves and we cannot take on new things without giving up something else. Anyway, a Committee stage—which is essentially a conversation—taken off the Floor of the House would be a better environment and would mean that the House was working better and more effectively.
In addition, we should look at changing Report stage. Report is a pretty sterile activity at the moment whereby everyone talks, the Minister replies and then you do not have a chance to pick up anything that the Minister said. It would work better if Ministers automatically rose immediately after the proposers of amendments and had a first go. That might bring everything to a close and save a lot of time. On other occasions, it would allow those who were to speak later to do so in a much more informed way, and the Minister’s final reply would be much more fruitful.
Lastly, I wish to pick up a point on intervals between the stages of Bills. Intervals are important if you are a Back-Bencher because it takes time to put amendments together when you do not have staff. You cannot do your job if everything is run together. I welcome this initiative by my noble friend and I am delighted that we are discussing procedures. I very much hope that what will come out of this is a committee which is open to all our views, open in its processes and results in our making real progress on the way that we conduct our business.
Lord Hunt of Kings Heath
My Lords, we, too, very much welcome the initiative of the noble Lord, Lord Strathclyde, and I am happy to reiterate what my noble friend Lady Royall said many hours ago that we will play a constructive role in reviewing our working practices, under the auspices of a Leader’s Group. That will be valuable in itself, but could also lay a good foundation for the more fundamental reform of your Lordships’ House that we are promised. As the noble Lord, Lord Cope, said, it is likely that a fully elected House would need very different procedures; but as there is likely to be a transition period, we will need working practices that help us now, see us through at least the first part of the transition and perhaps make a substantial contribution to the more substantive reforms that we are promised. My noble friends Lord Brooke and Lady McIntosh put it well, so I ask the noble Lord, Lord McNally, how he sees discussions on working practices feeding into the wider reform process.
Any reforms of our working practices will command the general support of this House only if they are seen as improving its overall effectiveness as a revising Chamber. The noble Lord, Lord Strathclyde, has long championed the value of this House in acting as a check on government. Most commentators feel that we have become increasingly effective in that since the reforms of 1999. That has much to do with the quality of our debates and the undoubted calibre of noble Lords.
The noble Lord, Lord Strathclyde, pointed to the large number of amendments made in the previous Session. Of course, some of them were routine tidying up, but I suggest that the House’s reputation is not unconnected with the number of defeats suffered by the previous Government—more than 500 since 1997. Those defeats gave the House considerable leverage and caused the previous Administration to think again on many occasions. That is why the House became so effective. I suffered more than my share of those defeats and make no complaint: that is what the House is here to do.
We come now to the circumstances of the coalition Government. As the noble Lord, Lord Elton, said, it is the job of Parliament to control the Executive. It is early days, but there is a genuine question about how the House will continue to control the Executive in the circumstances of the coalition. I would be very interested in the views of the noble Lord, Lord McNally. What role does he expect the House to perform if he and his colleagues on the Front Bench are determined to force through every clause of every piece of legislation that they put before us?
We are coming to the closing stages of the Academies Bill. If ever a piece of legislation fitted the description of “ill digested legislation” made by the noble Lord, Lord Strathclyde, this is it. It has been rushed through your Lordships' House at an unseemly pace because Mr Michael Gove, in one of a number of misjudgments for which he is becoming so well known, insisted that some academy schools had to be up and running by September. That is why the noble Lord, Lord Skelmersdale, was forced to stay so long last week. As the noble Lord, Lord Lucas, said, on Report three amendments were voted on. They were defeated by the Government, who had the votes to do so. Fair enough—but if the future pattern is that the Government will win every vote, the House will begin to lose some of its hard-won reputation. Again I ask the noble Lord, Lord McNally, how he sees the House acting as a check on the Executive in those circumstances. The noble Lord, Lord Lucas, put his finger on it.
When it comes to working practices, we are not short of material. The Wright committee’s work in the other place is of equal significance. I agree with noble Lords who talked about the relationship between the two Houses being of great importance when it comes to changes in working practices. I should be interested in the Minister’s response on how he thinks the Houses might work together. I should also like him to respond to questions raised about the role of the Lord Speaker. Clearly, among some noble Lords, there is a sense of frustration about self-regulation and how it works. Self-regulation depends on Members observing the spirit of the Companion. I say to the noble Lord, Lord Skelmersdale, that I am not sure that it is new Members who do not observe the spirit of the Companion. I fear that it is often very experienced Members.
The problem is most clearly seen at Question Time. It is a very important occasion. The House is full, Ministers are on their mettle and it sets the tone for the day; but not all noble Lords are happy with the way in which it proceeds. Supplementary questions are often read, are long-winded and exceed the two points that are permitted, and some ministerial responses are equally lengthy. My noble friend Lady Jones identified that nearly half the supplementary questions were asked by only 8 per cent of our Members, and that the current shouting match may not create an encouraging environment for all Peers to take part. The noble Lord, Lord Luce, shared that view. There is a case for looking at whether the Lord Speaker should perform the role currently performed by the Leader at Question Time, perhaps for a trial period. I should say that I have no criticism of the way in which the noble Lord, Lord Strathclyde, has conducted himself in that matter since he became Leader of the House.
Having performed that role myself for about 20 months, I am well aware of the pressures all round the House. Like my noble friend, I, too, have the statistics from my time discharging that awesome responsibility. During that time, the Government batted under its weight. The Conservatives were a little bit over, the Liberal Democrats were an awful lot over and the Cross-Benchers batted quite a lot under their weight. My current statistics show that the Government and the Opposition are getting roughly equal treatment in terms of the number of supplementary questions, with the Cross-Benchers again batting under their weight. As far as concerns the gender balance, so far about 28 per cent of supplementary questions have been asked by women, who make up less than 28 per cent of the House.
Question Time is a crucial part of what the House does. It is important that the spontaneity and liveliness of Question Time is not lost with any change that we might make. Many Members have mentioned Lord Williams of Mostyn and the reforms that he made. One of those reforms, to increase the number of Questions to six Questions, did not work; nor do I believe that the Questions to the Secretaries of State worked. We must be prepared to try these things, but it is important that the central focus of Question Time is not lost. I know that many Peers are reluctant to see the departure of self-regulation, but self-regulation will not survive an elected House. At the very least, the Leader’s Group will have to discuss these matters.
I want to comment briefly on a number of other matters which have been raised. My noble friend Lord Brett asked some searching questions about debates and particularly about how the Government should respond. That is a very relevant matter indeed. On the suggestion of the noble Lord, Lord Butler, that Statements might be made in Grand Committee, I am not at all convinced. I believe that major Statements of government policy ought to be made in this Chamber; for example, the announcement made today about the NHS, agree with it or not, was a very important Statement. Surely, such Statements ought to be heard in prime time in the Chamber. Frankly, the problem during the Statement was that experienced Members did not observe the spirit of the Companion. However, I agree with the noble Lord, Lord Skelmersdale, that it might be useful to circulate to all noble Lords a pocket guide of the three or four essential points in the Companion.
Lord Campbell-Savours
My Lords, on that subject, under this so-called self-regulatory regime, it is extremely difficult for individual Members, who may feel embarrassed, to stand up, thereby asking others to sit down. That is why self-regulation does not work. Very few of us are prepared to get up and challenge others. There is a great onus on those on the Front Bench to do that, but very often they do not.
Lord Hunt of Kings Heath
My Lords, that is a fair point. I would certainly encourage the Whips on the government Front Bench to intervene. They would certainly have the support of this side of the House if they sought to do so. Essentially, their role is to help the House to regulate itself.
Lord Maclennan of Rogart
My Lords, does the noble Lord acknowledge, even if he does not agree with Statements being taken in the Moses Room or in Grand Committee, that Back-Benchers do not get a fair crack of the whip? Even today when we had a major Statement on the National Health Service, there was very little scope for the House to express its views.
Lord Hunt of Kings Heath
My Lords, I have two points on that. The noble Lord is right that 20 minutes is a fairly limited time. Equally, a Statement is not an occasion for Back-Benchers to make general statements about what they have heard in a Statement; it is to elucidate answers from the Minister. An extension of time would be welcome but, equally, some self-discipline among Members would be appreciated.
On the legislative procedure, many interesting points have been made about how we can go into Grand Committee more often and how the process in Grand Committee can be improved. The noble Lord, Lord Lucas, made a very useful comment about Report stage and how we might change the procedures there. I also thought he was right about time intervals. Experiencing opposition for the first time, and the awesome task of having to write one's own speeches and amendments, a little time between stages is indeed welcome and very necessary.
In conclusion, I welcome the initiative of the noble Lord, Lord Strathclyde. We shall support it; it is a constructive move. I would comment on what the noble Lord said in the debate on the Queen's Speech. He said that Peers in this House already enjoy rights not given to Back-Benchers in the other place to table amendments at three stages of a Bill and to have each one heard and replied to. Today, he said that he had no desire to move from that, no desire for compulsory grouping of amendments or for timetabling Motions or for preventing every amendment being considered. That is welcome. I detected a veiled warning perhaps that that depended on noble Lords not abusing the flexibilities that they have. I have seen no signs of that. I agree with him that we need to update our working practices. The Official Opposition will support only change which increases the effectiveness of the House. Ultimately, the Minister must recognise that that will not happen if the parties opposite simply railroad their legislation through this House.
Lord McNally
My Lords, first, I am grateful for those final words—“the parties opposite”—because, as was said earlier, there is an attempt by the Opposition to make a very harmonious coalition into a single party. We are a coalition. The other point that came from the debate is now a hardy annual from the Benches opposite, about the harsh treatment of the Labour Party during Question Time. The noble Lord, Lord Hunt, will not let the facts get in the way of a good grievance.
Lord Hunt of Kings Heath
I do not think that I said that at all. I paid tribute to the noble Lord, Lord Strathclyde, for the even-handed way in which he helped the House come to a view on who should ask questions.
Lord McNally
I am very grateful. I hope that, from now on, when some people—I will not name them, but we know who they are—start shouting and screaming from those Benches, we can mention that, in the first week in June, the Labour Party had 42 per cent of questions, as against 19 per cent for the Conservatives and 16 per cent for the Liberal Democrats. In the second week, it was 48 per cent for the Labour Party—well done—21 per cent for the Conservatives and 13 per cent for the Liberal Democrats. In the third week, it was 40 per cent for Labour, 19 per cent for the Conservatives and 16 per cent for the Liberal Democrats. In the fourth week, it was 44 per cent for the Labour Party, 18 per cent for the Conservatives and 18 per cent for the Liberal Democrats. I hope that, as this Parliament settles down, we can get away from that Millwall supporters’ attitude.
Lord McNally
No, I was just getting to the nice bit of my speech. I just thought that we could get something on the record, especially as there has been so much praise for the Library, which is busy producing statistics for both sides, as it should.
I welcome the assurance from the noble Lord, Lord Hunt, that the Opposition intend to play a constructive role. We share his approach that the test must be the overall effectiveness of this House. I will return to that. As to how the House will work in the circumstances of the coalition, again, we have to see how things go. It is a different circumstance, but there have been other times when this House has been effective before reform. If people go to the memoirs of the noble Baroness, Lady Thatcher, they will find that she constantly complained about the defeats that the Government suffered in the House of Lords.
Lord Hunt of Kings Heath
My Lords, the noble Lord traded statistics with me. He has just to look at the scale of the defeats that the previous Government suffered. By my reckoning—again, I am grateful to the Library for these statistics—there were 526. During the Conservative Administration, the number of defeats was very much less.
Lord McNally
As my noble friend Lord Strathclyde has just whispered in my ear, it is too early to tell what the pattern of this House will be. All that we know so far of the statistics is that the Labour Party has won 40 per cent of the votes and the Government have won 60 per cent.
Lord Hunt of Kings Heath
My Lords, the first vote was on a technical point on the Local Government Bill. The second vote that the Government lost was very late at night on an amendment moved by the noble Lord, Lord Steel, which the noble Lord, Lord Strathclyde, described as a meaningless vote.
Lord McNally
I know what the votes were. You know what the votes were. I am just giving you the statistics.
I close this debate as Deputy Leader of the House and a loyal No. 2 to my noble friend. I am pleased to say that we approach our task today with a complete unity of purpose. I am delighted that he has given such priority to the reform of working practices so early in this Parliament. I am also pleased that he has chosen to do so in a way which benefits from the groundwork prepared by his predecessor, the noble Baroness, Lady Royall. This debate and the announcement of the immediate setting-up of a Leader’s Group to look into the matter in the first few weeks of this Parliament means that the reform of working practices is more than a declaration of intent: it is work in progress. I am delighted to say that my noble friend has persuaded the noble Lord, Lord Goodlad, a former chairman of the Constitution Committee, to be the chair of the Leader’s Group. He will lead it with the independence and rigour that it demands.
This has been a stimulating debate. Thanks to the customary enthusiasm that noble Lords have for this subject, nobody need fear that the Leader’s Group will be wanting for inspiration, advice or input. It is not my intention to set out the Government’s views on the suggestions that have been put forward by noble Lords—they are House matters for the Leader’s Group to reflect on—but I shall make brief mention of a few individual contributions. Many noble Lords paid tribute to the ad hoc working parties chaired by the noble Lords, Lord Butler and Lord Filkin, and the noble Baroness, Lady Murphy, which originated from the Lord Speaker’s work in this area. The Hansard report for this debate will provide an excellent first evidence paper to the Leader’s Group.
Looking back even over the past 18 months, we have made a number of advances in this House’s ability to scrutinise legislation and to hold the Government to account. We have adopted an additional set of arrangements for scrutinising fast-track legislation, based on the recommendations of the Constitution Committee, which should ensure that the House has at its disposal the information it needs to give proper consideration to such Bills and to the case for fast-tracking legislation. We have introduced a new procedure for scrutinising national policy statements, an innovation intended to enhance the House’s ability to scrutinise government policy formulated under the Planning Act. We have put in place a panoply of procedures for exercising the new powers that the House now wields in respect of European Union policy and legislation as a result of the Lisbon treaty and the entry into force of the European Union (Amendment) Act. We have conducted successful experiments with Question Time for Secretaries of State. They were successful, and have not been abandoned. We just, at the moment, do not have any Secretaries of State in this House—hope springs eternal, as they say. We also have a new approach to scrutinising Law Commission Bills, which I very much welcome. I could go on. My point is simply that we have been steadily adding to the armoury of tools at our disposal, and I am confident that the Leader’s Group will both refine existing practices and propose new ones.
Lord Rooker
I am not aware that the House debated or voted on any of the examples the Minister just gave. Something has been missing for change, and this is why we were advised not to go down the Procedure Committee route. No one is asking the Leader’s Group to put the whole agenda forward but, when it has considered issues, it should bring to the House not just recommendations about those issues that it agrees with, but other issues for the House to decide. We do not want to be told that the Leader’s Group has agreed all these things and to be asked whether we agree with them. What about the things it may not have agreed with? The House might have a view and therefore it must make the final decision about what goes on the agenda, not the Leader’s Group.
Lord McNally
This House is its own master. The Leader’s Group will report to it, and there will be full discussion and a full debate. I gave a list of procedures that have been put to—oh! I have been passed a note; I have always wondered what these notes said.
Lord McNally
It says here: “Did the House vote on these examples? Yes, it did”. It must have been when the noble Lord, Lord Rooker, was not here. I could go on. My point is simply that we have been steadily adding to the armoury of tools and as we move forward we need to recognise that, although there is a considerable appetite for further reform to our practices and procedures in many parts of the House, notably among those who have contributed to today’s debate, others take a different view—and we have heard a few of those today.
There is little time left tonight, save to say that we will set up the Leader’s Group, which will have the widest of wide agendas. We will then see what it reports back to us. That will be a very exciting time. The noble Lord, Lord Rooker, asked what we are here for. In my 15 years in this House, I have never had any doubt that I am a parliamentarian. The noble Lord, Lord Kirkwood, said that we are here as legislators. The noble Lord, Lord Elton, said that we are here to check the Executive. The noble Lord, Lord Luce, said that he used topical debates to influence government policy. The noble Baroness, Lady Howe, said that she goes about making a nuisance of herself. That combination is what we are here for, and we want the procedures to fulfil those roles. We do not need to agonise too much about this; the task is to find the working practices to facilitate that work.
Some themes have come through. It is interesting that about 10 speakers referred to a revised role of the Lord Speaker. I am sure that the Leader’s Group will look at that but, as the noble Lord, Lord Campbell of Alloway, and others have said, there are doubts about it. We have said before that powers to the Lord Speaker would be a slippery slope. Well, let the Leader’s Group look at that.
I have always been a great advocate of pre- and post-legislative scrutiny, and I hope that we can look at that very quickly.
The noble Lord, Lord Rooker, talked about Questions being a bear pit. I am not too sure about that. This is a Parliament, and I worry about what people who are invited to join a Parliament expect it to be. I also listened to the point made by the noble Lord, Lord Parekh. I know a place where people come in, read their speeches and go out. Has anyone seen the American Congress being televised? It looks like a funeral parlour most of the time. One of the things that I like about this place is the courtesy of people staying and listening to speeches. I know that Members harbour suspicions about my intentions for this House. I am even a bit suspicious of the noble Lord, Lord Butler, wanting us to get rid of the ermine. We wear it only once a year, and I think that we should keep some of the old courtesies and perhaps some of the old clothing. I have said once before, and got into terrible trouble when I did so, that if we start to look like Croydon Council we will be treated like Croydon Council. I had forgotten that there is a complete mafia of Croydon councillors in this House, who stopped me the next day and said “Oi!”. One of the constructive things about this place is that it retains those courtesies, which are part of its power.
The noble Lord, Lord Brooke, asked what our approach would be to trial and pilots, the point made by the noble Lord, Lord Rooker. That is a very good suggestion, but it is a matter for the Leader’s Group, which I hope it will take on board.
I turn to other points that I can cover in the time left. The noble Lords, Lord Rooker and Lord Filkin, referred to whether the Leader’s Group remit would extend to the governance arrangements of the House. The terms of reference will be widely drawn. The group will need to set priorities and will take its own decisions on what it wants to cover, but it is setting itself a big agenda.
A large number of noble Lords pointed out that we cannot consider our practices and procedures in isolation from those of the House of Commons. The House of Lords and the House of Commons keep their separation up to a point. We should learn from what they have done. There have been several good references to the work of the Wright committee. I do not think that we have been standing still even while the Wright committee has been working, but the Leader’s Group gives an impetus to what has been going on here. As a first step, my noble friend might talk to Sir George Young, the Leader of the House of Commons. I cannot remember who mentioned this point, but striking up a dialogue with the House of Commons is not always as easy as colleagues might think. However, knowing the two men I have just mentioned, some soft soundings might help in meshing what is going on at both ends of the building.
Lord Kirkwood of Kirkhope
It would be helpful to the House if my noble friend could give some indication of how long this might take. My noble friend Lord Goodlad is a serious man who I am sure will take this very seriously. But is there any chance of getting an interim report by, say, the end of the calendar year?
Lord McNally
Again, that would be both impudent of me and unfair to my noble friend Lord Goodlad and his group. From what has been said today, this will not be a speedy process. There is a big agenda and a lot to be considered. As has been said, the group will look for advice not only from within this Chamber but from bodies outside which have studied these matters.
Lord Hunt of Kings Heath
My Lords, while clearly one must not rush into this, the fact is that a draft Bill for reform of your Lordships' House is expected by the end of the year. I really think that it would be right to ask the Leader’s Group to report before that.
Lord McNally
I will not commit myself to that. At the end of the year there will be a draft Bill which will itself go to legislative scrutiny. There is no rushing of fences on this. There is some serious work to be done. A very good agenda has been set up. A standing committee to look at practices and procedures may come out of—
Lord Elton
While my noble friend is on procedure, perhaps we may revert for a moment to the point made by the noble Lord, Lord Rooker. I presume that the Leader’s Group will produce a report, which will be put to the House with a Motion that it is approved and will be open to amendment. It will include an enormous number of proposals, which could well elicit a large number of amendments. I hope that my noble friend will take on board the need to have perhaps a special procedure or at least a substantial time for us to deal with it.
Lord McNally
I think so, but we should first look at the report. Certainly, we will not do what the noble Lord, Lord Rooker, implied; namely, to say, “This is it: take it or leave it”. We hope that the committee will bring forward a range of suggestions which will be open to the House, but it will remain in this House’s power to decide what it wants out of that report.
As I said, this Hansard report will produce a good first working document for the group of the noble Lord, Lord Goodlad. Also, those such as the Hansard Society and other groups who take an interest in these matters will see an open invitation to submit their evidence, as will the parties and individual Members of the House. I hope that it may even consider the suggestion of my noble friend Lord Lucas and open up its workings to the new technologies so that we can get ideas through in that way. I also noted him saying that the Benches behind me should relearn the art of rebellion. I have to say that some of us never thought he had lost the knack for that.
I finish on a thought that comes from my noble friend Lord Campbell of Alloway. He gave us a political warning, and it is one I can feel as a parliamentarian: do not think that you can smooth all the rough edges out of our parliamentary workings. If you smooth all the rough edges away, the House will stop doing its job. Sometimes it has to be awkward and uncomfortable, and indeed sometimes we have to stay late, to make it do its job. I have never wanted to see this House be a kind of rubber stamp for the Executive of the day. My noble friend has put this forward in the real spirit of his job, not as a government Minister but as the Leader of the House—in the spirit of looking after the interests of this House. In this debate he has combined the Churchillian order of “Action this day” with the Maoist invocation to let a thousand flowers bloom.
Lord McNally
You didn’t know you’d done that, did you? My noble friend is now getting worried.
It is that combination of urgency and open-mindedness which gives us the best prospect for progress. I wish the noble Lord, Lord Goodlad, and the Leader’s Group well, and I hope that it receives ideas and proposals from both inside and outside the House to help it in its deliberations.